Recognizing the need for quality hotel rooms and adequate meeting and convention facilities to attract international tourists, Kerala’s Finance Minister, KN Balagopal, has introduced a new scheme to fund and incentivize hotel investments in the state. Presenting the Budget for 2025-26 in the State Assembly, he proposed a strategic initiative to boost the hospitality sector.
As part of this proposal, the Kerala Financial Corporation will formulate a scheme to provide loans of up to INR 50 crore for hotel construction. To support this initiative, INR 20 crore has been earmarked for interest subvention. The Finance Minister emphasized that the current availability of quality accommodation—both in the budget and luxury segments—is inadequate, necessitating the development of more hotels and hotel clusters. Additionally, to strengthen Kerala’s MICE (Meetings, Incentives, Conferences, and Exhibitions) tourism potential, large-scale convention centers and tourism hubs will be developed.
A novel accommodation initiative, ‘K-Home,’ has also been introduced to enhance Kerala’s tourism infrastructure. This scheme aims to utilize vacant and unoccupied homes across the state, transforming them into tourist accommodations. Not only will this generate revenue for homeowners, but it will also help maintain and ensure the security of these properties. The K-Home pilot project will initially be implemented within a 10-kilometer radius of popular tourist destinations such as Fort Kochi, Kumarakom, Kovalam, and Munnar, with an allocation of INR 5 crore for initial expenses.
Beyond its scenic beauty, Kerala aspires to position itself as a global hub for health and wellness tourism by leveraging its strengths in both traditional Ayurveda and modern healthcare. To create international awareness and market the state as a premier health tourism destination, INR 50 crore has been allocated for promotional campaigns abroad.
The overall budget allocation for the tourism sector in 2025-26 stands at INR 385.02 crore—an increase of INR 33 crore from the previous fiscal year. Specifically, INR 80 crore has been dedicated to international marketing and promotions.
A new initiative proposed in the budget is the ‘Loka Kerala Kendram’ (Global Kerala Centre), aimed at strengthening ties between the Kerala diaspora and the state. As part of this program, incentives will be provided to non-resident Keralites who promote tour packages.
Tourism, hospitality, wellness, and healthcare have been identified as key focus areas in Kerala’s growth strategy outlined in the budget. With the ambitious Inland Waterway Project from Kovalam to Bekal slated for completion in 2026, the state government plans to capitalize on Kerala’s extensive canal network for tourism and logistics. To facilitate this, the budget proposes acquiring 15.115 hectares of land along the Akkulam-Kollam stretch of the West Coast Canal, creating five development zones: an agro-tourism hub, a diversified tourism and allied activities zone, an integrated fish park, a backwater tourism zone, and a boat manufacturing and repair hub.
Furthermore, the budget outlines plan to acquire 68 land parcels covering 181 acres along the upcoming coastal highway, which spans eight coastal districts from north to south. This initiative aims to develop beach promenades, cycling tracks, tourist facilitation centers, walking tracks, EV charging stations, and other essential infrastructure to enhance coastal tourism.
Through these strategic investments, the Kerala government aims to propel the state’s tourism sector to new heights, fostering economic growth while enhancing visitor experiences.
