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.

The tourism and hospitality sector currently faces a critical moment as India prepares for its Union Budget 2026. The sector which emerged as a major force for economic recovery and job creation and regional development now seeks permanent changes through structural policy reforms instead of temporary benefits. Industry leaders believe that with the right fiscal and regulatory support, tourism and hospitality can evolve from being viewed purely as a service segment to becoming a key infrastructure and growth driver for the country.

Sharing his expectations, Dinesh Yadav, Founder and MD of Fine Acers, highlights the urgent need for comprehensive policy support to match the sector’s rapid expansion, “As we approach Budget 2026, the hospitality sector is looking for structural policy support that reflects its growing economic contribution and long-term capital intensity. The industry is experiencing a significant expansion, with the projected CAGR being about 10-11%. This growth is mainly owing to the attraction of domestic tourists, the MICE sector and the swift advent of experiential travel in Tier II and III destinations. On the other hand, if the industry wants to keep the same pace, it needs a complete policy overhaul and not just short-term remedies.

One of the long-awaited measures is to give the whole hospitality industry, rather than just selected parts, the status of an infrastructure. This move would pave the way for the access of long-term and low-cost funding which is vital for the completion of the projects that have long gestation periods. Besides this, the GST reform especially concerning room rates and bundled hospitality services where the high tax rates still pose a threat to price competitiveness and thus indirectly to occupancy-led growth, is peremptory.

New forms of ownership and financing, like the sale-leaseback model, should be more clearly recognized in terms of policy. These models help developers recycle capital, improve balance sheets and attract institutional participation. Simplifying approvals granting single-window clearances and standardizing compliance procedures across states, which would lead to a significant reduction in the time and cost involved in project execution. Even more, the tourism sector, which has been the main recipient of Budget 2026, can really reposition hospitality not only as a service industry but also as one of the main infrastructure drivers of India's growth story." Yadav Added

Govind Gaur, CEO, WanderOn

Echoing similar sentiments from the travel segment, Govind Gaur, CEO, WanderOn, underscores the importance of domestic tourism and infrastructure-led growth, “As we look ahead to the upcoming Union Budget 2026, the travel and tourism sector hopes for continued emphasis on growth, infrastructure and strengthening of consumer confidence. Domestic tourism can become the backbone of India’s tourism landscape, if the government focuses more towards increased infrastructural connectivity, expansion of airports and improving rail travel.

The industry is also looking forward to an ‘Industry status’ to travel and tourism, which would enable easier access to credit and lower financing costs. If these measures are addressed in Budget 2026, travel would become more affordable for consumers, enhancing margins and boosting the circular economy.”

Dr Vikas Katoch, Founder and CEO, Adotrip

From a digital travel and destination discovery perspective, Dr Vikas Katoch, Founder and CEO, Adotrip, stresses the need for GST rationalisation, easier financing, and continued support for sustainable tourism initiatives, “As India’s travel industry continues with its robust recovery, we expect budget 2026 to rationalize GST for the sector. It is also important to make compliance more seamless, improve credit access so that financing can become easier. Addressing these will benefit both consumers and businesses, as travel and hospitality will become more affordable for them, businesses can get a change to innovate and grow and there will be healthy competition in the market.

The government’s further support for sustainable tourism, heritage circuits, and domestic travel promotion will be critical in diversifying demand across regions. The government has already demonstrated strong intent through sustained investments in infrastructure, destination branding, and tourism-led regional development. Building on this momentum in Budget 2026 can help India unlock significantly higher economic value, employment generation, and inclusive growth through tourism.”

Budget 2026 gives India a chance to transform its tourism and hospitality industry according to the expert opinion of industry professionals. The sector seeks reforms which will create sustainable growth through industry recognition and infrastructure status and simplified GST rules and better financing options and support for new ownership models. The upcoming budget needs strategic policy changes because domestic tourism is increasing and international interest in India is growing, which will establish tourism and hospitality as a key driver of India's economic and job growth.