HOMESTAY TOURISM: SUSTAINABLE AND INCLUSIVE TOURISM

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Picture Courtesy:  The Hindu

Context

NITI Aayog launched the report titled ‘Rethinking Homestays: Navigating Policy Pathways’ in collaboration with Internet and Mobile Association of India (IAMAI), offering a strategic roadmap to unlock the potential of homestays in tourism sector.

Tourism Sector In India

Major contribution: In 2024 travel & tourism sector contributed about ₹21.15 lakh crore to the economy, a 21% jump over 2019, and the sector is projected to reach ₹43.25 lakh crore (7.6% of GDP) by 2034. (Source: NITI Aayog)

Employment: Over 4.33 crore people employed, could rise to 6.3 crore by 2034. (Source: NITI Aayog)

Growth: In 2024, domestic tourists spent Rs 16 Lakh Crore, expected to rise to Rs Rs 28.70 Lakh Crore by 2034. International tourist spending reached Rs 2.85 Lakh Crore, with projections of Rs 4.07 Lakh Crore by 2034. (Source: NITI Aayog)

• Former NITI Aayog CEO Amitabh Kant stated that tourism sector, is exempt from tariffs and can generate foreign exchange earnings, if given a ₹20,000 crore boost, the sector could offset the economic impact of US 50% tariffs.

What is Homestay Tourism?

A homestay is tourist accommodation run by a local family in their own residence.

• Visitors stay in the host’s home (usually 1–6 rooms) and share in daily life, food and culture.
• For example, Goa’s policy defines a homestay as an owner-occupied home with 2–6 guest rooms.

Experiential nature: Homestays offer immersive experiences – tourists can participate in local customs, cuisine and festivals in return for lodging.

• Homestays give travellers “a culturally immersive experience” while generating local jobs.

Flexibility: Unlike hotels, homestays are small and informal. Owners personally serve meals and act as guides.

• They are regulated by tourism departments (e.g., classified under Gold/Silver categories by the Ministry of Tourism) but retain a home-like atmosphere.
• Case Study: In Darjeeling’s Himalayan village of Sittong, homestays are run by villagers in traditional houses. Guests eat local food and take part in tea cultivation, indicating homestays blend travel with everyday life.

Significance of Homestay Tourism

Economic boost: Homestays inject income directly into local communities. The homestay market in India was valued at ₹4,722 crores in 2024. (Source: NITI Aayog)

• In Sittong (Darjeeling), homestays are “rapidly changing rural livelihoods” by producing substantial economic benefits for various social groups.
• In Nepal, homestays have been shown to empower marginalized villagers, create jobs and reduce rural poverty.

Bridging the Accommodation Gap: Shortage of tourist accommodations, estimated at over 2 lakh hotel rooms. Homestays offer a scalable, low-cost solution to this deficit, especially in remote locations.

Women Empowerment: Homestays in states like Kerala have become a powerful tool for women's empowerment, providing financial independence and fostering entrepreneurship in ventures like local cuisine workshops and craft classes.

Curbing Out-Migration: In states like Uttarakhand and Himachal Pradesh, homestays provide a viable livelihood for the youth, helping to curb the trend of out-migration from hill villages to urban centers.

Cultural Preservation: Homestays in regions like Fort Kochi (Kerala) and Spiti Valley (Himachal Pradesh) are preserving local heritage by offering tourists authentic experiences like Kathakali performances or interactions with local monastic traditions.

Sustainable spread of tourism: Homestays direct visitors to remote places, easing pressure on popular sites.

• According to NITI Aayog, 69% of travellers now prefer lesser-known destinations over crowded spots, 72% of tourists seek sustainability and 94% want eco-friendly options, which homestays (being small-scale and rural) naturally support.

Community involvement: Homestay tourism involves entire villages, organize joint promotions of local stays, builds social capital and spreads economic gains beyond individual hosts.

Steps taken by Government to promote Homestay Tourism

Classification and standards: Ministry of Tourism runs the Incredible India Homestay/B&B (Bed & Breakfast) classification scheme, categorizing approved homestays as Gold or Silver to assure quality. (No direct subsidies are given, but classification helps with marketing.)

NIDHI portal (“One India, One Registration”): All registered homestays are listed on the National Integrated Database of Hospitality (NIDHI).

• By Aug 2025, NIDHI reported 955 rural homestays in Uttar Pradesh and 570 in West Bengal, reflecting the spread of this initiative.  

Financial support: Union Budget 2025–26 introduced collateral-free MUDRA loans for homestays.

• States can also access funds: under the Pradhan Mantri Janjatiya Unnat Gram Abhiyan, State/UTs may get up to ₹5 crore to develop 5–10 homestays per village cluster.
• Budget dedicated ₹2,541 crore for tourism (FY26), including MUDRA loans for homestays.

National strategy: In 2022 the Ministry released a National Strategy for Promotion of Rural Homestays. Its objectives include meeting demand for experiential tourism, creating rural jobs, and promoting inclusive, eco-friendly tourism.

Training and marketing: Government (centre and states) conducts workshops to train hosts in hospitality and hygiene. Tourism departments help homestays with marketing (for example, featuring them on state tourism websites) and connecting them to online travel agencies.

State Schemes:

Kerala’s tourism board partners with the Homestay and Tourism Society (HATS), a non-profit that now represents over 1,000 homestays in the state. HATS trains owners in hospitality and crisis management.

• The 2025 K-Homes scheme (in the state budget) plans to convert vacant houses into tourist accommodations.

Uttarakhand’s Deendayal Upadhyaya Home Stay Yojana offers subsidies (25–33% of costs) and interest support for new homestays in plains and hills.

In June 2025 Uttar Pradesh approved a dedicated Homestay & B&B Policy. It offers financial incentives for approved units.

• UP launched the Ganga Gramin Homestay Yojana, surveying 330 rural homestays in 229 Ganga villages and providing host training.

Other states: Assam’s “Aamaar Alohi” scheme showcases tribal homestays.

• Meghalaya and Manipur promote community-run homestays in rural areas.
• Sikkim allows a high number of homestays per village and assists owners.

Many states integrate homestays into their larger tourism plans (e.g. linking them to pilgrimage and eco-circuits) to spread economic benefits.

Challenges and concerns

Regulatory hurdles: NITI Aayog report found 70% of homestay owners were unaware of available government incentives or face difficulties in accessing them.

• Nearly half of homestay owners depend on agents or middlemen to navigate registrations, overlapping policies create complexity. This “regulatory maze” slows sector growth.

Multiplicity of Policies: Confusion arising from different guidelines at the central level (Incredible India B&B Scheme) and state levels, plus local municipal laws.

Implementation Bottlenecks: Lack of coordination between departments. For example, the Tourism Department promise residential electricity tariffs, but the state electricity board continues to charge commercial rates.

Awareness and capacity: Low awareness of schemes and lack of training limit potential. For example, a study noted that 60% of operators did not know about host classification benefits. Many lack basic hospitality training or language skills.

• NITI Aayog report highlights infrastructure gaps (roads, internet, sanitation) and insufficient government support as key barriers.
• Seasonal tourist flows also mean income can be erratic.

Quality and safety: Homestays vary in quality. Without strict standards, some may offer subpar hygiene or safety.

• Ensuring guest security and property insurance is difficult in informal settings.
• Concern that rapid growth of homestays could strain local resources (water, waste disposal) and impact fragile environments if unregulated.

Market access: Many homestays struggle to reach customers. Few have direct booking sites, relying on Online Travel Agencies (OTAs) that charge high fees.

• Credit availability is limited for upgrades.
• During COVID-19, some rural homestays collapsed due to travel bans, showing vulnerability to external shocks.

Social issues: Introducing tourism in villages can lead to cultural dilution if not managed carefully. There are also questions of equity: ensuring benefits reach women and lower-income families.

• A study of Darjeeling noted that non-local investors and male relatives sometimes profit more, while landless villagers remain on the sidelines.

Way forward for Homestay Tourism

Simplify and harmonize rules: Adopt a unified approval process (e.g. expand the NIDHI portal) so hosts can register once nationally.

• States should align their rules to avoid duplication (as done in Malaysia’s homestay model).

Increase awareness and training: Launch targeted campaigns to inform rural families about homestay schemes and subsidies.

• Provide hands-on training via institutions like hospitality institutes and NGOs (similar to Kerala’s HATS model).

Strengthen quality standards: Enforce minimum infrastructure and service norms (e.g. sanitation, fire safety).

• Encourage voluntary star-rating/classification to build guest trust.
• Indicate certified homestays in official tourism materials.

Promote marketing and connectivity: Develop a national booking portal or app for certified homestays to reduce dependence on OTAs.

• Strengthen tie-ups with airlines, railways, and pilgrimage circuits to include homestays in package tours.  

Encourage PPPs and community involvement: As NITI Aayog recommends, involve private tech and travel companies in promoting homestays.

• Public-private partnerships can fund community centers or digital skills training.
• Organize homestay clusters (e.g. village networks) for joint promotion and resource-sharing.

Focus on sustainability: Emphasize eco-friendly practices. Offer incentives for waste treatment and rainwater harvesting at homestays.

• Highlight homestays as low-carbon options to meet rising demand (94% of tourists seek eco options).

Learn from successes: Replicate strategies that worked abroad. For example, Malaysia’s model shows that sustained government-community collaboration pays off. Adopt similar long-term commitment and monitoring.

Measure and adapt: Collect data on homestay performance (occupancy, revenue, guest feedback) and publish regular reports.

• Use feedback loops (e.g., host associations) to adjust policies.
• Ensure that initiatives include tribal and women hosts to fulfill inclusive tourism goals.

What India can learn from other countries?

Malaysia: Homestay Programme is a public–private partnership: government agencies, state bodies and local communities jointly run it.

• It trained hosts in hospitality, maintained strict village-quality standards, and won a UNWTO award for innovation.

Nepal: It linked homestays to rural development. India can similarly integrate homestays into national poverty-reduction plans, focusing on remote areas.

Japan and Europe: Many regions (e.g. Japan’s farm-stays, Spain’s turismo rural) demonstrate the appeal of authentic home stays.

• India can mimic their use of regional branding and quality certifications.
• European Union also promotes agritourism networks, India could create similar rural tourism associations.

Technology adoption: In the US and Europe, many small lodging owners list on global platforms.

• India should encourage domestic online booking (through Incredible India or partnership with global OTAs) to reach more tourists.
• Digital marketing lessons from Australia’s Airbnb indicate quality photos and storytelling are crucial.

Community ownership: In countries like Thailand and Indonesia, village homestay initiatives are community-managed. Learning from them, India should promote group enterprises (village cooperatives), ensuring profits stay local.  

Conclusion

Homestay tourism represents a sustainable, inclusive model that complements India’s mainstream tourism. It channels tourist spending directly into rural communities and helps preserve local culture.  

Source: The Hindu