'Domestic travellers are spending higher, fuelling India's tourism growth': Radisson South Asia COO

Foreign tourist arrivals in India continue to lag behind some South Asian countries like Thailand and Vietnam, even as domestic travel drives the country's hospitality sector. In 2024, India recorded nearly 10 million foreign visitors - far fewer than Vietnam's 17.6 million and Thailand's 35.54 million - highlighting the gap compared with smaller Southeast Asian countries.

Nikhil Sharma, Managing Director and COO, South Asia, Radisson Hotel Group, says India's hotel industry is entering a healthy growth cycle, with premium occupancy projected at 72–74 per cent in 2025–26. In an exclusive conversation with Business Today Digital, he discusses the trends driving India's hospitality sector, the role of domestic tourism, and what needs to change to attract more foreign tourists to India.

Edited Excerpts

How is India doing compared to South Asian countries in terms of foreign arrivals?

Given the geopolitics in South Asia, India is much better than anyone else. The focus continues to be domestic tourism, and what the government has done with the Swadesh Darshan and Udan scheme is helping tourism growth. 

In the long term, Vision 2047 aims for about 100 million inbound visitors in the hotel industry, and we should scale to about $52 billion as an industry by 2047. So, demand is really supported more by domestic tourism, and that will continue to grow.

Why do you think foreign arrivals are still not picking up? We have not reached pre-pandemic levels yet, but if you compare with some South Asian countries like Thailand and Vietnam, they are doing fine. What's holding foreign tourists back?

From a long-haul travel perspective, India is slightly more expensive compared to other Southeast Asian countries. But the government is currently working on an Incredible India 2.0 campaign, and they should launch it sometime next year. And let's see where we go from there. 

That said, the fundamentals in the country continue to remain strong, the domestic travel continues to grow. Pre-COVID, one could argue that foreign tourist arrivals brought in more revenue, but today, Indian tourists are spending much more and contributing higher revenues as well. We need to be cognizant of that fact as well.

A top Udaipur hotelier suggested that the government could consider giving tax breaks for foreign tourists on hotel bookings or flights to make our hotels more competitive. Do you agree? Would that work?

What the government has done on two fronts - first, the income tax relief below Rs 12 lakh, which leaves more money in the hands of consumers or guests, and second, the rationalisation of GST slabs - is important. 

While there's a discussion on no ITC at a certain slab, the repercussions of that are yet to be seen. But it's an extremely important step that the government has taken, and we are already seeing returns post its implementation on September 22.

We are seeing far better traction this year during this festival season. Goa is a good example - business for this December looks far stronger, which wasn't the case last year. The Indian consumer is ready to travel and spend that extra money, whether it is on retail or on travel.

If we give tax breaks to foreign tourists on their bookings, will that help attract more of them to India?

These tax breaks are short-term. Tourism has many multiples, it's the connectivity of flights, how many sectors you are doing, and so on and so forth.  India continues to be a long-haul and relatively expensive destination. It is not as affordable as some of the Southeast Asian countries are because their economies are built on tourism. India's pillars are far more than tourism. So, I don't know how much a tax break will actually incentivise someone to travel.

What we are doing in the country and what we need to continue doing is to make sure that the infrastructure and connectivity keep improving. And the last mile cleanliness in a lot of locations needs to improve. Hospitality and travel tourism companies are very cognizant of this and are working with various state, city, and zila level to ensure that happens.

Where is your majority growth coming from - globally and within India? Which Indian cities are showing more demand?

India, of course, is the hero country. So, I will stick to India. The spiritual and heritage circuits are major drivers. We were the first in Ayodhya and the first internationally branded hotel in Varanasi about two decades ago. We just opened in Prayagraj last week, and we're opening in Ujjain, Tirupati, and other pilgrimage destinations.

The Northeast is another focus area. In the hills, we're expanding in Corbett, Kumaon, and the Himachal sub-region. We're also growing in the South - for example, Coorg.

Heritage hubs like Kumbhalgarh, Saputara, and Udaipur are important. Since we operate mostly in upscale, upper-upscale, and luxury segments, F&B accounts for 40–50 percent of revenue in some hotels. Events and weddings are the biggest contributors, while conferences thrive in a few cities. We're also expanding aggressively in Tier-2, Tier-3, and Tier-4 cities.

As you said, India has become more expensive compared to Southeast Asian countries. Goa was also recently in the news. You have properties both in Goa and Southeast Asia. What are we missing that South Asian countries are doing right?

Goa did see a dip of about 8 per cent compared to last year. I will differentiate between North and South Goa - we operate in both parts. In South Goa, we didn't see a dip compared to last year because South Goa is more premium, with stronger pillars like F&B, conferences, and weddings. South Goa continues to do well.

The dip really was in North Goa, where we have a majority of our hotels. Compared to last year, we saw a dip in ADR (Average Daily Rate) and occupancy- anywhere from 8% to 14% in the first half of the year. But after the GST reforms, we are seeing a revival. Business on books for December is looking strong. December to December, if I were to compare, Goa seems to be doing far better.

In the last few months, many on social media have pointed out that cleanliness is a big problem in India. What’s your view?

The Swachh Bharat Abhiyan should be accepted by not only the citizens of the country, but also by the municipalities. We need to adopt it to a far greater extent. As Indians, we keep all our houses clean, but our neighborhoods dirty - that needs to change in our DNA, not only from a tourist perspective, but also from a hygiene perspective. A country should have basic cleanliness. That's something that I truly believe that we as a country need to improve.

The Northeast is often said to be under-promoted. Its landscape, minus the beaches, matches that of Vietnam. Do you think this region can emerge as a top tourist destination in the future?

Absolutely, there is tourism potential in the Northeast. Meghalaya and Sikkim, for example, have so much to offer in natural beauty - rainforest, lakes. It's just raw, natural beauty. Darjeeling and Gangtok have always traditionally done well. But I see parts of Northeast like Barapani that most people don't even know about. I truly believe Northeast is the next frontier for hospitality in this country.

Which Tier-2 and Tier-3 Indian cities do you think have the best potential to emerge as major tourism hubs in the next few years?

We're going to have presence in 114 cities - and I'm not talking about the top 10 or even the top 40 cities. Beyond the top 40, there are fewer branded hospitality players, which means huge growth potential.

In the last budget, the government spoke about launching 50 new tourist destinations with infrastructure - all in places with populations under 10 lakh. That, to me, is the most exciting piece. Once that list is announced, those destinations will become the next hotspots.

For example, when we opened in Saputara, there was no branded hotel supply - we were the first. We're also opening in Mount Abu and recently opened in Prayagraj - the first international branded hotel there.

India currently has only about 1,85,000 classified hotel rooms, and it is soon going to be 2,00,000. Dubai alone has 1,50,000 classified rooms. So, beyond the top 50 destinations, there’s far greater depth for hospitality growth in India.

What are the things we are doing right, and what are the areas where the government can still improve?

Firstly, the infrastructure push -  when it comes to roads - is an amazing initiative. India going from 75 airports to 150 operational airports and then eventually to 250 and beyond is again a phenomenal initiative. 

Of course, what is missing is inbound travelers. I don't work with the government of India, but because I'm on the FHRAI board, I know the Indian government is working on an Incredible India 2.0 campaign. Beyond that, we have very limited knowledge of what that is. That so far is a miss, but we should see some course correction on that piece.