India’s alternative accommodation market is projected to reach INR 415 billion in gross booking value (GBV) by FY29, as vacation rentals, apartments and other non-traditional stays gain a larger share of the country’s travel economy, according to a report by Booking.com and VIDEC Consultants.The fourth edition of How India Travels 2026 – The Homes Edit examines the expansion of alternative accommodation in India, including changes in traveller preferences, emerging destinations, business travel demand and the growing professionalisation of property management.The segment’s projected GBV represents a growing share of India’s broader travel market, estimated at INR 8,200 billion. Alternative accommodation listings distributed digitally increased from 102,200 in FY23 to 215,000 in FY26. Although supply growth is expected to moderate following a 26 per cent increase in FY26, the segment’s GBV is projected to grow at a compound annual growth rate of 21.2 per cent through FY29.Alternative accommodation currently accounts for around 13 per cent of lodging GBV. Online searches for the category grew 6 per cent between FY24 and FY25, compared with 2 per cent for hotels, according to the report.Emerging destinations expand the marketWhile metropolitan areas and established holiday destinations accounted for 46 per cent of alternative accommodation inventory in FY26, demand and supply are increasingly extending to Tier II cities, religious centres and emerging leisure destinations.The report cites an estimated shortage of more than 200,000 hotel rooms in India, as highlighted in a 2025 homestay report by NITI Aayog, as an opportunity for alternative accommodation providers to add capacity in underserved destinations and during periods of peak demand.Between June 2025 and June 2026, alternative accommodation listings more than doubled in Greater Noida, Ghaziabad, Indore and Ayodhya, according to the report.Bhuvnesh Kumar, Secretary, Ministry of Tourism, Government of India, highlighted access to finance as an important requirement for small homestay operators seeking to improve their properties and amenities. He referred to initiatives to help owners navigate loan applications through the JanSamarth portal under the MUDRA framework.Suman Billa, Additional Secretary and Director General, Ministry of Tourism, said the government was working to improve connectivity, destination infrastructure, access to finance and skills for micro-entrepreneurs and women-led businesses, alongside efforts to raise tourism quality standards.Local experiences and group travel drive demandThe report found that 87 per cent of surveyed travellers said alternative stays helped create more meaningful memories, while 85 per cent chose them for authentic local experiences. A further 83 per cent considered them suitable for families and groups, and the same proportion cited value for money and sustainability benefits.These preferences are expanding the category beyond conventional leisure breaks, with accommodation increasingly forming part of the overall travel experience.Business travel emerges as a growth segmentBusiness travellers accounted for 19 per cent of bookings in alternative accommodation in FY26, a share projected to increase to 21 per cent in FY27. Apartments and aparthotels are attracting professionals seeking separate living, working and meeting spaces.Among business travellers surveyed, 41 per cent cited additional living space or a separate bedroom or workspace as a motivation for choosing alternative accommodation. The ability to accommodate family members or colleagues was cited by 40 per cent, authentic local experiences by 39 per cent and better value for longer stays by 37 per cent.Santosh Kumar, Regional Head, South Asia at Booking.com, said alternative accommodation was increasingly contributing to tourism growth in non-metro markets and regional hubs, while technology was helping hosts develop more scalable business models.Technology and professional management reshape supplyTechnology adoption and more structured property management are also influencing commercial performance. Across Bengaluru, Goa, Hyderabad, Jaipur, Mumbai, Pune and Siliguri, properties with high dynamic-pricing scores generated 108 per cent to 190 per cent higher revenue per available room (RevPAR) than properties using fixed pricing. Goa recorded the highest differential, at 190 per cent.Virendra Jain, Co-Founder and Chief Executive Officer of VIDEC Consultants, said the segment was entering a more mature phase, with digital distribution and improving operating capabilities supporting growth. He highlighted formalisation, technology adoption, consistent quality and destination infrastructure as priorities for the market’s next stage.The report also identifies policy and infrastructure initiatives, including MUDRA, UDAN, PM Gati Shakti, Swadesh Darshan 2.0 and PRASHAD, as important to improving connectivity, tourism infrastructure and financing access.Separately, PayU data cited in the report shows online travel payments growing between 20 per cent and 35 per cent year-on-year. Flexible payment options, including buy now, pay later and equated monthly instalment products, increased their share of travel transactions from 6 per cent to 15 per cent over the past 18 months.The report concludes that sustained growth will depend on more than expanding inventory. Accurate listings, consistent property standards, reliable check-ins, guest support and stronger digital and financial infrastructure will be important to building traveller confidence and establishing alternative accommodation as a scalable part of India’s hospitality market.
