New Delhi [India], May 19 : India's travel and tourism sector is expected to grow at around 7 per cent CAGR till FY35, while Europe remained the largest inbound tourism market in 2025, according to a report by Anand Rathi Investment Banking.

The report highlighted the strong long-term growth potential of India's tourism industry, noting a 7% CAGR between FY24 and FY35. It also stated that domestic visits reached 18.6 billion during 2014-24, while foreign exchange earnings nearly tripled to around Rs 18.8 lakh crore.
The report noted that the global travel and tourism sector is in a "sustained structural growth phase," driven by "rising middle-class incomes, AI-led booking adoption, and broad post-pandemic recovery across all geographies covered."

On Europe, the report stated that the region continues to dominate international tourism flows. "Europe recorded ~714 million international tourist arrivals in 2023, reaching ~96% of pre-pandemic levels," the report said. It added that "Travel & tourism contributed ~EUR1.9 trillion to Europe's GDP in 2023, representing ~9% of the region's economy."

The report also pointed to the role of the Schengen region in boosting tourism activity. "The Schengen Area enables visa-free travel across 27 European countries, significantly boosting cross-border tourism," it said.

According to the report, the global travel and tourism market is projected to reach around USD 16.5 trillion by 2035, growing at about 4 per cent CAGR. It said the sector currently contributes nearly 10 per cent to world GDP and supports more than 350 million jobs globally.

The report highlighted that India's tourism growth is being supported by infrastructure expansion and rising domestic demand. "Domestic tourism has witnessed a ~3x structural expansion, with visits rising to 18.6 bn (2014-24) vs 6.8 bn (2004-13)," it said.

It further said that the sector contributes Rs 15.7 lakh crore (5.2 per cent of GDP), reflecting its growing economic significance" and "supports a large employment base of 76+ million jobs across the value chain."

The report also underlined the changing nature of travel demand globally, especially among younger travellers. "Gen Z and Millennials are the key demand drivers, undertaking ~4-5 trips annually and allocating ~29% of their income to travel," it said.

On technology adoption, the report said AI is reshaping the sector rapidly. "AI now influences up to 58% of online travel bookings," while AI-powered pricing engines generate "up to 168 million price recommendations per minute."