New Delhi: The US-Iran war has crimped energy supplies, raised fuel prices, threatens to spike India’s import bill and thus strain its foreign exchange reserves. It was in this context that Prime Minister Narendra Modi appealed to citizens on Sunday to cut fuel use, avoid unnecessary overseas travel and explore domestic destinations instead.
For some affluent Indian travellers, that shift is already underway—India's premium domestic destinations are seeing stronger demand, higher occupancies and rising room tariffs this summer.
A Delhi-based family of nine abandoned their usual summer plan of a European holiday as business class tickets surged past ₹5 lakh a seat on some key routes, nearly double the typical fares. Moreover, airports across West Asia were facing fresh disruption risks, and even the major transit hubs had begun to feel unpredictable.
So, their plan was flipped. Instead of Tuscany or Switzerland, the family will now check into a luxury waterfront resort in Kochi in June, opting for private backwater cruises, ayurvedic wellness therapies and villa stays along Kerala’s coast—the kind of high-end leisure experiences India’s luxury hotel industry increasingly believes can persuade affluent travellers to stay closer home.
Luxury domestic leisure travel is seeing a sharp surge this summer, as geopolitical tensions, soaring international airfares and disrupted aviation routes push affluent Indian travellers towards premium destinations within India and nearby Asian markets, according to hotel operators and travel companies.
Goa, Kerala, Rajasthan and hill destinations are witnessing stronger-than-expected demand, while neighbouring markets such as Bhutan, Thailand and Vietnam are also benefiting, as travellers avoid long-haul western routes.
Price a non-issue
What is striking hotel executives is not just the rise in demand, but travellers’ willingness to spend aggressively even during months that are traditionally considered off-season for luxury hospitality.
At The Oberoi Udaivilas, room tariffs—which were at around ₹29,000 a night excluding taxes in May—are rising to nearly ₹35,000 from 1 June and to ₹38,000 towards the end of the month, according to hospitality industry executives tracking pricing trends. For instance, Rambagh Palace, managed by Indian Hotels Co. Ltd-owned Taj, is priced at ₹31,400 a night starting 20 May all the way till end June. On some dates in June, the tariff goes up to ₹38,900 a night, excluding taxes.
The Postcard's hotel on the Mandovi river for the same dates in June start at ₹30,000 a night, excluding taxes, for regular rooms and go up to ₹3,01,200 per night for suites.
June would typically see softer pricing across several leisure markets, as temperatures rise and international outbound travel picks up. This year, however, luxury hotel operators say demand has remained unusually resilient.
India’s luxury leisure market is seeing a favourable structural shift rather than a seasonal spike, says a spokesperson at Leela Hotels & Resorts. “Demand remains extremely strong across key leisure circuits such as Rajasthan and Kerala and emerging experiential destinations such as Coorg, particularly within the luxury segment where branded supply continues to remain relatively constrained,” the spokesperson said. Luxury hospitality trends point to a sustained growth that is backed by rising affluence and discretionary spending and a growing preference for experience-led travel, the group said.
At The Leela, average daily rate for its owned palaces rose 13% in FY26 to ₹25,375, while that for the March quarter grew 15% to top ₹32,000.
Monisha Dewan, the vice-president sales & distribution for South Asia for Marriott International told Mint that its luxury leisure resorts are seeing good domestic momentum this summer despite the geopolitical headwinds. “May and June bookings are being driven by affluent Indian travelers, with lead times shortening and a healthy mix of last minute and advance reservations,” she said. “We are observing longer stays at resort destinations, and a clear preference for experiential and wellness-led travel.”
Summer sizzles
“Bookings have gone up significantly,” said Kapil Chopra, founder of bespoke luxury hotel company The Postcard Hotel. “In Goa especially, we are seeing a 25% uptake over last summer.”
Even new luxury supply, Chopra said, is being absorbed almost immediately. The company recently opened a new property on the Mandovi river in Goa, sharply increasing inventory, but the occupancy levels rose quickly despite the added rooms. “We increased supply significantly and it was absorbed instantly,” he said.
The demand surge is arriving at a time when India’s hotel industry is rapidly expanding its premium room inventory. According to a recent report by HVS Anarock and Gleeds Consulting, about 60,220 hotel keys were signed in 2025, making it the strongest year on record for hotel signings, compared with 47,249 keys in 2024. India’s branded hotel inventory is expected to cross 350,000 rooms within five years, with luxury and upper-upscale hotels accounting for nearly a fifth of both existing inventory and upcoming supply, even as economy hotel expansion slows sharply.
The surge is most visible at the upper end of the market—among the same set of affluent consumers who would typically travel to Europe or West Asia during the summer holiday season.
“Our business class flights to Europe last year were around ₹2 lakh to ₹4.5 lakh. Now they are between ₹3.5 lakh and ₹5 lakh,” Chopra said. “Plus, there is uncertainty around travel disruptions. Domestic travel is seeing a flip because of that.”
The conflict in West Asia continues to disrupt aviation routes and raise operating costs for airlines globally. In March, the International Air Transport Association (IATA) warned that escalating hostilities had introduced fresh uncertainty around traffic flows and fuel costs in one of the world’s most critical air corridors.
Elevated experiences
Travel companies said affluent consumers are increasingly avoiding itineraries that require long transits through Gulf hubs.
Radhika Khanijo, founder of Delhi-based luxury travel company Welgrow Travels, said domestic demand strengthened sharply through April, particularly for villas, homestays and experiential stays.
“There is definitely some part of traffic that has moved to domestic this year because airfares are touching the roof,” Khanijo said. “Private villas, homestays and cooler destinations like Coorg, Kasauli and Lansdowne are seeing demand everywhere.”
East and South-East Asian destinations such as Thailand, Vietnam, Singapore and Japan are also seeing strong traction due to better connectivity and relatively lower costs compared to Europe, she said.
Dubai, earlier a popular destination, has “almost zero demand” as of now, she said.
Hotel executives say the current travel boom reflects a deeper shift in consumer behaviour among affluent Indians, many of whom are now willing to spend heavily on curated domestic experiences, instead of automatically looking overseas for luxury holidays.
Theo Cromhout, regional director, Aman India, Sri Lanka & Bhutan at Aman Resorts, Hotels & Residences, said Indian travellers now make for a significantly larger share of bookings at the group's Indian properties compared to the pre-pandemic years.
“Demand appears to be driven less by price sensitivity and more by guest interest in exclusive experiences, wellness and privacy,” Cromhout said. “Repeat stays are becoming increasingly common among HNIs and younger affluent consumers.”
The company has also seen strong growth in wellness travel and destination weddings, while its Bhutan property, Amankora, has emerged as one of the country’s strongest-performing luxury destinations for Indian travellers despite room rates nearing $1,000 a night. Similarly, its Ajabgarh property in Rajasthan goes for upwards of ₹85,000 a night.
Diminishing foreigner footprint
At the same time, inbound tourism from Europe has weakened sharply at several luxury destinations that once relied heavily on foreign visitors.
"While international inbound demand remains fairly muted due to the Middle East geopolitical situation, domestic high net worth guests are supporting with sustaining occupancy and rate resilience across the luxury segments.” said Dewan of Marriott.
Chopra of The Postcard said leisure properties in Sri Lanka and Bhutan, which earlier depended on travellers from Germany, Austria, Switzerland and the UK, had seen that business “just stop”.
“That inbound traffic has disappeared,” he said. “It has been replaced by domestic Indian travellers”.
For India’s luxury hotel industry, that replacement may be turning into something larger: the emergence of an affluent domestic traveller willing to spend global luxury prices without leaving the country.