Domestic circuits gain as PM’s appeal to curb foreign trips, global headwinds shape outbound travel

Bengaluru: While the Indian tourism and hospitality sectors are assessing implications of Prime Minister Narendra Modi’s appeal to citizens to curb non-essential international travel for a year amid geopolitical and economic uncertainties, industry stakeholders are hopeful of a potential uptick in domestic travel demand as some travellers reconsider overseas plans.

India’s outbound tourism continues to expand rapidly, with an estimated 3-4 crore Indians travelling abroad annually. Driven by a younger, more aware and discerning population, rising purchasing power, and improved air connectivity supported by rapid airport expansion, the trend has gathered strong momentum.

Leisure remains the largest segment, accounting for 43.5 per cent of outbound travellers, while total overseas spending is estimated at $30-32 billion. Popular destinations include the UAE, Saudi Arabia, Thailand, the US, Singapore, and the UK, with the top 10 countries accounting for nearly 70 per cent of outbound travel. The sector is projected to continue its strong growth trajectory through 2030.

The West Asia conflict has added turbulence for travellers and the travel industry, with operational volatility arising from airspace closures, disruptions around the Strait of Hormuz driving crude price spikes, and resulting uncertainty and intermittent disruptions in travel flows. The situation has also triggered broader economic ripple effects, including in India.

At the same time, domestic tourism remains a major pillar of India’s travel economy, with over 303 crore domestic tourist visits recorded between January and August 2025, according to Ministry of Tourism data.

Industry stakeholders say any moderation in outbound travel could further strengthen domestic demand, benefiting airlines, hotels, transport operators and regional tourism economies, while supporting employment and infrastructure utilisation. It is also expected to ease pressure on foreign exchange outflows during periods of global uncertainty.

A shift towards domestic tourism has already begun to some extent, with rising inquiries and cost pressures influencing travel choices, said Rajiv Mehra, General Secretary, Federation of Associations in Indian Tourism and Hospitality (FAITH).

“Airfares to Europe have increased by nearly 25-30 per cent, while fares to several Eastern destinations are up 15-20 per cent. The depreciation of the rupee makes foreign travel even more expensive,” he said, adding, “We are witnessing increased inquiries for Kashmir, Munnar, Kodaikanal, Shillong, and Gangtok, and shorter trips such as Delhi–Mussoorie or Shimla are also gaining momentum. The PM’s appeal is likely to further accelerate this trend.”

Travel companies are also realigning their focus toward domestic offerings, according to Ravi Gosain, President, Indian Association of Tour Operators (IATO). “They are gradually shifting focus from international travel to spiritual tourism, wellness retreats, luxury resorts in India, Himalayan circuits, the Northeast, road trips, wildlife tourism, and experiential travel within the country,” he said.

He added that while it is too early to assess long-term impact, near-term behavioural shifts are visible. “We are seeing increased inquiries on fare fluctuations, visa timelines, travel insurance and international package costs. There are no mass cancellations. Consumers will still travel, but will take more time to evaluate budgets,” he said.

“The PM's call may lead to an approximate 10-15 per cent decline in international leisure travel bookings in premium and luxury segments. Business, education, medical and migration travel will remain stable. This demand is likely to shift toward domestic circuits,” he explained.

The hospitality sector is closely monitoring demand trends, with domestic leisure travel remaining resilient so far, said Hari Sukumar, VP — Operations, Jaypee Palace Hotel Agra. “We have not seen any abrupt decline so far. Domestic leisure and short-duration travel remain resilient,” he stated, adding, “If outbound travel moderates, a portion of that demand may shift to domestic hospitality and experiential travel.”

Domestic tourism momentum could strengthen further in the coming months, mentioned Rikant Pittie, CEO and Co-Founder of EaseMyTrip. “Following the PM’s appeal, domestic tourism momentum could see further support, while also benefiting local economies and the broader tourism ecosystem,” he said.

A broader opportunity may also emerge to build a stronger India-focused travel ecosystem, said Samir MC, CEO of Tamara Leisure Experience. “This presents an opportunity for an India-first travel and consumption ecosystem, benefiting local communities, artisans, transport providers and farmers,” he concluded.