Is India Pricing Itself Out of Its Tourism Boom?

When the cost of flying to Dubai is lower than spending a weekend in Goa, it indicates a malfunction in the system. Angel investor Ujwal Sutaria encapsulates this growing discontent with a straightforward query on LinkedIn: Is India pricing itself out of its tourism boom?

Sutaria highlights a concerning trend — what was once an accessible domestic getaway is rapidly being perceived as a luxury, as India’s booming real estate sector subtly alters the travel scene.

According to Sutaria, a short trip to Dubai or Georgia is now less expensive than a vacation in Goa, Manali, or Mumbai. What was once a reasonable travel option is now the domain of those who can afford high costs. The underlying reasons for this phenomenon extend beyond ₹400 airport tea or inflated hotel prices.

At the core of this transition, Sutaria explains, is India’s overheated real estate market. Over the last decade, property values have skyrocketed, negatively impacting tourism. Hotels are increasing their prices to recuperate massive investments made in ever-more-expensive land and properties.

Additionally, restaurants are grappling with rising rents, prompting them to raise their prices to stay afloat. Retailers in popular tourist destinations, facing similar financial pressures, are passing these costs onto consumers. Sutaria warns that while luxury travel expands, budget travel is being gradually eliminated, making domestic tourism more exclusive.

Supporting Data on Real Estate and Tourism Costs

He reinforces this argument with compelling statistics:

• Property prices in tourist areas are currently 150% higher than in non-tourist sections.
• Ayodhya has experienced a tenfold increase in merely a few years.
• Bengaluru and Hyderabad have seen a 90% rise since 2019.
• With India’s real estate market expected to reach $1 trillion by 2030, Sutaria observes no signs of this trend reversing.

Opportunities Amidst Challenges

Nevertheless, he also points to a silver lining. Entrepreneurs focusing on affordable accommodation options, lesser-known destinations, or innovations in transport infrastructure could leverage this situation to tap into the next major opportunity within Indian tourism.

India’s tourism landscape is indeed evolving. Sutaria poses a thought-provoking question: Will these changes enhance or detract from Indian tourism?