India Travel Market Set for 13% Rebound to $47.2 Billion in 2026
India’s travel economy is poised for a sharp rebound in 2026, with the market forecast to expand 13% to US$47.2 billion, according to new research from Phocuswright.
The projection follows a subdued 2025, when India’s total travel market grew only 1% to $41.7 billion, a significant slowdown from the 10% growth recorded in 2024. Operational disruptions affecting major airlines, alongside other travel-sector shocks, weighed on the market during the year.
Yet beneath the modest headline growth, the market underwent a more significant structural change: Indian travellers continued moving their bookings online.
Online bookings cross $24 billion
Phocuswright estimates that India’s online gross travel bookings increased 4% in 2025 to $24 billion, while offline bookings declined 2% to $17.8 billion.
That pushed online penetration to 57% of the total travel market, underlining how digital distribution is becoming increasingly central to the Indian travel economy.
The shift is particularly significant for online travel agencies, airlines, hotels and other suppliers competing for the same customer.
Indian consumers are increasingly able to search, compare and purchase flights, accommodation, ground transportation and holiday products through digital channels. For travel businesses, this means that distribution is no longer simply about having inventory available; increasingly, it is about how effectively that inventory appears within the traveller’s digital booking journey.
2026 rebound will not be entirely volume-driven
The projected 13% expansion to $47.2 billion should not be interpreted purely as a forecast of more trips or travellers.
Phocuswright notes that higher airfares are expected to contribute to the increase, meaning part of the rise in the market’s monetary value could come from pricing rather than equivalent growth in travel volumes.
That distinction is important for travel companies assessing the market.
A larger gross-bookings figure does not automatically translate into the same proportion of additional passengers, hotel nights or holidaymakers. Airlines, OTAs, hotels and travel agents will therefore need to distinguish between nominal market growth and underlying demand growth.
Domestic travel provides the stabilising base
Despite pressure on aviation, domestic travel remains an important support for India’s wider travel economy.
Phocuswright expects resilient domestic demand to sustain activity in accommodation and car rental, while geopolitical uncertainty is also encouraging some travellers to consider domestic destinations. Car rental was already the fastest-growing segment in 2025, with road travel benefiting as travellers sought alternatives amid uncertainty in the aviation market.
This creates opportunities beyond the traditional flight-and-hotel booking model.
Road trips, chauffeur-driven holidays, regional circuits, premium accommodation and experience-led domestic itineraries can all benefit from a market in which consumers are increasingly comfortable planning and purchasing travel digitally.
The online shift changes the competitive landscape
The 57% online penetration figure also points to a broader transformation in India’s travel distribution structure.
OTAs are expanding beyond their traditional roles in flight and hotel bookings, while suppliers themselves are investing more heavily in direct digital distribution. Phocuswright’s India research identifies a growing contest between OTAs, airlines, hotels and other travel suppliers for control of the wider customer journey.
The competition is increasingly moving from selling one component of a trip to owning the entire booking relationship.
That could mean flights bundled with hotels, rail combined with accommodation, car rentals attached to itineraries, or holiday packages integrated into a single digital transaction.
For travel agents and tour operators, the implication is equally significant: technology is becoming part of the product rather than simply an administrative tool.
Car rental emerges as an important growth category
Car rental’s performance in 2025 stands out against the weakness in aviation.
Phocuswright identifies car rental as the fastest-growing travel segment in India during 2025, with uncertainty encouraging more travellers to choose road trips.
The trend also fits India’s broader domestic tourism geography. As travellers explore destinations beyond major metropolitan gateways, road-based mobility becomes increasingly important for connecting airports and railway stations with smaller destinations, resorts and attractions.
For rental companies and destination management companies, this opens opportunities around multi-day rentals, chauffeur-driven services, airport transfers and packaged road itineraries.
What the rebound means for the travel trade
For India’s travel industry, the numbers point to a market that is not simply recovering — it is changing how it distributes and purchases travel.
The most important indicators are therefore not limited to the $47.2 billion forecast.
They include:
- $41.7 billion — India’s total travel market in 2025.
- 1% — total market growth in 2025.
- $24 billion — online gross bookings in 2025.
- 57% — online penetration of the total travel market.
- 13% — Phocuswright’s projected market growth for 2026.
- $47.2 billion — projected total market size for 2026.
- 62% — projected online penetration by 2029.
The figures together describe a market where digital booking behaviour is becoming structural, even when overall travel growth temporarily slows.
India enters its next travel cycle
Phocuswright expects growth to moderate after the 2026 rebound, with the market forecast to grow 7% in 2027 before settling at around 8% annually, reaching approximately $59.1 billion by 2029. Online penetration is projected to rise to 62% over the same period.
For India’s travel trade, the next phase will therefore involve more than capturing additional demand.
It will involve adapting to a traveller who increasingly expects the entire journey — discovery, comparison, booking, payment and servicing — to work digitally.
The headline may be a 13% rebound to $47.2 billion. The deeper story is the continued restructuring of how India buys travel.
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