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Rethinking Homestays:
Navigating Policy Pathways 1
NAVIGATING POLICY
PATHWAYS
Rethinking Homestays: copyright@ NITI Aayog, 2025
Every care has been taken to provide correct and up to date information with references.
However, NITI Aayog shall not be liable for any loss or damage whatsoever, including incidental
or consequential loss or damage, arising out of, or in connection with any use of or reliance on
the information in this document. Readers of this document should be aware that the document
may be subject to revisions.
About the Photographs
The photos are taken by the researchers or from publicly available domains.
Suggested Citation
NITI Aayog, (2025). Rethinking Homestays: Navigating Policy Pathways. June, 2025 Rethinking Homestays:
Navigating Policy Pathways
We are grateful to the research and analysis team behind the report. From the Indian School of Public
Policy, we thank Dr Imran Amin, Associate Professor and Shri Himansh Raj Bhatia, Research Associate. We
also thank the Internet and Mobile Association of India (IAMAI) and their distinguished experts, Shri Nilotpal
Chakravati and Shri Divyaish Srivastava, for their technical and analytical support in the creation of this
report.
Gratitude and deep appreciation is extended to Shri Jayant Singh, Former Programme Director (Tourism
and Culture), Shri Amit Bhardwaj, Deputy Adviser (Tourism and Culture), Shri Manavendra Jain, Consultant
(Tourism and Culture), Divya Nandini Consultant (Tourism and Culture) and Ms. Priyadharshini Paramasivam,
Young Professional (Tourism and Culture), Mayank Pathak (Intern) for their enthusiastic contributions,
coordination and hard work at all stages of this report. Rethinking Homestays:
Navigating Policy Pathways iii Rethinking Homestays:
Navigating Policy Pathways v
TABLE OF CONTENTS
List of Abbreviations��vi
List of Figures��vii
Executive Summary��ix
1. Evolving Landscape of Tourism��2
1.1 Introduction��2
1.2 State of Travel and Tourism in India��3
1.3 Changing Traveller Preferences��4
1.4 Growth of the Alternative Accommodation Sector��5
2. Alternative Accommodations in India: a Unique Cultural and Economic Proposition��8
2.1 Alternative Accommodations: Showcasing Incredible India and Embodying
Atithi Devo Bhava��8
2.2 Alternative Accommodations in India: Multiplier Effect��9
2.3 Alternative Accommodations: Towards Sustainable Tourism��10
3. Landscape of Alternative Accommodations in India�� 12
3.1 Regulatory Landscape��12
3.2 Homestay Ecosystem Development Across States��26
3.3 Challenges faced by Operators, Regulators and Community Members��27
3.4 Opportunities for Homestays��33
4. Proposing Recommendations��34
4.1 Best Practices from Across India on Various Components of Regulation��34
4.2 Towards a Model Policy Framework��35
5. Conclusion��38
Annexure ��38
Bibliography��40 Rethinking Homestays:
Navigating Policy Pathways vi
LIST OF ABBREVIATIONS
AbbreviationDescription
GDPGross Domestic Product
B&BBed and Breakfast
WTTCWorld Travel and Tourism Council
EIREconomic Impact Research
HMLHarmonised Master List
UNWTOUnited Nations World Tourism Organisation
GenGeneration
MoTMinistry of Tourism
OTAOnline Travel Aggregators
CAGRCompound Annual Growth Rate
UDANUde Desh Ke Aam Nagrik
GOIGovernment of India
SDGSustainable Development Goals
NIDHINational Integrated Database of Hospitality Industry
AGAYAtithi Greh Awas Yojana
NOCNo Objection Certificate
MOUsMemorandum of Understanding
HATSKerala Homestay and Tourism Society
DDUGAYDeen Dayal Upadhya Grih Awas Yojana
EoDBEase of Doing Business
USPUnique Selling Proposition
IECInformation, Education and Communication
LIULocal Intelligence Units
MSMEMicro, Small and Medium Enterprises
IATOIndian Association of Tour Operators
TAAITravel Agents Association of India
DTPCDistrict Tourism Promotion Council Rethinking Homestays:
Navigating Policy Pathways vii
LIST OF FIGURES
Figure No. DescriptionPage
1.1 Homestay Sectors Across the World: Size and Growth Projections 6
3.1 Study areas for On-ground surveys12
3.1.1A Registration Road Map - Uttarakhand14
3.1.1B Registration Road Map - Uttar Pradesh15
3.1.1C Registration Road Map - Kerala15
3.1.1D Registration Road Map - Goa16
3.1.4
Registration and classification process under Central Government
Guidelines for Homestays and B&Bs
17
3.1.5 List of prerequisite documents for application across states 18
3.1.6 Registration approval committee across states19
3.1.7 Verification Committee across states20
3.1.8 Compliances during operations21
3.1.9 Validity and Renewal within State Guidelines22
3.1.10 List of Documents Required to Apply for the Municipality Scheme 23
3.1.11 Verification Committee across states23
3.1.12 Compliance of the municipality scheme24
3.1.13 Validity and Renewal of License by Municipality24
3.1.14 Incentive based scheme from Uttarakhand and Goa25
3.3.1 Regulatory Labyrinth Encountered by Operators28
3.3.2 Awareness and Access to Incentive by Operators29
3.3.3 Awareness and Participation in Capacity Building Initiatives 30
3.3.4 Government Assistance in Marketing Homestays30
3.3.5 Awareness and Utility of Classifying Homestay Operators31 Rethinking Homestays:
Navigating Policy Pathways viii Rethinking Homestays:
Navigating Policy Pathways ix
EXECUTIVE SUMMARY
Following the economic slowdown during the pandemic, the tourism sector in India has
undergone a major recovery, driven significantly by booming domestic tourism and accompanied
by trends such as a rising propensity for travellers to choose experiential travel and less explored
destinations. As the sector continues on its growth path, strong future prospects can be unlocked
by tapping into the opportunities presented by these trends. Alternative accommodation such
as homestays is one such opportunity that has immense economic potential, and an increasing
ability to supplement the massive growth in India’s tourism sector.
Homestays offer tourists a different hospitality experience that is thoroughly localised and
promotes immersive cultural experiences. With its rich culture and diversity, India’s tourism
landscape is an ideal ground for the homestay model to thrive and complement the traditional
accommodation sector, adding capacity to meet the increasing demand for rooms. While the
homestay model has had some success in India, particularly in certain states such as Goa and
Kerala, there is an opportunity to apply these learnings and global best practices across the
country to enable the next stage of growth of the homestay sector and provide a fillip to micro-
entrepreneurship in tourism and hospitality.
For tourism to truly be a driver in achieving the Government’s vision for a Viksit Bharat by 2047,
an enabling regulatory framework for homestays is an essential step. Following the introduction
of the Incredible India Bed & Breakfast by the centre, 18 states in India have formulated their
guidelines/schemes for homestays, offering various fiscal, non-fiscal, tax, marketing, and
capacity-building incentives and focusing on diverse purposes from livelihood promotion to rural
tourism development.
Highlighting the employment-led growth potential of the sector, the 2025 Budget increased the
allocation on tourism development. Homestays were further given financial assistance through
their inclusion in the PM MUDRA Yojana loans.
However, despite the guidelines’ attempt to equalise homestay standards, the current regulatory
environment for homestays is marked by grey areas, which leads to disgreements between
regulators, homestay operators and community members who are tangentially engaged in the
homestay-led economy. Disparities in regulatory requirements to officially register and operate a
homestay and a lack of clarity regarding these requirements between various stakeholder groups
present a significant hurdle to the sector’s growth.
Alongside the on-ground challenges around onerous registration processes involving multiple
stakeholders and process delays, the sector also offers compelling opportunities. The homestay
sector has a multiplier effect on the economy by creating an ecosystem for tourism-allied services
to grow, thereby generating additional livelihood opportunities for local communities. It also
provides an opportunity to nurture India’s impressive diversity of local cultures and showcase
them around and beyond the country through travellers’ experiences.
Regulatory frameworks must thus be streamlined in a way that addresses the existing challenges
and meets the envisioned opportunities. Our collective goal must be to take a forward-looking
approach and work on enabling light-touch structures that help homestays become the next step
in India’s incredible tourism journey and potential. Capacity building, including for regulators, and
incentivisation through subsidies, non-commercial rates on utilities, and improved ease of doing
business are among aspects that will be integral to such structures. This report aims to advance
a framework that states can adopt to harmonise regulations and establish an inclusive homestay
ecosystem, thus promoting sustainable tourism growth. Rethinking Homestays:
Navigating Policy Pathways 1 Rethinking Homestays:
Navigating Policy Pathways 2
1. EVOLVING LANDSCAPE OF TOURISM
1.1 Introduction
India’s travel and tourism sector has witnessed significant growth in the 21st century, emerging
as a crucial driver of economic development, employment, and cultural exchange. This growth
has been fuelled by a surge in domestic and international travellers, rising disposable incomes,
and increased accessibility to diverse destinations. However, the COVID-19 pandemic halted
this momentum, causing an unprecedented crisis in the industry. The travel restrictions imposed
globally led to one of the steepest tourist declines, affecting millions dependent on the sector.
Despite this setback, India’s tourism industry has demonstrated remarkable resilience, bouncing
back with a strong recovery, primarily driven by domestic travel
1
. Future projections indicate that
this revival will continue at an accelerated pace, further solidifying the industry’s role in India’s
economic aspirations.
Even as the sector regains stability, significant transformations are underway. Changing traveller
preferences, evolving tourism sub-sectors, and infrastructural challenges have altered the
dynamics of the industry. A generational shift is reshaping the motivations behind travel, with new-
age travellers seeking immersive, personalised, and sustainable experiences
2
. Simultaneously,
alternative forms of tourism, such as eco-tourism, medical tourism, spiritual tourism, and adventure
tourism, are gaining prominence, demanding a diversified accommodation landscape. While the
hospitality industry has traditionally relied on hotels and resorts, the increasing demand for more
flexible and locally integrated lodging options has led to the rapid expansion of homestays and
bed & breakfasts (B&Bs). These accommodations provide an opportunity for travellers to engage
more deeply with local communities while offering a cost-effective, culturally immersive, and
sustainable lodging option.
Despite their increasing popularity, homestays and B&Bs operate within an evolving regulatory
framework that lacks uniformity across different states. While some states have introduced
policies and incentive programs, others have yet to develop a structured regulatory approach. The
sector remains nascent, requiring policy support, formal recognition, and streamlined regulation
to ensure growth without excessive compliance burdens. The challenge lies in establishing a
framework that balances ease of business for hosts with consumer safety, quality assurance, and
legal compliance. Rethinking Homestays:
Navigating Policy Pathways 3
This report examines the regulatory landscape governing homestays and B&Bs across key
Indian states, analysing the sector’s growth potential, challenges, and policy gaps. It presents a
comparative assessment of state-level policies, evaluates insights from on-ground interactions,
and outlines recommendations for a more inclusive, efficient, and growth-driven framework that
unlocks the full potential of alternative accommodation models in India.
1.2 State of Travel and Tourism in India
The World Travel & Tourism Council’s (WTTC) 2024 Economic Impact Research (EIR) underscores
India’s strong post-pandemic recovery, with domestic tourism playing a pivotal role in revitalising
the industry. The sector’s contribution to the economy has surged, and its role in employment
generation remains substantial.
In 2024, India’s travel and tourism sector contributed `21.15 Lakh Crore to the economy, reflecting
a 21% increase from 2019. Over the next decade, this figure is expected to reach `43.25 Lakh
Crore, constituting 7.6% of the country’s GDP. Employment in the sector has also expanded, with
4.325 crores individuals currently engaged in tourism-related jobs, making up one in every eleven
jobs in India. By 2034, the workforce in this sector is expected to increase to 6.3 crores.
3
Tourist spending patterns further highlight the sector’s resilience. In 2024, domestic tourists
spent `160 Lakh Crore, nearly 25% higher than 2019 levels, and this figure is expected to almost
double to `28.70 Lakh Crore by 2034. Similarly, international tourist spending surpassed pre-
pandemic statistics in 2024, reaching `2.85 Lakh Crore, with projections estimating an increase
to `4.07 Lakh Crore by 2034.
Furthermore, the Draft National Tourism Policy 2022 aims to elevate India into the top five global
tourism destinations by 2030, with ambitious targets for increasing international tourist arrivals,
domestic visits, foreign exchange earnings, and employment opportunities.
4
Recognising the sector’s potential as a key driver of employment-led growth, the Government
of India has significantly increased budget allocations for tourism development. The Ministry of
Tourism’s budget has risen to `2541 crore. The government’s efforts include developing the top Rethinking Homestays:
Navigating Policy Pathways 4
50 tourist destinations, focusing on public-private partnerships, providing fiscal support to the
homestay sector through MUDRA loans, and classifying hotels under the Harmonised Master List
(HML) to encourage investment.
5

1.3 Changing Traveller Preferences
The global tourism landscape is undergoing a fundamental transformation, with travellers seeking
experiences that go beyond conventional leisure trips. Social media has emerged as a powerful
influence, shaping travel decisions and destination choices.
6

Across different age demographics, travel motivations and booking behaviours vary significantly.
Gen X (45-60 years old) prioritises safety, family-oriented travel, and relaxation, relying heavily
on travel agencies and word-of-mouth recommendations. On the other hand, millennials (29-44
years old) seek exploratory experiences, cultural engagement, and hybrid work-leisure travel,
making them the most adaptable to alternative accommodations. Gen Z (13-28 years old) favours
adventurous and immersive travel, heavily relying on peer recommendations and online reviews.
7 Rethinking Homestays:
Navigating Policy Pathways 5
Another emerging trend is the shift towards longer, purpose-driven travel. In India, 87% of travellers
are interested in extended trips to experience new destinations fully. The rise of “workcations”
and digital nomadism has increased demand for affordable, long-term accommodations, further
boosting the homestay segment. Additionally, offbeat and rural tourism has gained popularity,
with 69% of travellers preferring lesser-known destinations over mainstream tourist spots.
8
Sustainability is also at the forefront of modern travel choices. A 2021 study found that 72%
of Indian travellers prioritise supporting local communities through tourism, while 94% actively
seek eco-friendly travel options. These shifting preferences have paved the way for alternative
tourism models, including eco-tourism, wellness tourism, and rural homestays, which align with
India’s broader tourism development goals.
9
1.4 Growth of the Alternative Accommodation Sector
Despite the rapid growth in tourism, India faces a significant shortfall in accommodation
infrastructure, particularly in peak seasons. The Ministry of Tourism estimates a shortage of
over 2 lakh hotel rooms, making alternative accommodations a critical solution to bridge the
gap. While new hotel developments require high capital investment, regulatory approvals, and
land availability, homestays and B&Bs offer a low-cost, scalable alternative that can expand
accommodation capacity without additional infrastructure pressure.
Homestays serve as an ideal lodging option in multiple contexts:
» Remote and Offbeat Locations – Providing accommodation in areas with scarce traditional
hotels.
» Tier-II and Tier-III Cities – Supporting the rise of new hubs for business and tourism
complemented by the push for infrastructure development through schemes such as PM
GATI SHAKTI and UDAN.
» Sustainable Travel Segments – Aligning with eco-conscious and community-driven tourism.
»Long-Term Stays – Catering to digital nomads, professionals, and slow travellers. Rethinking Homestays:
Navigating Policy Pathways 6
The rise of Online Travel Agencies (OTAs) such as Airbnb, MakeMyTrip, and Booking.com has
significantly expanded the alternative accommodation segment, making it more accessible
and structured through seamless digital booking systems, user reviews, and secure payment
gateways. This surge in digital adoption has driven strong growth in this market, with promising
prospects.
According to a report by Cognitive Market Research, the size of the homestay market in India
in terms of sales revenue was `4,722 crores in 2024, with a projected CAGR of 11.0% between
2024-2031.
10
This expansion is reflected in the success of major OTAs. MakeMyTrip’s homestay
segment now accounts for 10% of hotel room night sales.
11
On the supply side, MakeMyTrip has
expanded its homestay portfolio to over 1 Lakh rooms.
12
Meanwhile, Booking.com continues
to experience strong momentum in the alternative accommodation sector, with global listings
reaching 79 lakhs by Q3 2024.
13

Airbnb has also demonstrated significant growth in India. According to Airbnb, nights booked
by Indian guests in the domestic market grew by over 30% in the first three quarters of 2024
compared to the same period in 2023.
14
Additionally, a study by Oxford Economics on Airbnb’s
economic impact in India found that Airbnb contributed `7,200 crores to the country’s Gross
Domestic Product and supported over 85,000 jobs in 2022 alone. Airbnb guests also spent
`6400 crores in India, more than doubling 2019 levels.
15

8
According to a report by Cognitive
Market Research, the size of the
homestay market in India in terms of
sales revenue was ₹4722 crores in
2024, w ith a projected CAGR of 11.0%
between 2024-2031 . This expansion
is reflected in the succes s of major
OTAs . MakeMyTrip’s homestay
segment now accounts for 10% of
hotel room night sales. On the supply
side, MakeMyTrip has expanded its
homestay portfolio to over 100,000
rooms. Meanwhile, Booking.com
continues to experience strong
momentum in the alternative
accommodation sector, with global
listings reaching 79 lakhs by Q3
2024.
Airbnb has also demonstrated
significant growth in India. According
to Airbnb, nights booked by Indian
guest s in the domestic market grew
by over 30% in the first three
quarters of 2024 compared to the
same period in 2023. Additionally, a
study by O
xford Economics on
Airbnb's economic impact in India
found that Airbnb contributed ₹7,200
crores to the country’s Gross
Domestic Product and suppo rted
over 85,000 jobs in 2022 alone.
Airbnb guest s also spent ₹ 6400
crores in India, more than doubling
2019 levels .
UNLOCKING THE ECONOMIC POTENTIAL OF HOMESTAYS: A REGULATORY LANDSCAPE ANALYSIS 2025
4
9
11
12
1315
14
10
Figure 1: Ho mestay Secto rs Across the Wo rld: Size and Gr owth Projectio ns
16
Figure 1.1: Homestay Sectors Across the World: Size and Growth Projections
16
Rethinking Homestays:
Navigating Policy Pathways 7 Rethinking Homestays:
Navigating Policy Pathways 8
2. ALTERNATIVE ACCOMMODATIONS IN INDIA: A UNIQUE
CULTURAL AND ECONOMIC PROPOSITION
2.1 Showcasing Incredible India and Embodying Atithi Devo Bhava
In 2002, the Government of India launched the Incredible India campaign to position the country
as a premier global travel destination by showcasing its rich cultural heritage, diverse landscapes,
and unique experiences.
17
This campaign aimed to redefine India’s image on the world stage,
emphasising its unparalleled diversity and authentic charm. To further complement this vision
and meet the growing demand for immersive and experiential travel, the Ministry of Tourism also
introduced the Incredible India Bed & Breakfast/Homestay Establishment guidelines in 2006,
which were revised and updated in 2018.
18
These guidelines sought to provide travellers with
authentic, community-driven experiences by enabling them to stay with local families and explore
India’s vibrant tourism landscape. This initiative also aligned with the ethos of Athithi Devo Bhava,
a campaign launched in 2005, reflecting India’s long-standing cultural value of treating guests
as gods.
19
By promoting meaningful and sustainable interactions between travellers and local
communities, the Incredible India Bed & Breakfast/Homestay Establishment guidelines aimed to
enhance the tourist experience and provide economic opportunities for local communities.
Further, with over 65% of India’s population under age 35 as of 2020, there has been a notable shift
towards more immersive, meaningful travel experiences that traditional accommodation options
often fail to provide to this demographic. Alternate accommodations—such as homestays—have
emerged to fill this gap by offering personalised, culturally rich experiences, allowing travellers
to engage deeply with local communities, traditions, and cuisines. This shift has been further
accelerated by the widespread penetration of smartphones, affordable data plans, and the rise
of online travel aggregators (OTAs).
20
These technological advancements have made it easier
for travellers to discover and access unique stays, driving the popularity of homestays and other
alternative accommodation options. Rethinking Homestays:
Navigating Policy Pathways 9
Beyond enriching the visitor experience, homestays ensure tourism benefits flow directly to
grassroots communities. By encouraging travellers to engage with artisans, explore traditional
crafts, and support small businesses, homestays help sustain local economies while preserving
cultural heritage. They also act as catalysts for community-based tourism, fostering collaboration
among families within villages to collectively host guests, generate shared incomes, and create
sustainable livelihoods.
2.2 Enabling Multiplier Effect
The alternative accommodation sector stands apart from other travel and tourism sub-sectors
due to its decentralised nature and strong multiplier effect. Unlike traditional hospitality models,
these small-scale units generate revenue distributed across a broader population, ensuring more
inclusive economic benefits. As estimated by the Tourism Satellite Account of India,
21
the homestay
sector, in particular, is stated to have an estimated employment multiplier of 4.38 and an output
multiplier of 2.04, which is the highest among sub-sectors of tourism. Accordingly, the growth in
the homestay sector also significantly impacts other manufacturing sectors like processed foods,
and trade. However, its most significant impact is on agricultural products, given that a per unit
increase in the homestay sector output has a 0.42 unit increase in agricultural products.
22
Research from the field also shows that homestays account for a sizable share of the spending
that supports local businesses and livelihoods, thereby strengthening community-based tourism.
The sector enables local groups to pool resources, manage sustainable tourism funds, and invest
in infrastructure and sanitation improvements. This fosters better living conditions, reduces
outmigration, and regenerates fading cultural practices. By unlocking local communities’ untapped
cultural and social capital, homestays serve as a powerful catalyst for equitable economic growth
and sustainable livelihoods. Rethinking Homestays:
Navigating Policy Pathways 10
2.3 Promoting Sustainable Tourism
In addition, as responsible and sustainable tourism gains momentum, alternative accommodations
increasingly align with India’s broader goals of cultural preservation and economic empowerment.
They are also seen to specifically contribute to the achievement of the 2030 Agenda for
Sustainable Development adopted by all United Nations Member States in 2015, particularly
SDG1 (No Poverty), SDG5 (Gender Equality), SDG8 (Decent Work and Economic Growth), SDG11
(Sustainable Cities and Communities), and SDG13 (Climate Action)
.
23
Given that women have
been actively involved in the operation of homestays, it has also played a transformative role in
their lives by empowering them to attain entrepreneurial status.
24
By blending modern traveller
preferences with traditional hospitality, they enhance India’s tourism landscape and create lasting
social and economic benefits for local communities. Rethinking Homestays:
Navigating Policy Pathways 11 Rethinking Homestays:
Navigating Policy Pathways 12
3. LANDSCAPE OF ALTERNATIVE ACCOMMODATIONS IN INDIA
3.1 Regulatory Landscape
Generally, across states and central governments, homestays are categorised under Category IV,
which means that there are other types of accommodation than the usual tourism units, such as
hotels, guest houses, etc. In some states, local governance bodies like the Nagar Nigam and the
Panchayats have also issued guidelines for other types of accommodation units within Category
IV, like paying guests, guest houses and lodges.
25
To incentivise and promote homestays, state
governments have promulgated schemes for specific population groups or geographical areas
for livelihood promotion, tourism development, and women empowerment. In some cases, where
no specific policies/schemes for homestays exist, they are featured in the state’s tourism policy.
State HomestayB&BGuest House
Uttarakhand
Up to 6 rooms
Family should reside
in the premises
Up to 6 rooms.
Family should reside
in the premises
Goa
Up to 6 rooms,
Family should reside
in the same house
Up to 6 rooms,
Caretaker should
reside in the
premises
Up to 6 rooms,
No requirement for residing
Kerala
Up to 6 rooms,
Family should reside
in the same house.
Residence certificate
or Ration card are
required as proof of
residence.
Up to 6 rooms;
Manager, Chef &
Helper are to be
resided if the family
does not live in
the premises. This
is categorised as
‘serviced villas.
Up to 6 rooms,
Family residing is not
mandatory.
Uttar
Pradesh
No requirement for
residing
Under 5 rooms
No requirement for
residing
Under 5 rooms
No requirement for residing
Under 5 rooms
Table 3.1: Different types of Accommodation within Category D/Others
To understand the regulatory practice at the ground level, our team visited 8 districts across four
states (Uttar Pradesh, Uttarakhand, Kerala and Goa) to speak to homestay operators, regulators,
and community members. Rethinking Homestays:
Navigating Policy Pathways 13
4
1
To understand the regulatory practice at the ground level, our team visited 8
districts across four states (Uttar Pradesh, Uttarakhand, Kerala and Goa) to speak
to homestay operators, regulators, and community memb ers.

UNLOCKING THE ECONOMIC POTENTIAL OF HOMESTAYS: A REGULATORY LANDSCAPE ANALYSIS 2025
Tehri Garhw al
Nainital
Prayagr aj
Ayodhya
North Go a
South Goa
Ernakulum
Idukki
15

The following section outlines the regulatory procedure, process, and ways to
access them.
The following section outlines the regulatory procedure, process, and ways to access them.
3.1.1 Registration Roadmap
26
To understand the regulatory landscape, it is essential to examine how each state perceives
homestays as microenterprises and formulates policies accordingly. States tend to formalise and
standardise the sector, whereas there is a need for a more flexible and light-touch approach that
aligns with the unique characteristics of homestays.
Figure 3.1: Study areas for On-ground surveys. Rethinking Homestays:
Navigating Policy Pathways 14
List of Websites for registration
TitleLink
Uttarakhand
https://uttarakhandtourism.gov.in/homestay/details.
php?pgID=home-stay-list
Government of Indiahttps://nidhi.tourism.gov.in/mynidhi/
Uttar Pradesh
https://uptourism.gov.in/en/post/bed-and-breakfast-
scheme
Keralahttps://www.keralatourism.org/homestays
Goa
https://goaonline.gov.in/Appln/Uil/DeptServices?__
DocId=TOU&__ServiceId=TOU03
Table 3.1.1: List of websites for homestay registration
While Uttarakhand, Uttar Pradesh, and Kerala follow a similar number of steps, their regulatory
frameworks differ in structure and intent. Goa, meanwhile, stands out by issuing certificates
before conducting verification. The illustrations below outline the registration process in each
state.?
UNLOCKING THE ECONOMIC POTENTIAL OF HOMESTAYS: A REGULATORY LANDSCAPE ANALYSIS 2025
4
?Dj?CT%?T???x%?'DCC
Figure 3.1: Regis tration Roadmap Utt arakhand
Figure 3.1: Regis tration Roadmap Utt ar Pradesh
??
Figure 3.1.1A: Registration Roadmap - Uttarakhand Rethinking Homestays:
Navigating Policy Pathways 15?
UNLOCKING THE ECONOMIC POTENTIAL OF HOMESTAYS: A REGULATORY LANDSCAPE ANALYSIS 2025
4
?Dj?CT%?T???x%?'DCC
Figure 3.1: Regis tration Roadmap Utt arakhand
Figure 3.1: Regis tration Roadmap Utt ar Pradesh
??

Figure 3.1.1B: Registration Roadmap - Uttar Pradesh
Figure 3.1.1C: Registration Roadmap - Kerala Rethinking Homestays:
Navigating Policy Pathways 16?
UNLOCKING THE ECONOMIC POTENTIAL OF HOMESTAYS: A REGULATORY LANDSCAPE ANALYSIS 2025
4
?Dj?CT%?T???x%?'DCC
Figure 3.1: Regis tration Roadmap Ker ala
Figure 3.1: Regis tration Roadmap Go a
??
Figure 3.1.1D: Registration Roadmap - Goa
3.1.2 Guidelines for Registration and Classification of B&B and Homestays in India
Tourism is not part of any of the three lists under Schedule VII of the Constitution. However, many
activities associated with tourism and hospitality are already part of either Union or State Lists.
Consequently, the Ministry of Tourism has issued Incredible India Bed and Breakfast Guidelines
27

under which Homestays and B&Bs across India can register. Moreover, the Ministry has also
launched an online portal- National Integrated Database of Hospitality Industry (NIDHI)
28
where
tourism entities can register their services.
3.1.3 Registration Process
Operators are required to fill the form along with a requisite set of documents and submit it to
the tourism department. After this, the verification and approval process begins, followed by the
registration and classification certificate award. The guidelines also lay down various compliances
that homestay operators have to adhere to during the course of their operation. Finally, the
guidelines specify the duration for which the certificate is valid and the process of renewal to be
followed. Rethinking Homestays:
Navigating Policy Pathways 17
3.1.4 Registration and Classification Process under the Central Government Guidelines for
Homestays and B&BUNLOCKING THE ECONOMIC POTENTIAL OF HOMESTAYS: A REGULATORY LANDSCAPE ANALYSIS 2025
4
?Dj?CT%?T?????3L??CC?e?'?T???x%?'DCCc?3D%
TtDLD?T%???? ?D%??D?T?c?3D???DCe?%
???DCT??C??3DD
Verification
Incentives
Regional Director,
Indiatourism
2 members of the
quorum committee
Compliance
Incredible India
B&B and
Homestay
Documents
Approval
done by
regional
committee
Amenities of
Classification
Residing with
Family
Photographs of the
building
Undertaking
Application with
Annexure 1 & 2
Police
Clearance
Ownership papers and
details of the property
Regional Director,
India tourism
Representative from
IATO
Validity
Valid for 2 years
Resubmission of
application for
renewal
Details of
Payment
Representative from
TAAI
Representative from
local India Tourism
Office
Representative from
State Tourism
Department
Figure 3.5: Regis tration and classification process under Cent ral Government Guidelines
for Homestays and B nBs
???
Figure 3.1.4: Registration and classification process under Central Government Guidelines for Homestays and B&Bs
3.1.5 Registration and Classification of Homestays and B&Bs in States
The regulatory framework for B&Bs and homestays varies across states, with differences in terms
of documents required for application, the constitution of the approval committee, verification
process, compliances, validity and renewal process. For instance, Uttarakhand and Goa also have
schemes to promote homestays with a specific application process and incentives. Whereas,
Uttar Pradesh and Kerala have guidelines issued by local municipal bodies for Guest House and
Lodge, respectively, that allow operators to run similar types of accommodation units
29
. Rethinking Homestays:
Navigating Policy Pathways 18
Additionally, state government guidelines for homestays vary: Uttarakhand regulates homestays
through the Atithi Griha Awas Yojana (AGAY), while Uttar Pradesh allows registration via the
NIDHI portal or the Paying Guest Scheme, 1998. Kerala has classification guidelines for homestays
and a Serviced Villa classification for B&Bs. In 2022, Goa Tourism introduced a new Ease of Doing
Business Order with a homestay registration process.
Examining these policies provides insights into application requirements, approval committee
structure, verification, compliance, validity, and renewal processes.
Figure 3.1.5: List of prerequisite documents for application across states Rethinking Homestays:
Navigating Policy Pathways 19
Goa requires the least paperwork for applications, while the Uttar Pradesh Paying Guest scheme
has the most. This is crucial, as the effort needed to procure these documents can be a major
bottleneck for operators. The time and resources needed to get these documents may discourage
potential operators from entering this business and hinder existing operators from registering.
These states also vary regarding the composition of the approval committee and the verification
process.
3.1.6 Registration Approval Committee across States
Figure 3.1.6: Registration approval committee across states Rethinking Homestays:
Navigating Policy Pathways 20
3.1.7 Verification Committee across states
After submitting the application for registration, specific departments verify the amenities in
the homestay, as attested by the applicant. The number of verifications involved in registration
significantly impacts the application processing time.
UNLOCKING THE ECONOMIC POTENTIAL OF HOMESTAYS: A REGULATORY LANDSCAPE ANALYSIS 2025
4
?D%?e?'?T???L????TTDD?'%?CCCT?TDC
After submitting the applicat ion for registration, specific departments
verify the amenities in the homestay, as attested by the applicant . The
number of verificatio ns involved in registration significant ly impacts the
applicat ion processing t ime
Figure 3.8: Verificatio n Committee acr oss states
Uttarakhand
Uttar
Pradesh
Kerala
Classification
Deputy Director,
District, Department of
Tourism
Representative of
the local body
Secretary, DTPC
Any 4 of the following committees:
Manager of the
Government
Guest House
Representative of
Food Craft Institution
Representative of
Indian Association of
Tour Operators
Kerala Serviced
villa
Classification
Additional & Deputy
Director, District,
Department of Tourism
Representative of
the local body
Secretary, DTPC
Any 4 of the following committees:
District
Panchayat
President
Representative of
Food Craft Institution
Representative of
Indian Association of
Tour Operators
District Tourism Officer
District Tourism
Development officer
Zonal Officers like Ayodhya
Development Authority
Tourism Rest House
Goa
Tourism
Department of
Goa
Electricity
Department
Goa Coastal Zone
Management
authority (if
applicable)
Food and Drugs
Department
(If ap plicable)
Health
Department
Excise Department (if
applicable)
Fire
Department
Public W orks
Department
Pollution
Department
Panchayat
NOC
???
Figure 3.1.7: Verification Committee across states Rethinking Homestays:
Navigating Policy Pathways 21
3.1.8 Compliances During Operations
Once verified, homestay operators must comply with prescribed guidelines throughout their
operation.UNLOCKING THE ECONOMIC POTENTIAL OF HOMESTAYS: A REGULATORY LANDSCAPE ANALYSIS 2025
4
L??????'DCWc%??jBD%?T???C
Figure 3.9: Compliances dur ing operations
Once verified, homestay operators must comply with prescribed
guidelines t hroughout their operation.
?NN?8?????
?NN?8
?8???@?
J?
k?8???
!??@@?????N?
k?8?????8n???
n????
!??@@?????N?
Register Entry of
visitors
Register Entry of
visitors
Residing owner &
family
3 staff members:
Chef, Manager,
Caretaker
Form C for Foreign
Tourists
Form C for Foreign
Tourists
Up to 6 rooms
Up to 6 rooms
Food license
registration
Amenities based on
classification
Amenities based
on classification
Waste Segregation
Waste Segregation
Residing
Owner & Family
Register Entry
for Visitors
Fire extinguisher
Basic amenities
based on
classification
Up to 6 rooms
Form C for
Foreign tourists
Fire
Extinguishers
Register entry
of Visitors
Form C for foreign
tourists
Upto 5 rooms
Up to 6 rooms
Register Entry
of visitors
Form C for Foreign
Tourists
Notice with Name and signed certificate.
Information on check in and check out,
guidelines for tourists and prohibitions
Operator must stay
within the premises
Amenities based
on classification
Bill book duly
numbered
Suggestions and
complain box
Food and
safety License
List of emergency
contacts
???
Figure 3.1.8: Compliances during operations Rethinking Homestays:
Navigating Policy Pathways 22
3.1.9 Validity and Renewal within State Guidelines
Finally, the guideline lays down the certificate’s validity duration and its renewal process.UNLOCKING THE ECONOMIC POTENTIAL OF HOMESTAYS: A REGULATORY LANDSCAPE ANALYSIS 2025
4
????3?T???3?D?D?????Tt???T?TD?c?3D???DC
Figure 3.9: Validit y & Renew al
Finally, the guideline lays down the certificate' s validit y duration and its
renew al process.
?NN?8?????
?NN?8
?8???@?
J?
?u??8??????Nu
??n@V??NN?????
??V?N@?8????
N??@??58???V8?
k?8???
!??@@?????N?
?u??8??????Nu
??n@V??NN?????
??V?N@?8????
N??@??58???V8?
k?8???
??8n????n????
!??@@?????N?
?u??8??????Nu
??n@V??NN?????
??V?N@?8????
N??@??58???V8?
?u??8??????Nu
?u??88?u??8@
??5????
N??5?8?N8
??n@V??NN?????
??V?N@?8????
N??@??58???V8?
?V??NN???
?8??N?????
???
Figure 3.1.9: Validity and renewal within state guidelines Rethinking Homestays:
Navigating Policy Pathways 23
3.1.10 List of Documents Required to apply for the Municipality Scheme
Beyond the state guidelines for registering and classifying homestays and B&Bs, municipal bodies
in Uttar Pradesh and Kerala have separate schemes for other Category IV accommodations. In
Uttar Pradesh, Guest House schemes, and in Kerala, Lodge schemes, are often used by homestay
and B&B operators, creating regulatory confusion.
30
To clarify, we’ve prepared a comparative
overview of key components across both states below.
Figure 3.1.10: List of documents required to apply for municipality schemes
3.1.11 Approval Committee for Schemes by Municipal Bodies
Figure 3.1.11: Verification Committee across states Rethinking Homestays:
Navigating Policy Pathways 24
3.1.12 Compliances of the Municipality Scheme
Figure 3.1.12: Compliance of the municipality scheme
3.1.13 Validity and Renewal of License by Municipality
Figure 3.1.13: Validity and Renewal of License by Municipality Rethinking Homestays:
Navigating Policy Pathways 25
3.1.14 Incentive Based Scheme from Uttarakhand and Goa
While municipal bodies influence regulations in Uttar Pradesh and Kerala, Goa and Uttarakhand
incentivise homestay owners through state-led schemes. These schemes offer financial support
but require applicants to meet eligibility criteria and submit necessary documents.UNLOCKING THE ECONOMIC POTENTIAL OF HOMESTAYS: A REGULATORY LANDSCAPE ANALYSIS 2025
4
??'D?T??DD?CD3?'tD?De%???TT?%??t??3??3???
30
While municipal bodies influence regulat ions in Uttar Pradesh and
Kerala, Goa and Uttarakhand incent ivise homestay owners through
state-led schemes. These schemes offer financial suppo rt but require
applicant s to meet eligibilit y criteria and submit necessar y document s.
Uttarakhand
Committee for
approval of
Subsidy
Goa Incentives
for Hinterlands
Eligibility
Chief Development
Officer
District Magistrate
Bank
Representatives
Homestay should be
part of the 7 talukas
Sattari
Applicable to the
first 100
homestays
DDUAY
Documents
required
Uttarakhand
Incentives under
DDUAY
Uttarakhand
Incentives
Eligibility
Budget Plan and an
approved Map
Bank Details
Approval of
Pradhan
Domestic Water
Connection
Domestic
Electricity
Connection
Domestic Property
Rates
50% subsidy Loan up to
50 lakhs on construction
and repair
The applicant must
be a native resident
to Uttarakhand
The Homestay must
be in a village area
Goa Incentives
for Hinterlands
Reimbursement of
classification fee
Up to 2 Lakhs fees for
the purchase of the
furniture
50% subsidy and
free participation
in trade fairs
Domestic Rates of
Water/Electricity/
Property
Subsidized provision
for Internet for the
first Year
TIME software free
or Subsidized
Dharbandora
Sanguem
Bicholim
Canacona
Quepem
Ponda
Figure 3.15: Incentive based scheme from Uttarakhand and Go a
???
Figure 3.1.14: Incentive based scheme from Uttarakhand and Goa Rethinking Homestays:
Navigating Policy Pathways 26
3.2 Homestay Ecosystem Development across States
3.2.1 Incentives
a. Uttar Pradesh: The state does not provide any fiscal or non-fiscal incentives.
b. Uttarakhand: The Uttarakhand government offers financial incentives to promote
homestays, with distinct benefits for general and hilly areas. In general areas, homestay
owners can avail of a capital subsidy of 25% of the cost of capital works, up to a
maximum of `7.50 lakh. In hilly areas, this subsidy increases to 33% of the cost of
capital works, capped at `10.00 lakh. Additionally, an interest subsidy is provided for
the first five years, covering 50% of the interest payable on loans—up to `1.00 lakh per
year in general areas and `1.50 lakh per year in hilly regions. While no classification
basis applies to general areas, homestays in hilly regions are governed under the
Micro, Small, and Medium Enterprises Policy, 2015
31
.
c. Kerala: Homestays registered under the tourism department are eligible for domestic
electricity rates
32
.
d. Goa: Specific hinterland regions in Goa are eligible for incentives. This includes
the application fee reimbursements for the first 100 homestays after one year, `2
Lakh subsidy for furniture from government-approved vendors (processed within a
year), selective participation in one domestic trade show per year along with 50%
reimbursement (up to `50,000) for travel and accommodation expenses
33
.
3.2.2 Capacity Building
a. Uttar Pradesh: The Gange Gramin Krishi Prayatan Yojana
34
was launched to promote
rural homestays. It identified 330 homestays across 229 villages within designated
tourism circuits. Under the scheme, village coordinators and homestay operators
undergo training at the Manyawar Kashiram Institute of Tourism Management
35
.
b. Uttarakhand: The government organises training camps in Dehradun and district
headquarters for homestay operators. Further, they also have MoUs with various
OTAs to execute capacity-building programs across different regions in the state.
c. Kerala: While the Department does not engage in capacity building activities, the
Kerala Homestay and Tourism Society (HATS), a non-governmental organisation
representing over 1,000 homestays, plays an active role in training and support. In case
of conflicts with guests, HATS members utilise WhatsApp groups for swift resolution,
including coordinating with local police when necessary.
d. Goa: The Department has collaborations with several OTAs to provide capacity
building training across rural and urban areas in the state.
3.2.3 Marketing
a. Uttar Pradesh: The state focuses on cluster promotion; district-specific—guest house
operators are contacted based on room availability during surges in tourist demand
due to events. However, no formal mechanisms for cluster promotion currently exist. Rethinking Homestays:
Navigating Policy Pathways 27
b. Uttarakhand: Cluster promotion is driven by community networks formed by
homestay operators. For instance, the Kanatal region has major collaborations and
shared networks, whereas, in Bhimtal, homestays operate individually with minimal
cooperation. However, limited government support for cluster promotion has led
many homestay owners to join small and medium hotel associations for problem-
solving. Additionally, the state recently launched the Uttarastays portal to promote
and amplify visibility for registered homestays in the state.
c. Kerala: The state has a homestay-specific website that lists classified homestays with
details, photos, and classification levels. Further, subsidies are available for operators
purchasing marketing fair stalls, based on District Tourism Promotion Council approval.
d. Goa: The Department of Tourism regularly participates in domestic and international
travel marts for destination/cluster promotion as well as promotion of homestays.
3.3 Challenges faced by Operators, Regulators and Community Members
The regulatory landscape across these states presents a range of challenges for homestay
operators, regulators, and local communities. These challenges could significantly hinder the
sector’s ability to achieve its full economic potential, as outlined in the earlier sections of this
report. A comprehensive understanding of these regulatory obstacles is essential for developing
effective policy interventions. This section first examines the challenges faced by homestay
operators, followed by those encountered by regulators, and finally, the concerns of the broader
community.
3.3.1 Challenges faced by Operators
Homestay operators encounter challenges across various regulatory aspects, including
registration, classification, access to incentives, capacity-building initiatives, and compliance
with Form C requirements. Beyond regulatory hurdles, operators also struggle with broader
ecosystem-related issues.
Key challenges have been highlighted below:-
a. Multiplicity of Policies: In many states, homestay operators face challenges due to the
existence of multiple policies governing registration and compliance, leading to confusion
regarding the appropriate processes. For instance:
i. Uttarakhand: Homestay schemes such as AGAY
36
and Deen Dayal Upadhya Grih
Awas Yojana (DDUGAY)
37
, the latter being a financial incentive programme for home
construction, are applicable.
ii. Uttar Pradesh: Schemes such as Incredible India B&B and Homestay Scheme (federal
level), Paying Guest Scheme, and Guest House Scheme are applicable.
iii. Kerala: Homestays fall under both the Department of Tourism’s classification scheme
and the Municipality’s lodging licence requirements.
iv. Goa: In 2022, recognizing the struggles of operators to start and profitably run their
businesses, the Department of Tourism, Goa passed the Ease of Doing Business (EoDB) Rethinking Homestays:
Navigating Policy Pathways 28
order
38
to reduce the compliance burden. Further, in 2023, the Department notified
the Homestay and B&B Policy
39
which requires multiple documents for registration of
homestays, which was not in line with the EoDB order. This has left operators confused,
given the different requirements of registering with the Department. Moreover,
due to this complexity, many operators remain unaware of the benefits offered by
newer policies and continue to renew their registrations under outdated regulatory
frameworks.
Operators also often find themselves navigating a labyrinth of registration requirements—visiting
multiple offices, submitting an extensive array of documents, and enduring lengthy approval
processes that can span from a period of two to six months. This complex regulatory landscape
not only creates confusion but also severely delays the issuance of registration certificates.
This highly restrictive framework underscores the myriad obstacles microentrepreneurs must
overcome to establish a homestay. Drawing on insights from the recently released Economic
Survey 2025—which advocates for states to adopt a ‘get out of the way’ approach
40
—the need for
simplification is both timely and critical. By reducing excessive regulatory intervention, the survey
argues that the operating environment for small business operators can be markedly improved,
enabling them to focus on growth and innovation rather than administrative compliance.UNLOCKING THE ECONOMIC POTENTIAL OF HOMESTAYS: A REGULATORY LANDSCAPE ANALYSIS 2025
?P?Lt???D?jDCe?'D3 ?BD%?T?%CO?Djc??T?%C
??3L???c??T?%D? D%C
Operators also often find
themselves navigating a labyrinth
of registration requirement s—
visiting multiple offices,
submitting an extensive array of
document s, and enduring lengthy
approval processes that can span
from a period of two to six
months. This com
plex regulatory
landscape not only creates
confusion but also severely
delays the issuance of
registration certificates.
This highly restrictive framework
underscores the myriad obstacles
microentrepreneur s must overcome
to establish a homestay. Drawing on
insights from the recent ly released
Economic Survey 2025—which
advocates for states to adopt a 'get
out of the way' approach —the
need for simplif ication is both timely
and critical. By reducing excessive
regulatory intervention, the survey
argues that the operating
environment for small business
operators can be markedly
improved, enabling them to focus
on growth and innovation rather
than administrative complia nce.
40
a????#???
?
H??
?
#?????Z??
?
Bee?'DC??C?TD 33c%??j%Dj?CT%?T???
a???????????? ???
?
H??A ????
?
#?????Z??A ?????
?
Z????B???A ?????
?
???D???D?e?Dj?CT%?T???x%?'DCC
#?????Z??
?
a????#???
?
Z??????A?? ?
?
-?P?eW?'c?D?TCTt?T?D% D%D!c?D%3
Figure 3.16: Regulatory Labyrinth faced by the
operators
???

Figure 3.3.1: Regulatory Labyrinth faced by the operators
Source: On ground surveys. Rethinking Homestays:
Navigating Policy Pathways 29
b. Lack of Access to Incentives: Nearly 70% of respondents reported either a lack of awareness
regarding available incentives or difficulties in accessing them. For instance, in Uttarakhand,
despite the existence of schemes such as the Deen Dayal Upadhya Grih Awas Yojana
(subsidy for construction of homestays), delays in disbursing the subsidy persist even after
several years of construction. Conversely, in Kerala, Goa, and Uttar Pradesh, the absence
of a dedicated financial incentive for launching homestays means that many operators are
unable to repair or construct their facilities. Moreover, all four states face issues with non-
fiscal incentives. The electricity and water departments in these states often refuse or deny
the domestic connection incentives provided by the tourism department, instead charging
commercial rates. Therefore, the unsustainable cost burden forces many operators to
close their homestays.
Figure 3.3.2: Awareness and access to incentives by operators
Source: On ground surveys.
c. Limited Training Progammes: Despite the introduction of new training initiatives in
multiple states, including Uttar Pradesh, these programs suffer from limited awareness
and accessibility. Over 70% of respondents reported either being unaware of these
initiatives or not attending the training sessions. Moreover, existing training programs
primarily focus on standardised topics such as hospitality and hygiene, with little emphasis
on the unique selling propositions (USPs) that could enhance local tourism. As a result,
homestay operators are often unaware of how to leverage their cultural heritage and
regional assets to attract visitors. For instance, homestay owners with agricultural land
remain largely uninformed about the potential of organic farming as a distinctive tourism
offering. Additionally, digital literacy training is almost entirely absent, limiting operators’
ability to expand their market reach. Consequently, many homestay operators in Uttar
Pradesh and Uttarakhand continue to rely on government-arranged guest bookings,
leading to low occupancy rates. To address these gaps, states such as Uttarakhand and
Goa have begun collaborating with online travel agencies (OTAs) to enhance training
programs. These partnerships have enabled more comprehensive and targeted training
modules, equipping homestay operators with the skills necessary to effectively market
their offerings, improve guest experiences, and achieve greater financial sustainability. Rethinking Homestays:
Navigating Policy Pathways 30
Figure 3.3.3: Awareness and Participation in Capacity Building Initiatives
Source: On ground surveys.
d. Limited Marketing Support: Homestay promotion remains limited across states, placing
the burden on operators to attract guests independently. While state-run websites and
apps exist, operators report receiving little to no leads from these platforms, restricting
their reach and occupancy rates. In Uttarakhand, the Uttarastays website was launched to
promote tourism and homestays. However, despite many operators registering, awareness
about the platform remains low, and based on on-ground research, several listed operators
have yet to receive bookings. Similarly, in Ayodhya, an app was introduced in collaboration
with an OTA to facilitate homestay bookings. Initial concerns over high commission rates
were later overshadowed by disappointment, as the platform failed to generate visibility
beyond the operators themselves. Kerala’s tourism website includes homestay listings but
lacks a direct booking mechanism, requiring tourists to rely on OTAs. Even then, operators
must inform guests about the website themselves. In Goa, the tourism website does not
feature a dedicated section for homestays, further reducing visibility and limiting growth
opportunities for local operators.
Figure 3.3.4: Government assistance in marketing homestays
Source: On ground surveys. Rethinking Homestays:
Navigating Policy Pathways 31
e. Complication Classification Processes: The classification process faces significant challenges,
primarily due to a lack of awareness. 60% of respondents were unaware of the classification
process, and over 80% did not perceive any benefits from obtaining classification. For
instance, operators in Goa and Uttarakhand are often unaware of their classification status. In
Uttarakhand, the classification is neither mentioned on the registration certificate nor reflected
on official websites. The lack of perceived benefits is another major issue, with operators
seeing little value in classification. Kerala has a structured classification process, but many
operators prefer registering with local authorities instead. Further, the classification process in
Kerala is extremely prescriptive and necessitates meeting granular criteria, making it onerous
for operators. Therefore, in both Uttarakhand and Kerala, there is no clear advantage of one
classification category over another, leaving operators confused about its purpose, as it does
not impact visitor interest or pricing. Additionally, the current classification model applies state-
wide standards rather than region-specific criteria, leading to compliance challenges. For
example, in Munnar, homestays must have air conditioning to qualify for a ‘Gold’ or ‘Diamond’
rating, despite the region’s cooler climate as a hill station.
Figure 3.3.5: Awareness and Utility of Classifying Homestay Operators
Source: On ground surveys.
f. Exploitation by Middlemen: Confusion around the registration process has created an
opportunity for middlemen and agents to step in, leading to increased operator costs.
Nearly 50% of respondents reported relying on middlemen for registration and daily
operations.
g. Lack of Awareness about Form C: Operators hosting foreign guests must file Form C
with the Local Intelligence Unit (LIU). However, a lack of awareness across all states has
led to compliance issues. In Ayodhya, Uttar Pradesh, miscommunication from the LIU has
resulted in homestay operators refusing to accommodate foreign guests. Rethinking Homestays:
Navigating Policy Pathways 32
h. Infrastructural Issues: Infrastructure gaps persist across all states, particularly in
mountainous regions, where water and electricity shortages are common. Accordingly,
operators often incur high costs by relying on agents to supply tourist water. Additionally,
inadequate road infrastructure further deters tourist inflow, restricting access to homestays
in remote locations.
i. Seasonality: Seasonality is a major factor for most homestays; they typically remain
empty in the off-season. For instance, Prayagraj sees the longest off-season between
every Kumbh, leading homestays there to shut down and sometimes re-register before
the next Kumbh.
3.3.2 Challenges faced by the Regulators
a. Unregistered homestays: Onerous registration processes and lack of awareness
around registration requirements discourage compliance among operators, giving rise
to unregistered units. Many homestays across all states thus operate without proper
registration, creating issues for both regulators and operators. Regulators attempt to shut
down these unregistered establishments, but due to limited manpower and a complaint-
driven approach, many continue to operate outside formal oversight.
b. Lack of training: There is an absence of dedicated training programmes for regulators in
states, which leads to widespread confusion. For example, in Uttarakhand, the Tourism
Rest House is responsible for inspecting homestays yet lacks a clear understanding of the
homestay model, resulting in unclear feedback to operators.
c. Lack of communication between different regulatory bodies: Inter-departmental
miscommunication is common. The electricity department of each state is an example,
wherein the operators are promised domestic rates, but this information is not approved
by or communicated to the electricity department. Further, there are collaboration issues
between different regulators in the same process, leading to delays.
3.3.3 Challenges faced by the Community
a. Lack of Awareness about Homestays’: Based on our on-ground research, in states
including Uttar Pradesh and some parts of Uttarakhand, the community is not aware
of the concept of homestays and often confuses them with hotels. In interactions with
local auto and taxi drivers, homestays are seen as just another hotel or guesthouse in all
states except Kerala. The same was the case with shopkeepers. In Kerala, taxi and auto
drivers and bus operators knew homestays were alternative accommodations. This lack of
awareness was a major stumbling block to developing community-based tourism.
b. Lack of Incentives: There are no incentives for community members who want to
participate in or enter the homestay market in Kerala, Goa, and Uttar Pradesh. Interactions
with local shopkeepers, farmers, and taxi operators showed a lot of interest in operating
homestays, but they lacked financial resources. The lack of awareness about state
government schemes for subsidised loans, as is the case in Uttarakhand, and aversion to
loans, as is the case in Kerala, were a significant challenge for those interested in starting
their homestays. However, when homestay operators create incentives for the community
to participate in the operations of the homestays, like in the case of Lonikot Homestay Rethinking Homestays:
Navigating Policy Pathways 33
in Prayagraj and Seashell, Haris Beach Home in Kunnur, then community members living
around the homestays do find the source of livelihood from the establishment. In places
with hotels, like Kanatal in Uttarakhand and Fort Kochi in Kerala, local shopkeepers often
interacted with homestay guests, selling to them directly. Local hotels and restaurants
were frequently called for providing food for homestays.
c. Negligible Capacity Building: Most homestay capacity-building programs, either by
government or non-governmental organisations, are for operators. No capacity-building
programmes assist the community in exhibiting its culture and sharing its traditions with
tourists. They are not even trained to work in such establishments. Uttar Pradesh is said to
launch training programs for guides in birdwatching and other eco-tourism activities, but
these are generic to tourism sectors and not around homestays as such.
3.4 Opportunities for Homestays
a. Alternative Livelihoods and Rural Development: Homestays create secondary income
opportunities, especially in rural areas, through Skill Development and Destination
Management Organisations. For example, in Kerala, agricultural homestays engage
tourists in spice harvesting, offering a hands-on experience. In Uttar Pradesh, a homestay
in a fishing village allows tourists to participate in fishing and boating, benefiting both the
operator and the local community.
b. Tourism MSME Growth & Public-Private Collaboration: Homestays align with the National
Tourism Policy 2022 by fostering tourism MSMEs
41
. Further, the rising demand for unique
travel experiences among youth presents an opportunity for homestay promotion through
digital platforms. Exploring unique public-private partnerships with OTAs can also enhance
homestay visibility, capacity building, and marketing.
c. Curbing Youth Out-Migration & Senior Engagement: Homestays provide economic
opportunities for young professionals in Uttarakhand and Uttar Pradesh, allowing them
to stay with their families. In urban areas, they offer a meaningful occupation for seniors
whose children have migrated for work or education.
d. Reviving Local Arts & Indigenous Activities: Homestays support local artisans and
performers by incorporating cultural experiences for guests. For example, in Kerala,
homestays hire locals to perform traditional dance forms, collaborate with theatres, and
introduce guests to toddy farming and animal care.
e. Women Empowerment & Financial Independence: Many homestays in Kerala are women-
led, providing financial independence and opportunities to explore ventures like pottery
classes and social work. Rethinking Homestays:
Navigating Policy Pathways 34
4. PROPOSED RECOMMENDATIONS FOR
THE HOMESTAY SECTOR
4.1 Adopt Best Practices from Across India on Various
Components of Regulation:
The current ecosystem for alternative accommodations, particularly homestays, in India operates
within a diverse regulatory landscape where states have tailored frameworks to balance
operational ease with governance. Many states have simplified registration processes and
introduced policy incentives to drive homestay growth while ensuring compliance.
For instance, Goa has significantly reduced bureaucratic hurdles by requiring only three essential
documents—proof of ownership, applicant identification, and GST registration (if applicable)—for
homestay registration. The state also offers a seamless digital registration and renewal process
through a single online portal, with a five-year validity period for registration and no additional
documentation required for renewal.
Kerala follows a structured yet efficient verification process through a quorum-based assessment.
A team of four out of six designated officials, including the District Tourism Officer, inspects the
property and issues the necessary NOCs.
For classification of homestays, Chhattisgarh offers functional classification with various
categories such as heritage, urban, village/forest, and tribal homestays with concomitant flexibility
regarding amenities to be provided.
In Delhi, under the National Capital Territory (Incredible India) Bed and Breakfast Establishments
(Registration and Regulation) Act of 2007, classifies B&Bs as residential units. This provision
allows operators to benefit from lower power, water, and property tax rates, along with deemed
registration under the Incredible India B&B guidelines.
Other states have also integrated the convergence of their respective homestay incentives into
broader policy initiatives. Meghalaya offers operators the opportunity to combine subsidies
for national and state policies whereas Gujarat allows operators to reap benefits from their
state solar mission and other policies, thereby fostering growth in the sector. Maharashtra has
introduced a zone-based classification system for tourism projects, linking incentives to the
property’s location to promote balanced regional development. Meanwhile, Uttarakhand follows
a structured, phase-wise incentive program tailored to the needs of both hilly and plain regions,
ensuring equitable growth across the state.
Further, to advance sustainable and responsible tourism, Kerala introduced the Responsible
Tourism Mission in 2008 which aspires to foster better economic benefits and the well-being of
local people and communities. Its key aspects are conserving natural and cultural heritage and
preserving the world’s diversity. Goa also prioritises regenerative tourism through the Tourism
Master Plan as well as the Homestay and B&B Policy, to revive ecosystems, communities, and
cultures, and build a sustainable ecosystem. Rethinking Homestays:
Navigating Policy Pathways 35
4.2 Take concrete steps towards creating a model policy
framework for homestays:
Building on these successful practices, it is proposed to have a model policy framework that
states may adopt to harmonize regulations and establish a more resilient and inclusive ecosystem
for homestays. This framework incorporates key components designed to simplify processes,
encourage wider participation, and promote sustainable tourism growth.
4.2.1 Ease of Doing Business:
a. Registration and Renewal: The registration process may be streamlined, requiring only
essential documents such as ownership proof, applicant identification, and GST registration
(if applicable, depending on the threshold). For renewal, the concerned establishment’s
renewal application may be processed upon payment of the requisite fee, with no
additional documentation required
(i)
. The focus may be placed on reducing bureaucratic
hurdles and eliminating unnecessary steps.
b. Establish a Single-window Clearance System for Homestay Registration: A unified, digital
platform may be established to integrate approvals across key departments, including
tourism, panchayats, revenue, and utilities, to streamline processes and minimize delays
(ii)
.
Provisional registration certificates may be issued before verification, allowing homestays
to commence operations while necessary inspections are conducted.
(iii)
. Further, inter-
departmental coordination may be strengthened to facilitate a smooth and efficient
registration process
c. Proportionate Registration Fees: Fees and compliance requirements may be reasonable
and proportionate to the size and category of the homestay, ensuring the financial viability
of smaller operators.
(iv)
.
d. Facilitate Processing: Application disposal timelines may be capped at 30 days, ensuring
prompt registration and renewal processing, thereby improving service delivery and
reducing delays
(v)
. Additionally, if the concerned Tourism Department fails to communicate
a decision within the stipulated time frame, the application may be automatically deemed
approved to prevent unnecessary administrative bottlenecks.
e. Establish Central Nodal Agency: Establish a central nodal agency to streamline
communication across departments and facilitate coordination between various
stakeholders to ensure a unified approach to policy implementation, marketing, and
resource allocation
(vi)
.
4.2.2 Digitalisation for Streamlined Operations of Homestays:
a. Develop a Digital Portal for Registration and Compliance: A centralised digital portal may
be developed for homestay registration, renewals, and compliance management
(vii)
. The
portal may allow operators to submit documents, track applications, and receive policy
updates and renewal reminders.
b. Introduce-Declaration Mechanisms: To reduce administrative burden and enhance ease Rethinking Homestays:
Navigating Policy Pathways 36
of doing business, homestay operators may be permitted to self-declare compliance
with essential guidelines through a digital portal while obtaining necessary NOCs and
undergoing inspection processes.
(viii)
Further, a randomised inspection mechanism may
be introduced to ensure regulatory compliance and reduce administrative overheads.
4.2.3 Destination Management and Promotion through Homestays
The policy may emphasise developing and promoting lesser-known destinations by integrating
the homestay sector as a key component in diversifying tourism across the state. In addition, a
key priority may be creating distinctive, immersive experiences that are inherently linked to each
destination’s unique character to attract visitors.
a. Targeted Marketing Campaigns: Collaborative marketing initiatives and promotional
campaigns undertaken by the state government may highlight the unique offerings
of underdeveloped regions, with a focus on how homestays can provide authentic,
community-driven travel experiences that attract both domestic and international visitors
(ix)
.
The following marketing strategy could be considered:
i. Collaborations with OTAs, and travel companies to increase visibility and drive bookings
for the particular destination, attracting both domestic and international tourists.
ii. Engagement with travel influencers and content creators to showcase local experiences,
heritage, and immersive stays associated with the particular destination to ensure
broader audience reach and engagement.
iii. Integration of registered homestays into official marketing channels, including state
tourism’s website, app, social media platforms, establishments, outlets, printed
promotional materials and brochures at travel marts and exhibitions etc.
(x)
b. Experiential Tourism & Community Involvement: State policies may prioritise the
development of experiential tourism models, ensuring that visitors have engaging
activities—such as guided cultural experiences, workshops, and adventure trails—to ensure
homestays provide authentic and enriching tourism experiences in addition to facilitating
accommodation.
(xi)
c. Anchor Hub and Thematic Circuit Development: State governments may diversify tourism
offerings by stimulating demand in key segments through a strategic Anchor Hub and
Thematic Circuit development mode
(xii)
. This approach establishes:
i. Anchor Hubs as key tourist destinations with the potential to offer diverse tourism
experiences and serve as gateways to surrounding regions, with homestays playing a
vital role in enhancing the visitor experience.
ii. Thematic Circuits that connect multiple destinations through homestays based on
shared themes such as spiritual, culture, adventure, wellness, ecotourism etc. These
circuits should be built around unique experiences, ensuring travellers have a deeper
connection to the region. Rethinking Homestays:
Navigating Policy Pathways 37
4.2.4 Incentives:
a. Destination-Focused Financial Incentive: Financial incentives may be based on promoting
tourism at the destination level rather than focusing solely on individual homestay amenities
or classifications
(xiii)
. This will encourage operators to contribute to regional growth and
attract tourists to underserved areas. A tiered incentive approach could be used.
i. Tier 1 Destinations: Areas with immediate tourism potential should receive top priority
for development and promotional support.
ii. Tier 2 Destinations: Secondary areas with long-term potential should receive phased
incentives and marketing support.
b. Non-Financial Incentives:
i. Project Support Organisations (PSOs): PSOs may be introduced to support homestay
operators, particularly in rural or remote regions. These organisations would provide
technical assistance, project management expertise, and guidance on best practices
to help new homestay operators successfully launch and maintain their businesses
(xiv)
.
ii. Residential Utility Classification: Homestays may be classified as residential units for
utility purposes, ensuring access to residential rates for water, electricity, and property
taxes. This will enhance the financial sustainability of homestays.
(xv)
.
iii. Capacity Building: State Tourism Departments may be encouraged to collaborate
with private industry experts to organise capacity-building sessions and Homestay
Business Summits. These initiatives may facilitate knowledge exchange, provide
networking and collaboration opportunities, and impart best practices from top-
performing homestays
(xvi)
.
4.2.5 Awareness Generation:
i. Information Education Communication (IEC) Campaign: A national IEC strategy may
be launched to raise awareness about homestay registration, compliance guidelines,
and available policy benefits
(xvii)
.
ii. Local Facilitation Centers: Dedicated facilitation centres may be established,
particularly in rural and remote areas, to assist homestay operators with registration,
compliance procedures, and access to financial and technical support
(xviii)
.
4.2.6 Creation of Homestay Clusters:
Promote the creation of homestay clusters within communities by leveraging local resources
and existing infrastructure to create high-value experiential tourism products. This approach
may also prioritise the sustainability of these clusters by promoting long-term viability through
community involvement, environmental stewardship, and economic diversification to ensure that
these clusters remain resilient and beneficial for both visitors and host communities
(xix)
.
(Please refer to Annexure 1 for the reference numbers) Rethinking Homestays:
Navigating Policy Pathways 38
5. CONCLUSION
Reports suggest that the homestay market in India reached market sales revenue of `4,722
Crore in 2024, positioning it as a fast-growing market with a projected NIDHI of 11% between
2024-2032. Multiple levers, including India’s vast cultural and landscape diversity and the rising
popularity of experiential, immersive travel among domestic and international tourists alike, are
fuelling this growth. During this ascent, there is an undeniable opportunity to tap into this sector’s
incredible and unique potential for economic generation and sustainable tourism promotion.
This study assesses the realities on the ground, which showcase the success of the homestay
model while also making a case for its formalisation through an effective and enabling regulatory
framework. The framework offered has been put together, accounting for existing best practices
and insights derived from primary research, and its adoption across states in India would create
a robust ecosystem that ensures the Indian homestay sector continues its upward trajectory.
ANNEXURE 1
S.no. InstitutionInput
i Goa
As per the EoDB order, Goa requires only essential documents such
as ownership proof, applicant identification, and GST registration (if
applicable depending on the threshold) for registration of homestays.
Further, Goa has a single online portal for homestay registration
and renewal, which does not require submission of any additional
documents for renewal of such establishments.
ii Goa
As per on ground research conducted by ISPP, Goa issues a registration
certificate before verification and follows a single-window clearance
for the certificate. The Tourism Department contacts all the necessary
NOC departments to investigate the homestay after the certificate is
provided.
iii Goa
As per on ground research conducted by ISPP, Goa issues a registration
certificate before verification and follows a single-window clearance
for the certificate. The Tourism Department contacts all the necessary
NOC departments to investigate the homestay after the certificate is
provided.
iv Goa
Under the Goa Homestay and B&B Policy, the registration fee for
homestays and B&Bs is Rs 1000
v Delhi
As per the National Capital Territory (Incredible India) Bed and
Breakfast Establishments (Registration and Regulation) Act of Delhi,
2007, the timeline for disposal of the applications has been reduced
to 30 days (from the earlier existing timeline of 90 days) under Ease
of Doing Business for fast delivery of service.
vi ISPP As per suggestion received from NITI Aayog Rethinking Homestays:
Navigating Policy Pathways 39
vii Goa
Goa has a single online portal for homestay registration and renewal,
which also mentions the registration requirements. In addition, the
portal does not require submission of any additional documents for
renewal of such establishments.
viii ISPP
As per suggestion received by ISPP from homestay operators during
on ground research in the selected states
ix ISPP As per suggestion received by ISPP from NITI Aayog
x Goa
Under Section 6.2 of the Homestay and B&B Policy, which outlines non
fiscal support, provided by the Department of Tourism in Goa
xi ISPP As per suggestion received from NITI Aayog
xii
Andhra
Pradesh
This input has been taken from the Andhra Pradesh Tourism Policy
2024-2029
xiiiMaharashtra
Under the Maharashtra Tourism Policy 2024, the state has categorized
tourism projects zone-wise, and the incentives offered to homestays
are determined based on the zone in which the property is located.
xiv ISPP As per suggestion received by ISPP from industry stakeholders
xv Delhi
As per the National Capital Territory (Incredible India) Bed and
Breakfast Establishments (Registration and Regulation) Act of Delhi,
2007, B&Bs are not classified as commercial units. They are subject to
power, water tariff, and property tax rates applicable to residential or
domestic use.
xvi ISPP
As per on ground research and challenges identified for homestay
operators during on-ground research in selected states and suggestion
received by industry stakeholders
xvii ISPP
As per on ground research and challenges identified for homestay
operators during on-ground research in selected states
xviii ISPP
As per on ground research and challenges identified for homestay
operators during on-ground research in selected states
xix ISPP As per suggestion received from NITI Aayog Rethinking Homestays:
Navigating Policy Pathways 40
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Rethinking Homestays:
Navigating Policy Pathways Rethinking Homestays:
Navigating Policy Pathways 45