India’s travel industry experienced a sharp slowdown in 2025, with revenue rising by just 1% to $41.7 billion, down from 10% growth the previous year. The decline stemmed from airline disruptions and higher fuel prices, which altered consumer demand. Air travel faced challenges due to operational problems at IndiGo and Air India, while road trips gained popularity, increasing demand for car rentals. Despite these shifts, online bookings still grew by 4% to $24 billion (57% penetration) even as offline sales dropped by 2% to $17.8 billion, according to the Phocuswright India Travel Market Essentials 2026 report.
The downturn followed a jet-fuel cost crisis, prompting the Indian government to pledge up to ₹10,000 crore in fuel price-stabilization support. IndiGo, which posted a ₹2,394 crore net loss in fiscal year 2026, ended its widebody leasing experiment. Air India, under CEO Tewolde Gebremariam, trimmed its international routes. Both airlines now operate under new leadership—IndiGo with Willie Walsh and Air India with Tewolde Gebremariam—as higher fares become the norm. A recovery is expected in 2026, with growth projected at 13%, pushing the market to $47.2 billion. After that, expansion is forecast to moderate to 7% in 2027 and stabilize around 8% annually through 2029, reaching $59.1 billion. By then, online bookings are expected to account for 62% of total sales.
AI reshapes travel bookings and planning
Travel companies are adapting by integrating new booking models. Online platforms like MakeMyTrip, Ixigo, Cleartrip, and EaseMyTrip are expanding into each other’s markets, while suppliers such as Air India and IndiGo are entering booking territory previously controlled by OTAs. AI-driven trip-planning tools, developed by startups like 30 Sundays and Scapia as well as established platforms such as MakeMyTrip’s Myra 2.0 and Ixigo’s TARA, are transforming consumer behavior by making bookings faster and more tailored.
For corporate travelers, Trip.Biz, the business division of Trip.com Group, introduced Agent ONE, an AI-powered suite designed to reduce inefficiencies in travel programs. Unveiled at the Transform 2026 conference in Singapore, the tool addresses “travel-program leakage” caused by fragmented legacy travel management companies, digital-only platforms, and in-house programs. The suite includes four AI agents: a Planning Agent that converts natural-language requests into policy-compliant recommendations, a Booking Agent that cuts average booking time from 45 minutes to 2 minutes, an Approval Agent that reduces approval wait times from over an hour to under 3 seconds, and an Insight Agent that generates leakage and savings reports in under 7 minutes, a significant improvement over the roughly week-long process with traditional tools.
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Corporate travel adopts AI efficiency gains
Trip.Biz reports that its unified platform already achieves a 90% service-level agreement compliance rate and maintains customer satisfaction scores above 80% across the Asia-Pacific region. The tool is now available globally, aiming to standardize corporate travel workflows while lowering costs. This shift reflects a broader industry trend toward automation, where AI is increasingly used to streamline approvals, optimize routes, and minimize manual tasks.
Japan’s tourism sector climbs global rankings
Japan’s travel industry is positioning itself for sustained growth. The World Travel & Tourism Council (WTTC), Japan Association of Travel Agents (JATA), and Tourism EXPO Japan (TEJ) signed a Memorandum of Understanding (MOU) to strengthen global tourism collaboration through research, events, and digital initiatives. The agreement follows Japan’s travel sector contributing a record $343.1 billion to GDP in 2025, accounting for 8.1% of the national economy, a 4.6% increase from the previous year, despite overall economic growth of just 1.1%. International visitor spending reached $63.3 billion, an 8.8% rise and 74.9% above 2019 levels, propelling Japan from 15th to 7th in global rankings for international tourism revenue.
Formula 1 races are driving a surge in hotel bookings across Southeast Asia. Consecutive events in Sepang, Malaysia (October 2–4, 2026) and Singapore (October 9–11, 2026) have increased demand by over 200% in Sepang and 80% in Singapore. Travelers are increasingly combining both destinations, extending their stays from one to two days in Malaysia and two to 2.5 days in Singapore. Daily rates have risen by 27% in Malaysia and 44% in Singapore compared to typical October weekends. Trip.com’s Edmund Ong noted that the races are encouraging multi-city, event-driven travel, with longer trips reflecting a broader trend of pairing major sporting events with regional exploration.