As the Union Budget 2026 approaches, India’s travel and hospitality sector is looking to policy support to consolidate the strong demand witnessed across domestic and international travel segments. While occupancies and travel intent remain healthy, industry leaders believe structural reforms are essential to ensure long-term, quality-led growth and global competitiveness.

The hospitality sector continues to benefit from experiential travel, destination weddings and wellness-led stays. However, industry stakeholders point out that high capital costs and limited access to long-term financing continue to put pressure on returns. Granting infrastructure status, offering tax incentives on capital expenditure and improving access to institutional credit are widely seen as critical steps to enable sustainable expansion across destinations.

Digital travel platforms and alternative accommodation providers are also playing an increasingly important role in shaping India’s tourism ecosystem. With demand rising for hotels, homestays and BnBs across Tier-II and Tier-III cities, the industry has reiterated the need for GST rationalisation, especially in the mid-scale segment, to keep travel affordable and ensure price consistency. Support for integrated digital booking platforms and skill development across tourism services is expected to improve transparency and enhance the overall traveller experience.

Outbound travel remains a key focus area ahead of the Budget, particularly as luxury and experiential travel from India gains momentum. Louis D’Souza, Managing Partner, Tamarind Global, says, “As luxury and experiential travel from India continues to gain momentum, the Union Budget can play a pivotal role in shaping both outbound and inbound travel sentiment. On the outbound side, high-spending Indian travellers are increasingly investing in curated, design-led experiences, but policies around TCS and forex costs continue to influence booking timelines and destination choices. Easing these financial frictions would boost travel confidence and encourage travellers to upgrade experiences rather than compromise on quality.”

He further adds, “Equally important is the opportunity to strengthen India's inbound tourism narrative. With global travellers seeking authentic, immersive journeys, India's rich cultural heritage, wellness offerings, luxury hospitality, and emerging experiential circuits are uniquely positioned to attract high-value inbound travellers. Strategic budgetary support for destination marketing, infrastructure upgrades, simplified visa processes, and enhanced connectivity can significantly elevate India's appeal as a premium travel destination.”

Long-haul leisure and island destinations are particularly sensitive to outbound travel costs. Leena Jhugroo, Managing Director, Travel Lounge Leisure & Tours Ltd., notes, “As India's outbound travel market matures, the Union Budget presents an opportunity to unlock sustained long-haul leisure growth. A key expectation from the industry is rationalisation of TCS on overseas tour packages and forex spends, which continues to impact travel affordability and decision-making for Indian consumers.”

She adds, “For island destinations like Mauritius, which are positioned around romance, luxury, wellness, and MICE, easing outbound travel costs would significantly boost bookings. Improved forex policies and incentives for international travel-linked services would further encourage longer stays and higher spends.”

Neighbouring destinations are also closely watching India’s policy direction. Highlighting Sri Lanka’s strong reliance on Indian travellers, Charith DeAlwis, CEO, Unique Lanka Travels, says, “India continues to be one of the most important and consistent source markets for Sri Lanka, driven by strong cultural ties, short travel time, and a growing appetite for nearby international destinations.”

He further states, “As the travel ecosystem evolves, policies that enhance ease of travel, cost transparency, and regional connectivity can play a meaningful role in encouraging more frequent visits and longer stays.”

Within the premium segment, luxury travel operators stress the importance of addressing cost inefficiencies to sustain aspirational demand. Mir Musa Baghirzade, Sales Director, Turalux, says, “The Union Budget is closely watched by the luxury travel sector, as policy decisions directly influence discretionary spending and travel intent. Indian travellers today are aspirational, well-informed, and willing to invest in unique global experiences, but cost inefficiencies, such as high TCS on outbound travel can act as friction points.”

He adds, “Additionally, continued emphasis on digital payments, ease of global banking, and improved forex accessibility would enhance the overall booking experience. Luxury travel is no longer limited to leisure alone; it now extends to wellness retreats, destination celebrations, and immersive experiential escapes.”

Across segments, industry leaders have also called for stronger focus on manpower development, improved aviation connectivity and expansion of air networks to unlock new travel corridors. As the sector enters 2026 with cautious optimism, stakeholders agree that a forward-looking Budget balancing domestic, outbound and inbound tourism priorities could play a defining role in shaping India’s travel growth story

As India moves closer to the Union Budget 2026, stakeholders across the hospitality and travel-tech ecosystem are calling for structural reforms to sustain domestic travel growth and strengthen tourism-led development. With improving hotel occupancies and rising demand for alternative accommodations such as homestays and BnBs, the sector believes consistent policy support can help maintain momentum across emerging destinations.

Highlighting the growing role of digital booking platforms, Vinesh Gupta noted that online hotel and alternative accommodation platforms are becoming key enablers of destination-led tourism, particularly in Tier II and Tier III cities. He emphasised the need for further GST rationalisation on hotel rooms, especially in the mid-scale segment, to ensure affordability for travellers and price consistency across hotels and alternative accommodation providers.

“As we look ahead to the Union Budget 2026, the online hotel and alternative accommodation booking ecosystem is playing an important role in supporting India's domestic and destination-led travel growth. With hotel occupancies improving and demand for homestays and BnBs rising across Tier-II and Tier-III cities, continued policy support can help sustain this momentum,” Gupta said.

He added that GST reforms would not only benefit consumers but also encourage better quality stays across destinations. As a travel-tech platform preparing to expand into flight bookings, Gupta said government support for digital travel platforms, integrated booking experiences, and skill development across tourism services would improve transparency, customer choice, and overall travel accessibility for Indian travellers.

Echoing similar concerns from the broader hospitality investment perspective, Vinesh Gupta pointed out that despite strong operating performance driven by robust travel demand, returns on investment continue to face pressure due to the sector’s capital-intensive nature and high acquisition costs.

“Introducing tax incentives on capital expenditure and granting the long-awaited infrastructure status would provide a significant boost. This would unlock access to long-term institutional credit at competitive repo-linked or international benchmark rates, thereby easing the cost of capital and fuelling sustainable growth,” he said.

He further highlighted the need for stronger government-led manpower development and training initiatives to address the widening skills gap within hospitality. In addition, strengthening aviation connectivity and expanding the domestic airline network were cited as critical factors in opening new travel corridors and reinforcing India’s position as a leading global tourism destination.

With domestic tourism continuing to grow and digital platforms reshaping how Indians travel, industry leaders believe Budget 2026 presents a timely opportunity to align policy reforms with the sector’s long-term growth potential.

With the Union Budget 2026 approaching, India’s hospitality sector is looking to the government for meaningful reforms that can support long-term, sustainable growth. Industry leaders believe the coming year presents a crucial opportunity to strengthen tourism-led economic development, especially as travel preferences continue to evolve.

According to Ms. Amrita Gupta, Director of Manglam Group and CEO of Manglam Spa and Resorts, demand entering 2026 is being driven by experiential travel, destination weddings, and wellness-focused stays. This shift, she notes, highlights the need for policy support that encourages quality-led investments rather than short-term expansion.

“The coming year presents an important opportunity for India's hospitality sector to scale sustainably while deepening its contribution to tourism-led economic growth,” said Gupta. She added that reforms such as granting tourism industry status, rationalising GST, and improving access to infrastructure and green financing could significantly strengthen the sector.

Gupta also highlighted the importance of destination-specific support, particularly for heritage cities like Jaipur. Targeted budgetary allocation for tourism infrastructure, heritage-sensitive development, and sustainable hospitality projects, she said, would help improve global competitiveness while preserving cultural identity.

As India continues to position tourism as a key economic driver, industry voices believe that balanced policy measures in Budget 2026 could play a decisive role in ensuring inclusive growth, employment generation, and long-term resilience for the hospitality sector