Why is India’s rising middle class a game changer for tourism and hotels?

More money in middle class hands is turning travel from a rare luxury into a regular habit, and this is giving India’s tourism and hotel sector a very strong multi‑year runway. As incomes rise and taxes ease, families are choosing trips, experiences and short breaks more often

India’s middle class is projected to grow from about 432 million people in FY21 to 715 million by FY31, and could cross one billion by FY47, so this is a structural shift and not a short‑term spike. Recent GST changes cut tax on hotel rooms under ₹7,500 a night from 12 percent to 5 percent without input tax credit, and this directly brings down the bill for middle class and budget travellers. GST on certain buses with more than ten seats also dropped from 28 percent to 18 percent, so group tours become cheaper and more attractive. For hotels and restaurants, lower GST on key kitchen items from 18 percent to 5 percent is easing input costs and helping owners keep tariffs and menu prices stable even as demand rises.

Most point to steady single digit to mid teen growth for the next several years. One study sees India’s travel and tourism market growing from about 22.5 billion US dollars in 2024 to around 38.1 billion US dollars by 2033, which is roughly a 6.1 percent CAGR, though some travel service segments like online bookings can grow at more than 15 percent a year between 2024 and 2029. For the hotel and wider hospitality industry, estimates suggest the market could move from about 24.6 billion US dollars in 2024 to roughly 31 billion US dollars by 2029 at around 4.7 percent CAGR in one data set.