GST Reduction Boosts India’s Hospitality Sector Ahead of Festive Season

GST Reduction Spurs Growth in India’s Hospitality Industry Ahead of Festive Season

With the festive season approaching, India’s hospitality sector is witnessing a timely boost following a recent Goods and Services Tax (GST) reduction. This move has lightened the financial burden on travellers and ignited optimism among hotels and resorts nationwide.

Rooms priced at or below ₹7,500 are now taxed at 5% instead of 12%, making stays more affordable. As a result, mid-scale and premium-budget hotel bookings are projected to increase by 7–8% this festive season, coinciding with India’s peak travel period when cultural celebrations and personal milestones drive high demand.

Greater Affordability Benefits Travellers and Industry

For travellers, the GST cut means enhanced affordability, allowing tourists to:

• Extend their travel itineraries

• Opt for better accommodation

• Spend more on local experiences

This affordability is expected to lead to longer stays and an increase in travellers, potentially boosting hospitality revenues by 20–25% during the festive season.

Destination Weddings: A Key Growth Driver

Even before the GST cut, industry experts at ICRA forecasted a revenue growth of 6–8% for FY26. A major growth engine is the rising demand for destination weddings, which are estimated at USD 3.5 billion in 2024 and expected to reach USD 25.7 billion by 2033, growing at an impressive CAGR of 22.1%.

The tax reduction has already led to an 18–20% increase in demand for banqueting and hotel services, especially benefiting mid-tier budget weddings by lowering accommodation and hospitality expenses. This trend is expected to accelerate further with the wedding season kicking off in November.

The Rise of Branded Resorts Under the Sales-Leaseback Model

A parallel trend contributing to the hospitality boom is the growing popularity of branded resorts operating under the Sales-Leaseback (SLB) model. Once niche, this model now appeals to travellers who seek:

• The reliability of established hospitality brands

• Immersive, destination-based experiences

These resorts, ranging from palatial properties in Rajasthan to beachfront escapes in Goa, are increasingly hosting leisure holidays paired with wedding celebrations.

Investment Opportunities in Branded Resorts

India’s hotel market, valued at USD 32.1 billion in 2023, is projected to grow to nearly USD 59.4 billion by 2030, at a CAGR of 9.4%. Within this growth, branded resorts on the SLB model represent a high-potential segment, offering:

• Steady cash flows from leisure demand

• Premium pricing during peak wedding and festive seasons

Institutional investors and high-net-worth individuals (HNIs) are particularly focused on Tier-2 and Tier-3 cities, which are emerging hotspots for tourism and weddings.

Shifting Traveller Preferences

Traveller behaviour is evolving, with more families opting for longer stays that blend leisure with remote work. The post-pandemic rise of the “workation” culture has increased demand for properties that enable a balance of work and relaxation.

Branded resorts, with their dependable infrastructure and services, are ideally suited to capture this demand. Holiday homes, boutique resorts, and branded properties in mountain, coastal, and heritage destinations are already witnessing higher bookings for the festive season.

A Festive Season Filled with Optimism

Reduced cost pressures in branded residences will enhance affordability and curb rapid price hikes. Even modest savings encourage premium travellers to spend more.

As families plan elaborate weddings, travellers explore new destinations, and investors seek resilient assets, branded resorts—combining consumer trust and strong investment potential—are emerging as the most sought-after hospitality category this festive season.