The Growth in Demand for Alternative Stays in India

The vacation rentals market represents a relatively small segment of India's hospitality industry. However, despite its small size, the short-term rental market has significant potential. Catch Asia Editor Peden Doma Bhutia in conversation with Skift Research’s Varsha Arora as they discuss what’s driving the growth of this sector in India, in the latest episode of the Skift India Travel Podcast, presented by Amadeus.

Key Points

Market Potential: The short-term rental market in India, though nascent, has significant potential. Skift Research estimates the market could grow to around $3 billion by 2033.

Supply-Demand Dynamics: India has a significant deficit of hotels compared to China. Regulatory challenges make it difficult to open new hotels, contributing to slow growth in hotel supply.

Growth Factors: Under-penetration of the hospitality market. Increasing demand for alternative accommodations due to a shortage of hotel rooms. Conversion of existing villas and bungalows into rental properties as a practical solution.

Involvement of Hospitality Brands: Big brands like Airbnb, StayVista, Saffron Stays, ITC, and Taj are entering the vacation rental market. These brands enhance consumer trust and perception towards vacation rentals.

Changing Travel Preferences: Post-pandemic shift towards authentic, immersive experiences. Millennials and Gen Z, the primary travel cohort, prefer vacation rentals for their flexibility and local flavor.

Family and Multi-Generational Travel: A significant portion of Indian travelers prefer traveling with family, including extended family. Vacation rentals cater well to this need with larger spaces and family-friendly amenities.

Trends and Opportunities: Rising interest in off-the-beaten-path destinations and solo travel. Vacation rentals can leverage these trends by promoting properties in scenic, less-known locations. Increasing focus on responsible travel practices and environmental consciousness among travelers.

Future Outlook: The vacation rental market is expected to grow significantly. The involvement of big hospitality names and changing consumer preferences will continue to drive this growth.

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Episode Summary

In this episode, we elaborate on the nascent but promising short-term rental market in India. Despite its small current size, it has significant growth potential, fueled by the under-penetrated hospitality market and a shortage of hotel accommodations. We have cited Booking.com's report on the surge in demand for alternative stay options and referenced Make My Trip's focus on this sector. The episode delves into the supply-demand dynamics, comparing India's hotel supply with China's and discussing the regulatory challenges in opening hotels in India. We also highlight the ease of converting existing villas and bungalows into rental properties and the increasing involvement of big hospitality brands in the vacation rental market. The discussion also covers the shift in travel preferences post-pandemic, especially among millennials and Gen Z, and the rising trend of family and multi-generational travel. The episode concludes with insights on how vacation rentals can cater to the growing interest in off-the-beaten-path destinations, solo travel, and responsible travel practices.