Seasonal Rental Opportunities in India

Published on January 17, 2026 and written by Cyril Jarnias

Vacation rentals are no longer a niche market in India. Driven by the explosion of domestic tourism, the rise of digital platforms, and the appetite of middle and upper classes for more personalized stays, holiday homes have emerged as a genuine investment lever. For local owners as well as Non-Resident Indians (NRIs), opportunities abound, but they require a solid understanding of market dynamics, key figures, regulatory constraints, and best practices in management.

A fast-growing market driven by domestic tourism

The first key to understanding vacation rental opportunities in India is the boom in domestic tourism. The domestic tourism market is estimated at around 4.8 lakh crore rupees and is growing at a rate close to 12% per year. Post-pandemic, domestic travel rebounded spectacularly: we’re talking about a 40 to 50% increase in domestic tourism, with 1,731 million Indian tourists recorded in one recent year, and over 2,500 million in another.

This dynamic translates to the national economy: the travel and tourism sector contributes roughly 9.2% of India’s GDP, a higher share than before the health crisis. In 2022, tourism generated tens of billions of dollars in value and several tens of millions of direct and indirect jobs.

The growth isn’t limited to volume: occupancy rates, Revenue per Available Property (RevPAR), and revenue per user are increasing in many destinations. In hotspots like Goa, Manali, or Rishikesh, RevPAR is growing by 5 to 8%, while in major cities, classic residential rental pressure continues to fuel interest in flexible short-term rental formulas.

The shift of travelers towards more personalized experiences

This development is largely due to a profound change in the expectations of Indian travelers—particularly Millennials and Generation Z. More than 85% of families now plan domestic trips, with an average travel budget increase of 15%. Travelers are looking for:

Properties that integrate smart features can, according to some analyses, command a price premium of 15 to 20%. Simultaneously, the “work-from-anywhere” culture has boosted demand for monthly rentals in the range of 25,000 to 50,000 rupees, even in destinations once considered purely tourist.

Supply still underdeveloped relative to demand

Despite this explosion in demand, the structured supply of accommodation remains relatively limited compared to the potential. The country has barely 165,000 hotel rooms, with a pipeline of 35,000 additional rooms over five years—far insufficient for the hundreds of millions of domestic tourists.

The emblematic case of rental villas

The segment of branded rental villas is particularly revealing of current opportunities:

– market value: approximately 329.6 million dollars in 2023;

– projected to nearly 1.38 billion dollars in 2028;

– estimated Compound Annual Growth Rate (CAGR) of over 30%.

The distribution of rental villa revenue illustrates a often counter-intuitive reality: it’s not the major metropolises that concentrate the value, but rather so-called ‘remote’ or peripheral destinations.

Location Category (villas)	Revenue Share (2023)	Share of Villa Count (2023)	Revenue (M USD)
Remote (distant / nature areas)	64%	57.2%	32.9
Tier 2 Cities	15%	19.8%	49.4
Nearby Short Stays	10%	12.1%	36.3
Metropolises	11%	10.9%	210.9

This distribution shows that, even if the average price per unit is often higher in metropolitan areas, market depth and cumulative demand today favor natural, coastal, or mountain destinations.

Significantly higher yields than long-term rentals

One of the most powerful arguments in favor of vacation rentals in India lies in the rental yields.

While classic residential rentals generate an average annual yield of 1.5% to 3% on the property value (slightly more in some dynamic markets), properties operated as vacation rentals frequently achieve net yields of 5 to 9%, or even more in highly touristic destinations.

Examples of quantified yield

Available data allows for easy comparison of models.

Type of Rental	Average Annual Yield (India)	Comment
Long-term Residential	1.5% – 3%	Overall national market
Residential in Goa	4% – 10%	Depending on location and standard
Luxury Villas in Goa	12% – 16%	North Goa, luxury villas / 3BHK
‘Standard’ Vacation Rental	5% – 9% (net)	In established tourist destinations

A concrete example: a premium 3-bedroom villa with an average nightly rate of 18,000 rupees and an occupancy rate of 45%. The gross annual income works out to about 29.55 lakh rupees. After deducting 25% for management fees and 15% for operating costs, the net income is around 17.73 lakh rupees. On an asset valued at 2 crore, this represents a net yield in the order of 8 to 9%, or three to four times the average residential yield.

Comparison with long-term rental

Data shows that, in areas like Calangute (North Goa), an apartment or small house valued at 50 lakh rupees will rent for 25,000 to 30,000 rupees per month on a long-term lease. As a vacation rental, the same property can rent for 8,000 to 15,000 rupees per night during the high season. At equivalent occupancy, the revenue ratio is clear: short-term rentals can generate between 3 and 6 times more gross revenue.

Rates, market prices, and stay typology

Aggregated data from international platforms provides a useful snapshot of prices charged in India for vacation rentals.

Price levels and average length of stay

According to data from searches on KAYAK, the starting price for a vacation rental night in India can go as low as 19 dollars, with occasional opportunities at 5 dollars or less for ‘last-minute’ stays. But averages are higher:

Price Indicator (USD)	Approximate Value
Average price per night – house	109
Average price per night – apartment	159
Average weekly rental price (last 2 weeks)	790
Average monthly rental price (last 2 weeks)	3,386
Average weeknight price (Sunday–Thursday)	167
Average weekend night price (Friday–Saturday)	50
Cheapest night found (over 2 weeks of data)	4
Most expensive night found (over 2 weeks of data)	83

It’s also observed that KAYAK users book an average stay of 17 days in India, which is relatively long for vacation rentals and confirms the interest in extended stays, especially among digital nomads, long-term travelers, or families on extended trips.

Seasonality of prices

Seasonality is very pronounced, both in terms of rates and occupancy:

On a weekly scale, Tuesday often turns out to be the cheapest day to rent, while Saturday is the most expensive. For an investor, this data is central to building a dynamic pricing strategy and adjusting minimum stays, weekly/monthly discounts, and promotional calendars.

Where to invest? Overview of promising destinations

Vacation rental opportunities in India vary strongly by region. The main categories of destinations are fairly clear: coastline, mountain/hill stations, heritage cities, urban hubs, and emerging destinations.

Coastline and beach resorts

Goa remains the absolute icon, with almost continuous demand year-round and a peak from November to February/April. North Goa areas like Calangute, Baga, Anjuna, Candolim, Siolim, or Saligao offer the most spectacular yields, especially for 3–4 bedroom villas with a private pool. South Goa, more tranquil, attracts a family and international clientele seeking tranquility (Varca, etc.).

Other coastal spots are gaining ground:

– Kerala: Kovalam, Varkala, the backwaters of Alleppey, and Wayanad (more nature-oriented);

– Tamil Nadu: Mahabalipuram, Kanyakumari, coasts near Chennai;

– Odisha: Puri, near the Jagannath Temple and the beaches of the Bay of Bengal;

– Maharashtra and Karnataka: Alibaug, Karjat, the Karnataka coast, popular for weekends from Mumbai, Pune, or Bangalore.

Hill stations and mountains

Historic mountain stations (Manali, Shimla, Mussoorie, Nainital, Kufri, Kasauli, Ooty, Lonavala, Munnar, Coorg) attract a varied audience: couples, families, friend groups, remote workers. The high season for these destinations generally spans:

– from April to June, to escape the heat of the plains;

– then around December–January, for those seeking cold weather, sometimes snow.

Heritage, cultural, and spiritual cities

Cities like Jaipur, Udaipur, Rishikesh, Varanasi, Puri, Mysore, or Kochi combine architectural heritage, spirituality, gastronomy, and festivals. Demand is more spread out over the year, with peaks during major religious and cultural festivals.

Metropolises and tier 2 cities

The major metropolises (Mumbai, Delhi, Bangalore, Chennai, Hyderabad, Pune, Kolkata) mainly constitute markets for:

– ‘business travel’;

– extended stays for assignments or training;

– short leisure stays (weekends) for historic or lively neighborhoods.

Tier 2 cities, like Indore, Coimbatore, Kochi, Bhubaneswar, or certain areas of Gurgaon/Noida, are seeing short-term rentals develop rapidly, with already high occupancy rates for vacation rental apartments and sometimes a more flexible regulatory environment.

Identified emerging markets

Data from platform analyses shows strong potential in cities like:

City / Market	Number of Listings (approx.)	Average Occupancy Rate	Average Daily Rate (Rs)
Hyderabad	1,809	42%	3,004
Pune	1,152	46%	2,670
Gurgaon	1,812	33%	2,754
Varanasi	1,055	42%	3,088
Noida	1,108	33%	2,921
Greater Noida	361	33%	2,253
Vrindavan	248	41%	2,587
Indore	254	36%	2,253
Kozhikode	113	35%	3,839
Faridabad	112	34%	2,587

These markets are described as booming, with relatively ‘flexible’ regulation, decent occupancy rates, and average daily rents allowing for an estimated short-term rental yield around 12.3% in certain arbitrage models (with permissible subletting)—subject, of course, to respecting co-op rules and local laws.

Traveler profiles and expectations: adapting the offering

Demand for vacation rentals in India is far from homogeneous. The ability to target a precise segment and design a suitable product often makes the difference between a moderately profitable property and a cash-flow machine.

Indian families and upper-middle classes

Families typically look for: the well-being and safety of their members, as well as environments conducive to their fulfillment. They also prioritize leisure activities, education, and health.

– good value for money;

– a well-equipped kitchen;

– multiple bedrooms and bathrooms;

– proximity to main attractions;

– a safe and child-friendly environment.

Young professionals, Millennials, and Gen Z

This demographic—very present on Airbnb—prioritizes:

– design, ‘Instagrammable’ style;

– very high-speed Wi-Fi;

– spaces to work (desk, ergonomic chair);

– local experiences (cooking, guided tours, workshops);

– unique accommodations (cabins, tents, houseboats, treehouses, lofts).

According to some data, 90% of first-time Airbnb bookings in India are made by Gen Z travelers. For an owner, this is a strong signal: tomorrow’s stays will be won online, through image, reviews, and digital experience.

NRI, expatriates, and international clients

NRI investors represent a significant part of the owner clientele, but also a notable segment of traveler clientele: they look for ‘home-like’ accommodations for long family visits, as well as properties to house their relatives.

Their sensitivities are particular:

– importance placed on professional remote management;

– need for legal security (contracts, taxation, income repatriation);

– preference for properties in premium destinations (Goa, Kerala, Rajasthan, major cities).

Many NRIs use specialized remote real estate asset management companies, which handle the entire cycle: tenant verification, lease drafting, collection, maintenance, regulatory compliance.

Investing: amounts, costs, and financing plan

Getting into vacation rentals in India means dealing with several layers of costs: the acquisition price, transaction fees, furnishing, upgrades, and working capital.

Entry costs

For an apartment or small villa in an established tourist destination, the rough order of magnitude is as follows:

– purchase price: often between 50 lakh and 2 crore rupees, depending on location (e.g., 60–120 lakh in Manali, 50–100 lakh in Coorg, 70–140 lakh in Udaipur, 45–90 lakh in Munnar, 80–150 lakh in South Goa);

– initial down payment: 20–25% of the price (i.e., 10–30 lakh, depending on the property), accompanied by a home loan covering 70–80%;

– registration fees, duties, and legal fees: 8–10% of the property value;

– furnishing and equipment: 3–5 lakh for a 2BHK, 3–5 lakh also estimated for a 3BHK depending on the desired finish level.

Recurring expenses

Typical annual expenses for a vacation rental property in India include:

Cost Item	Order of Magnitude
Outsourced Management	12% – 30% of rental income (often 15–25%)
Routine Maintenance	2% – 3% of property value / year
Utilities (electricity, water, internet)	3,000 – 8,000 Rs / month
Insurance	15,000 – 25,000 Rs / year
Platform Commissions / Marketing	3% – 5% of bookings (outside major OTAs)
Local taxes, co-op charges	Depending on city and building type

Operators who opt for fully outsourced management through specialized companies (StayVista, SaffronStays, Elivaas, Madvik Retreat, OYO Townhouse, etc.) pay higher commissions, but gain peace of mind—a key factor for NRIs and geographically distant investors.

Taxation and incentives

Vacation rental income is taxed in India under ‘income from house property’ or, depending on the operational model, as ‘business income’. A few key structuring points:

For owners who personally use their vacation home for more than 180 days a year, the tax authorities generally consider the property as owner-occupied, which changes the treatment of rental income (no deduction on a ‘notional’ rent but also no tax on a theoretical rental value).

Regulatory framework: a patchwork to master

India does not have a single national law explicitly governing vacation rentals. Owners must navigate a composite environment mixing:

– State regulations (homestay policies, Bed & Breakfast);

– Municipal regulations (trade licenses, safety standards);

– Co-operative society / Resident Welfare Association (RWA) rules;

– Tax laws (Income Tax, GST, TDS);

– Sometimes, older texts like the Incredible India Bed & Breakfast Establishment Act of 2007.

Examples by State

A few examples illustrate the diversity of requirements:

Other states like Tamil Nadu, Himachal Pradesh, or Uttarakhand also offer homestay or guesthouse schemes, with an underlying aim to formalize a long-informal sector.

Common obligations

Some points are common to most jurisdictions:

Non-compliance with these provisions can lead to penalties: fines, administrative closure, activity blocking, or even seizure in extreme cases. In some cases, courts have upheld the right of co-operative societies or resident associations to prohibit commercial activities in strictly residential buildings.

Operational management: from Indian hospitality to technology

The success of a vacation rental project in India rests on a subtle balance between traditional hospitality—deeply rooted in local culture—and modern management, heavily equipped with tools.

“Atithi Devo Bhava”: a demanding culture of welcome

The Indian cultural principle “Atithi Devo Bhava”—“the guest is God”—still permeates how hospitality is conceived in the country. Local hosts, especially in homestays, take pride in:

– personally welcoming travelers;

– offering drinks and food upon arrival;

– paying attention to details (cleanliness, comfort, generous portions, availability).

Digital tools and automation

To overcome constraints of scale and distance, Indian owners are turning en masse to platforms and management software:

– OTAs and portals: Airbnb, Vrbo, Booking.com, MakeMyTrip, OYO, Homestay.com, India Holiday Rentals, HolidayRentals.co.in, etc.;

– management software (PMS, channel managers): Guesty, Hostfully, Rentals United, Hospitable, Lodgify, Tokeet, etc.;

– Dynamic pricing: PriceLabs, Beyond Pricing;

– Guest communication: automated messaging, digital check-in, digital guidebooks;

– Marketing: websites on Squarespace or Wix, Google Ads campaigns, SEO and destination content, social media (Instagram, Facebook, YouTube, TikTok).

Solutions like Guesty, for example, allow centralizing dozens or even hundreds of listings across more than 60 booking channels, synchronizing calendars, processing payments, and drastically reducing the risk of double bookings. Testimonials from operators indicate that such tooling can:

Outsourcing for remote investors

For investors based abroad or in another region, remote management remains a challenge: coordinating housekeepers, contractors, guest reception, managing emergencies. Hence the rise of turnkey management companies, including those specializing in NRI clientele, which:

– select and vet tenants;

– prepare leases and addendums;

– collect and track rents online;

– oversee work and maintenance;

– ensure tax and regulatory compliance.

Combined with periodic visits (physical or virtual), smart lock systems, and video surveillance (respecting privacy), these solutions allow managing a vacation rental in India while living in Dubai, London, or New York.

Risks, limitations, and factors for caution

The outlook is promising, but it would be misleading not to address the inherent risks of vacation rentals.

Seasonality and income volatility

The most profitable destinations are also those where seasonality is most pronounced. In Goa, a villa can be 80–90% full from November to March, then drop to 30–40% occupancy from June to September. Similarly, hill stations see their performance concentrated in a few summer and year-end months.

The consequence is twofold:

– need to build a solid cash reserve to get through the low season;

– importance of a dynamic pricing model to capture residual demand during off-peak periods (discounts, special offers, long-term stays).

Saturation and competition

Hotspots like North Goa, Manali, or Rishikesh see new properties entering the market each year, with annual supply growth around 8% in the country. Eventually, some micro-markets may experience:

– downward pressure on prices;

– a hardening of service requirements (professional cleaning, high-end amenities);

– slightly eroding occupancy rates if demand doesn’t follow the same slope.

Therefore, the investor must reason at the level of micro-location (neighborhood, road access, view, proximity to the beach or a site of interest) and not just the state or city.

Regulatory complexity and co-operative societies

The initial regulatory ambiguity around Airbnb and short-term rentals is gradually diminishing, but we are witnessing a rise in:

– new tourist registration obligations in some states;

– increased scrutiny of accommodations hosting foreigners (Form C);

– growing resistance from some residential co-operative societies regarding frequent visitor traffic.

– the co-operative society’s bylaws explicitly permit short-term rentals, or at least do not prohibit them;

– the builder has not included a restrictive clause in the sale documents;

– the municipality does not plan unfavorable zoning.

Upgrading costs and traveler expectations

Indian travelers are becoming increasingly demanding. The era of ‘rustic but cheap’ accommodations is fading, especially in the mid and high-end segments. Customers want:

– a stable and fast internet connection;

– effective air conditioning (in the plains and by the sea);

– comfortable bedding, spotless bathrooms;

– fully equipped kitchens for multi-day stays;

– perceived high security (locks, lighting, neighborhood).

This alignment with international standards requires regular investments and constant vigilance on maintenance. Neglecting a small flaw can result in a negative review, which has an immediate impact on booking rates.

How to maximize opportunities: some guidelines

Facing this rich and complex landscape, how can an investor or owner practically leverage the vacation rental opportunities in India?

1. Choose your segment and location with precision

Rather than a general approach (‘invest in Goa’), it’s wise to:

– define a clear target: couples, urban families, digital nomads, groups, wellness retreats, etc.;

– cross-reference this target with a destination type: lively beach, quiet mountain, heritage city, metropolitan periphery, etc.;

– analyze a few micro-markets in detail: rates, occupancy rates, regulation, accessibility, competition.

Occupancy and average nightly price data in cities like Hyderabad, Pune, Varanasi, or Vrindavan show, for example, that non-beach markets can offer very attractive return/risk profiles, with less saturation than classic seaside spots.

2. Think of the property as a ‘hospitality product’, not just real estate

A high-performing vacation home in India isn’t just well-located square footage. It is:

Listings that combine these elements, with well-optimized descriptions and quality photos, get more bookings and better reviews, which in turn strengthens their algorithmic visibility.

3. Fully leverage the technology lever

Figures show that a majority of Indian tenants and travelers now use apps and online platforms to find their accommodation. Owners who:

– list their property on multiple OTAs (Airbnb, Booking.com, Vrbo, MakeMyTrip);

– create a direct booking website;

– implement a channel manager and dynamic pricing software;

– automate responses, check-in messages, and review requests;

benefit from a real competitive advantage. Some studies estimate that simply using professional photos can increase the booking rate by 40%, while algorithmic revenue management can boost revenue by 20 to 35%.

4. Ensure compliance from the start

Rather than waiting for a reaction from authorities or neighbors, it’s safer to: take personal initiatives to resolve any potential problems.

This approach reduces the risks of shutdowns, tax surprises, or legal disputes, which can destroy the profitability of a project even if it’s well-located.

5. Diversify revenue sources

Beyond the nightly rate, many vacation homes in India take advantage of additional services:

– airport/station transfers;

– catering (breakfasts, on-site meals, private chef);

– custom activities (guided tours, safaris, yoga, adventure sports);

– small-scale private events (retreats, workshops, birthdays).

These services, charged as extras, improve the margin without requiring additional real estate investment. They also strengthen guest satisfaction and thus the rate of return visits.

Conclusion: considerable potential, provided you act professionally

The vacation rental opportunities in India are today among the most interesting in the Asian market: double-digit growth in domestic tourism, marked preferences for alternative accommodations, yields significantly higher than long-term rentals, sustained real estate appreciation in major tourist hubs.

But this potential is not an automatic ‘El Dorado’. It comes with:

– sometimes extreme seasonality;

– a fragmented and evolving regulatory framework;

– increasingly demanding travelers in terms of quality, safety, and experience;

– intensifying competition in the most popular destinations.

– a fine-tuned selection of location and target customer segment;

– a thoughtful investment in furnishings, technology, and branding;

– strict adherence to local laws, co-op rules, and safety standards;

– structured management, either internalized with advanced tools or outsourced to specialized operators.

In a country where the guest is still considered a form of divinity, offering a memorable stay is both a tradition and a formidable economic lever. For those who know how to combine a culture of welcome with management rigor, vacation rental opportunities in India are set to remain, for many years to come, one of the most dynamic drivers of real estate investment.