Helping Hand: How the Mudra Loan will Boost India’s Homestay Market

New Delhi, March 5, 2025: India is a nature’s paradise in its true sense. From verdant valleys to scenic mountain peaks to vast sandy coastlines, the country is a dynamic kaleidoscope of natural beauties. The country has something to offer to every kind of tourist, whether a multi-generational family get together looking for leisure or a corporate team meeting craving for a nature gateway, there is something available for all of us.

Tourism activities in India amounts to 9-10 per cent of the GDP, up from 7-8 per cent prior to the pandemic. As per media reports, the volume of tourists reached 13 million in 2024. GOI and other development agencies are planning to develop a $ 1 trillion tourism economy by 2047.

Just as the gargantuan size of the tourism industry, the Indian hospitality industries is also prolific. There are around 175,000 branded rooms alongside a vast volume of guest houses, budget hotels, service apartments, private lodges, etc. Besides, India is also witnessing a splurge in homestays segment, which is becoming a pivotal force in the alternate hospitality sector.

Ankit Kansal, MD- SKYE Hospitality said, “As a frontrunner of the alternate hospitality, homestays are becoming popular amongst various kinds of tourists. A sizable portion of leisure, adventure, staycations, and wellness tourism are shifting to the homestay category. From widely acclaimed tourist destinations to peaceful offbeat trails, homestays are proliferating everywhere in India.”

In contrast to a mainstay hotel, where the nature of hospitality is more signature-styled, the experience in a homestay is very immersive & localized. A homestay can offer an immense opportunity to experience the nuances of local culture, customs, and traditions. In this way, homestays are very special & unique compared to traditional hotels.

Imagine staying in a cottage or a traditional farm stay with the local family. Starting the day by sipping a cup of local tea or coffee, followed by the indigenous healthy breakfast. This will be followed by a lot of sightseeing, travelling to remote places, and meeting & interacting with the locals. In the end, finally winding the day with local drinks and watching some folk dance. Or otherwise, learning some indigenous handicraft skills. Such an itinerary can take the meaning of travel to an altogether different level.

Ankit Kansal further added, “Homestays comprise complete tapestry in itself. From simple & modest homes and cottages converted into lodging spaces to premium gated villas with a host of topline facilities, the options are wide, vast, & miscellaneous.”

The segment is also witnessing increased organization, with the advent of professional rental homestay management companies such as Stay Vista, Lohono Stays, The Rentalgram, Saffron Stays, Tripvillas, etc. These companies offer a wide range of services from aggregation, online search & discovery, marketing & branding advisory, property management, and much more, thereby organizing the segment at a breakneck speed. This is also inspiring many property owners & landlords to venture into homestays.

Likewise, there is a whole gamut of homestays in terms of functionality. From farmhouses to corporate stays to backpack village homes, there are plenty of options. Similarly, there are vintage havelis, farm houses, and chalets, that can take you to an altogether nostalgic world.

Mudra Loan Options Can Help in Broader Growth

The Government of India (GOI) has announced the provision of Mudra loans of up to INR 10 lakh for homestay business in the country. It will help both new business owners to start a homestay as well as existing ones to expand their activities.

This decision has been taken in the interest of broader growth of the tourism industry in the country. This will not just help the nascent homestay business in India but also catalyse employment and regional development.

Liquidity has always been a challenge for small hospitality business. This prudent step from the governing agencies will help bridging the gap and boost the homestay sector. Interestingly as many homestays are managed by women, it can further help in plugging the gender divide.