Indian hospitality is experiencing a fundamental shift as more people opt for alternative accommodation: Report

A report highlights a fundamental shift in Indian hospitality with alternative accommodation encompassing vacation rentals apartments and other nontraditional accommodation options rapidly transforming from a niche preference into an increasingly important part of Indiarsquos travel economyThe segmentrsquos total Gross Booking Value GBV is projected to reach Rs 415 billion by FY29 reflecting its growing contribution to Indiarsquos broader Rs 8200 billion travel market according to the fourth edition of the research report How India Travels 2026 ndash The Homes Edit by digital travel platform Bookingcom in partnership with travel advisory and research firm VIDEC ConsultantsAs travel becomes more experienceled 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 focusAlternative accommodations Not so lsquoalternativersquo anymoreThe alternative accommodation market has expanded rapidly over the last three years with digitally distributed listings increasing from 102200 in FY23 to 215000 in FY261 Although supply growth is expected to moderate after a 26 per cent surge in FY26 the segmentrsquos GBV is still projected to grow at 212 per cent CAGR through FY291 outpacing the overall travel marketDespite 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 hotelsUnlocking Indiarsquos emerging travel destinationsAlternative 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 Tier2 cities religious centers and emerging leisure corridors1 According to NITI Aayogrsquos 2025 homestay report India faces an estimated shortage of more than 200000 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 AyodhyaThe stay is becoming part of the experienceTodays 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 choiceBusiness travel emerges as a new growth driverAlternative stays arent 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 stayBeyond longterm 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 longstays 37 per centTech and professional hosts drive nextgen staysAs 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 dynamicpricing 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 dynamicpricing adoption may also reflect more professional management and stronger listing practicesWhat was once largely a fragmented market of individual hosts is steadily evolving into a more organised ecosystem supported by technology platforms specialist operators and datadriven pricing strategies The trend reflects a broader shift towards professionalisation with hosts approaching accommodation as a business rather than a supplemental source of incomeSantosh Kumar regional head South Asia at Bookingcom said ldquoThe overall growth of alternative accommodation marks a major inflection point in Indiarsquos travel economy We are seeing a fundamental shift where alternative accommodation is no longer just supplementary inventory it is actively driving tourism expansion in nonmetro markets and regional hubs As local hosts adopt techdriven 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 countryrdquoPowering longterm scaleThe report notes that policy and infrastructure development will continue to play an important role in supporting the sectors next phase of growth National initiatives such as MUDRA UDAN PM Gati Shakti Swadesh Darshan 20 and PRASHAD are improving connectivity strengthening tourism infrastructure and expanding access to financing At the state level efforts such as Keralas classification standards and Goas focus on tourism diversification are helping encourage greater formalisation and quality assurance within the sectorThe broader travel payments ecosystem is evolving alongside these changes PayU data shows online travel payments growing between 20 per cent and 35 per cent yearonyear 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 monthsAs alternative accommodation becomes a larger component of Indias 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 checkins and dependable guest support will be key to building credibility winning over hesitant travellers and creating a trusted investable and scalable alternative accommodation ecosystem