21 October,2026 11:19 AM IST | Mumbai | mid-day online correspondent
Image for representational purpose only. Photo Courtesy: File pic
A report highlights a fundamental shift in Indian hospitality with alternative accommodation, encompassing vacation rentals, apartments and other non-traditional accommodation options, rapidly transforming from a niche preference into an increasingly important part of India's travel economy.
The segment's total Gross Booking Value (GBV) is projected to reach Rs 415 billion by FY29, reflecting its growing contribution to India's broader Rs 8,200 billion travel market, according to the fourth edition of the research report, 'How India Travels 2026 - The Homes Edit', by digital travel platform Booking.com in partnership with travel advisory and research firm VIDEC Consultants.
As travel becomes more experience-led, Indian travellers are looking beyond conventional accommodation to stays that connect them with local food and culture. From family holidays and group getaways to emerging leisure destinations and business trips, alternative accommodation is expanding the possibilities of travel while bringing new destinations and stay experiences into focus.
The alternative accommodation market has expanded rapidly over the last three years with digitally distributed listings increasing from 102,200 in FY23 to 215,000 in FY261. Although supply growth is expected to moderate after a 26 per cent surge in FY26, the segment's GBV is still projected to grow at 21.2 per cent CAGR through FY291, outpacing the overall travel market.
Despite supply expansion, the category remains underpenetrated relative to the broader accommodation industry. Alternative accommodation currently represents around 13 per cent of lodging Gross Booking Value, while online searches for the category grew 6 per cent between FY24 and FY25 compared with 2 per cent for hotels.
Alternative stays are expanding well beyond traditional beach and hill station destinations. While major metros and classic vacation spots still account for nearly half of total inventory in FY26 (46 per cent), better connectivity and evolving travel habits are rapidly shifting growth toward Tier-2 cities, religious centers and emerging leisure corridors1. According to NITI Aayog's 2025 homestay report, India faces an estimated shortage of more than 200,000 hotel rooms, creating opportunities for alternative accommodation providers to help add capacity in undersupplied destinations and during sharp bursts of demand around major events. In fact, between June 2025 and June 2026, alternative accommodation listings more than doubled in cities like Greater Noida, Ghaziabad, Indore and Ayodhya.
Today's travellers are placing greater emphasis on the role accommodation plays in shaping their overall trip. When planning leisure travel, 87 per cent say alternative stays help create more meaningful memories, 85 per cent choose them for authentic local experiences, 83 per cent find them ideal for families and groups. Additionally, 83 per cent feel they offer great value for money, while a similar number consider them a more sustainable choice.
Alternative stays aren't just for long weekends anymore. Business travellers now account for nearly 1 in 5 bookings (19 per cent in FY26) at alternative accommodation (projected to reach 21 per cent by FY27). Apartments and aparthotels are leading the charge as professionals look for spaces where they can seamlessly blend living, working and meeting in a single stay.
Beyond long-term work assignments, business travellers are now considering these properties for short business trips as well. Primary motivators for business travellers include more living space and a separate bedroom or workspace (41%), ability to accommodate accompanying family members or colleagues (40 per cent), more authentic and localised experiences (39 per cent) and better value for long-stays (37 per cent).
As the market scales, digital distribution and tech adoption are acting as direct revenue multipliers. Across Bengaluru, Goa, Hyderabad, Jaipur, Mumbai, Pune and Siliguri, properties with high dynamic-pricing scores generated 108 per cent to 190 per cent higher RevPAR than those with fixed pricing, with Goa recording the highest differential at 190 per cent. Higher dynamic-pricing adoption may also reflect more professional management and stronger listing practices.
What was once largely a fragmented market of individual hosts is steadily evolving into a more organised ecosystem supported by technology platforms, specialist operators and data-driven pricing strategies. The trend reflects a broader shift towards professionalisation, with hosts approaching accommodation as a business rather than a supplemental source of income.
Santosh Kumar, regional head, South Asia at Booking.com, said, "The overall growth of alternative accommodation marks a major inflection point in India's travel economy. We are seeing a fundamental shift where alternative accommodation is no longer just supplementary inventory, it is actively driving tourism expansion in non-metro markets and regional hubs. As local hosts adopt tech-driven tools, they are not only meeting the diverse demands of modern travellers, but are also building sustainable, scalable business models that contribute directly to local economies. Alternative accommodation is no longer an 'alternative'; it has become a core driver of modern travel culture across the country."
The report notes that policy and infrastructure development will continue to play an important role in supporting the sector's next phase of growth. National initiatives such as MUDRA, UDAN, PM Gati Shakti, Swadesh Darshan 2.0 and PRASHAD are improving connectivity, strengthening tourism infrastructure and expanding access to financing. At the state level, efforts such as Kerala's classification standards and Goa's focus on tourism diversification are helping encourage greater formalisation and quality assurance within the sector.
The broader travel payments ecosystem is evolving alongside these changes. PayU data shows online travel payments growing between 20 per cent and 35 per cent year-on-year, while flexible payment options such as Buy Now Pay Later and EMI products have increased their share of travel transactions from 6 per cent to 15 per cent over the past 18 months.
As alternative accommodation becomes a larger component of India's travel economy, the next phase of growth will depend not only on increasing supply, but also on building the digital, operational, financial and policy infrastructure required to make that supply more discoverable, trusted and commercially sustainable. Accurate listings, consistent quality, smooth check-ins and dependable guest support will be key to building credibility, winning over hesitant travellers and creating a trusted, investable and scalable alternative accommodation ecosystem.
