The PHD Chamber of Commerce and Industry (PHDCCI) has released a comprehensive report titled ‘Impact of the West Asia Conflict on India’s Tourism, Aviation & Hospitality Sectors’, highlighting significant disruptions across aviation, inbound tourism, hospitality and restaurant segments, even as robust domestic demand continues to provide stability.
India’s tourism and hospitality sector, contributing nearly 8% to GDP and supporting over 40 million jobs, is once again facing external shocks amid escalating geopolitical tensions. The report notes that after a strong V-shaped recovery in 2025—with branded hotel inventory nearing 200,000 rooms and daily domestic aviation traffic crossing 5 lakh passengers—the West Asia conflict in early 2026 has introduced fresh volatility.
The aviation sector has emerged as the most impacted. Airlines are grappling with flight cancellations, restricted airspace, and rerouting of international flights, increasing travel time by 2–4 hours on key routes. This has significantly raised fuel consumption and operating costs, with aviation turbine fuel already accounting for 35–40% of total expenses. Disruptions in Middle East air corridors—among the world’s busiest transit routes—have further reduced connectivity efficiency and driven up airfares.
Inbound tourism has witnessed a 15–20% decline, particularly in leisure travel, as global travellers adopt a cautious approach. At the same time, outbound travel patterns are shifting, with Indian travellers favouring short-haul destinations such as Thailand, Singapore and Vietnam, while long-haul and transit-dependent routes are seeing moderation.
The hospitality sector remains resilient, supported by strong domestic demand, though profitability is under pressure due to rising energy costs, higher input prices and fluctuating international demand. Premium and business hotel segments, which rely heavily on foreign travellers, are particularly affected despite stable occupancy levels.
The restaurant and food services sector is experiencing a mixed impact. According to industry estimates aligned with insights from the National Restaurant Association of India (NRAI), input costs have risen by 10–15%, driven by higher prices of imported ingredients, logistics and energy. While premium dining outlets in key tourism hubs have seen reduced international footfall, strong domestic demand and food delivery—now contributing 20–30% of revenues for many organised players—continue to provide stability.
Despite these challenges, domestic tourism remains the sector’s primary growth engine. Travel trends such as revenge travel, staycations, bizcations and experiential dining are sustaining demand across segments.
To mitigate the impact, the report outlines key policy recommendations, including diversification of international air routes, enhanced bilateral air service agreements, and rationalisation of taxation across aviation turbine fuel, hospitality and F&B sectors. It also calls for improved credit access for MSMEs, accelerated infrastructure development, stronger multimodal connectivity, and targeted promotion of domestic tourism circuits.
The report concludes that while the West Asia conflict has created short-term disruptions, it also presents an opportunity for India to build a more resilient and diversified tourism ecosystem. With strong domestic fundamentals and coordinated efforts between government and industry stakeholders, the sector remains well-positioned for sustained long-term growth.
