How Homestays Can Help Fix India’s 200,000-Room Shortage

India’s rapid rise in domestic and international travel is outpacing its hotel supply. A new report from Niti Aayog, the government’s public policy think tank, estimates that the country faces a shortfall of more than 200,000 rooms.

The report, titled "Rethinking Homestays," argues that homestays — homes rented out to travelers — can help close this gap. Unlike hotels, they are cheaper to set up, need fewer regulatory approvals, and expand bed capacity without requiring large new builds.

India’s homestay industry brought in INR 47.2 billion ($539 million) in revenue last year, according to Cognitive Market Research. The sector is projected to grow at 11% a year through 2031, fuelled by both demand from travelers and policy support from governments.

Platforms such as Airbnb, MakeMyTrip, and Booking.com have helped standardize the space, making homestays easier to book and compare.

Homestay Boom in India: Booking.com's trend data show