Alternative accommodation in India is experiencing rapid growth, expanding at double the rate of the traditional tourism market and emerging as a crucial solution to the nation's severe hotel room shortage. Driven by a post-Covid surge in travel for leisure, work, and pilgrimage, the Indian government and tourism officials are actively promoting homestays, bed and breakfasts, and vacation rentals by utilizing vacant apartments and second homes. Major travel platforms like Booking.com highlight this fundamental shift in hospitality, projecting the sector's value to cross forty-one thousand crore rupees while noting that the market remains under-penetrated and full of untapped potential.

Alternative accommodation in India is experiencing rapid growth, expanding at double the rate of the traditional tourism market and emerging as a crucial solution to the nation's severe hotel room shortage. Driven by a post-Covid surge in travel for leisure, work, and pilgrimage, the Indian government and tourism officials are actively promoting homestays, bed and breakfasts, and vacation rentals by utilizing vacant apartments and second homes. Major travel platforms like Booking.com highlight this fundamental shift in hospitality, projecting the sector's value to cross forty-one thousand crore rupees while noting that the market remains under-penetrated and full of untapped potential.

Alternative accommodation in India is experiencing rapid growth, expanding at double the rate of the traditional tourism market and emerging as a crucial solution to the nation's severe hotel room shortage. Driven by a post-Covid surge in travel for leisure, work, and pilgrimage, the Indian government and tourism officials are actively promoting homestays, bed and breakfasts, and vacation rentals by utilizing vacant apartments and second homes. Major travel platforms like Booking.com highlight this fundamental shift in hospitality, projecting the sector's value to cross forty-one thousand crore rupees while noting that the market remains under-penetrated and full of untapped potential.

Alternative accommodation (referring to homestays, bed and breakfast, vacation rentals, etc.) is no longer alternative. Even in India, where it’s growing 20 per cent, double that of the total tourism market.

And India government believes it can be the panacea to the growing dearth of accommodation across the country as travel surges, for work, leisure and pilgrimage—the country has some 2 lakh branded and 15 lakh unbranded hotel rooms, but if you consider the post-Covid boom in domestic travel, it barely suffices.

“By all estimates, it should be double,” said Suman Bhalla, additional secretary & director-general in the tourism ministry.

“While there are several hotels in the pipeline, you would still need more. This is a great opportunity to bring the bed & breakfast (B&B) concept into home stays and second apartments....many such bought perhaps for investment purposes would be lying empty.”

Leading travel aggregator Booking.com’s latest ‘How India Travels’ study highlights this fundamental shift in Indian hospitality: alternative accommodation, encompassing vacation rentals, apartments and other non-hotel accommodation options, is rapidly transforming from a niche into an increasingly sought-after mode. Its value is projected to cross ₹41,000 crore in three years’ time.

Explained Santosh Kumar, Booking.com’s South Asia head, “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.”

Indian government and some state tourism boards have been encouraging the trend for some time now. The heyday of the ‘Incredible India’ campaign period saw the ministry running an accreditation scheme for homestays, while state tourism boards like Keralam and Goa have robust frameworks presently.

“A separate window for homestays was announced earlier under the Mudra framework, and we used that opportunity to prepare practical guidance for owners,” said Bhuvnesh Kumar, tourism secretary. “We realised that some potential applicants are not highly literate or comfortable navigating banking processes; therefore, we created a step-by-step booklet explaining how to use the JanSamarth portal and apply for the loan.”

The Booking.com study says listings under alternate accommodations, which can range from a homestay to a flat to a beach guest house to a mountain villa or any kind of vacation rental, have been increasing in the country: from just over 1 lakh three years ago, they are now at 2.15 lakh earlier this year. “Despite supply expansion, the category remains under-penetrated 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,” the study says.

The government feels converting vacant apartments and ‘second homes’ across the country could open up a swathe of options for the category, even while providing an alternative revenue option to the owners. With religious tourism on an upswing, leading to spikes during certain festivals and in certain towns, ministry officials feel this could even be a solution to the spikes and scarcity one encounters seasonally.

There are problems to be dealt with. The biggest is about standards of service and the bad press that such accommodations get. “We need to build perception that alternate accommodation can be equally good,” argued Billa, “It is right for India, because the demand is such. There are complaints, too, like with units in apartment complexes with neighbours objecting to visitors, or about letting in people after midnight, etc. There are structural issues we need to fix through regulation and cultural issues that need to be dealt with (differently).”

Booking.com itself has been in an intense rivalry over the alternative accommodation category with Airbnb, which sort of single-handedly turned the category into a global segment on its own. The result has been both players trying to encroach into each other’s speciality, with Airbnb including boutique hotels and extended stays in its offerings, while Booking.com, which was originally about hotel rooms, moved aggressively into homestays and rental villas. With its annual report for 2026 focusing sharply on this category, the strategy for the travel giant, especially in its fast-growing Indian travel market, is pretty clear.

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