"Why would anyone come here just to worry about their safety?" asks Bilal, a middle-aged hotelier who runs Milkyway Hotel and Adventures in Pahalgam. Over the past few years, Bilal welcomed hundreds of tourists at his hotel as Kashmir slowly reclaimed its place on the travel map. But today, his voice carries a weight of resignation.

Bilal says every booking for the next 15 days has been cancelled. All this comes in the wake of a terror attack in Pahalgam that claimed the lives of 26 tourists on April 22.

“As many as 80-90% of our bookings for Kashmir tours have already been cancelled and this includes bookings for peak summer months of May and June as well,” shares Varnika Chawla, who runs Trail The Himalayas, organising experiential tours across the Kashmir valley including Pahalgam and Sonmarg.

This sudden disruption comes at a critical time. The union territory typically welcomes a third of its annual tourist footfall between April and June, a figure that rises to nearly half when July and August numbers are also included. For businesses, summer was supposed to be their busiest season, and now, it feels like the season has ended before it even began.

Summer rush turns into a season of uncertainty for small businesses amid 90% cancellations

Of the ₹1.45 lakh crore real Gross State Domestic Product (GSDP) recorded in 2024-25, tourism’s direct contribution stands at around 7%, according to J&K chief minister Omar Abdullah’s Budget speech for 2025–26, translating into an economy of ₹18,550 crore.

Independent estimates, however, suggest the potential impact of tourism could be even larger. The tertiary sector accounts for an estimated 61.7% of the state's Gross State Value Added (GSVA) in 2024–25. Within this, tourism-linked industries—such as trade and repair services, hotels and restaurants, transport, storage, communication, and other services—comprise 28.7% of the real GSDP, or ₹41,615 crore. Trade, repair services, and hotels and restaurants alone contribute about 11.21% to the real GSDP, or ₹16,264.5 crore. This indicates that tourism-related services may account for as much as half of the tertiary sector’s contribution to J&K’s economy. And the future of the former state hinges on its tourism sector, which itself remains deeply intertwined with stability and perceptions of security in the region.

MSMEs account for nearly 90% of employment in J&K’s industrial sector—including tourism. For many local businesses, the summer rush is not just peak season—it is essential for survival. But with the valley emptying out even before summer begins, the outlook for Kashmir’s tourism economy has turned bleak. Small, mid-sized, and homegrown businesses, which had been counting on a strong season, now face an uncertain future.

"There are drivers who took loans this season, hoping to cash in on the 2024 tourist boom. Now, with business gone, they're not just facing a short-term crisis—they risk falling into a debt trap," says Shaila, a tour operator.

The widespread fear among travellers has triggered a wave of hotel and travel booking cancellations, as tourists demand refunds or shift their plans to alternative destinations. With many hotel bookings being non-refundable, travel agencies are grappling with mounting financial losses and operational chaos. Videos of homestays offering free food and subsidised rates to lure the few remaining visitors are circulating online.

Airlines, too, have been inundated with requests to reschedule or cancel flights to Srinagar. Typically, around 60,000 to 70,000 passengers fly to Srinagar every week from across India.

“As per the observations, flight cancellations jumped by 7x, and a drop in future bookings by around 40%,” says Manjari Singhal, Chief Growth and Business Officer, Cleartrip.

Shaila shares that her company has already processed advance refunds for nearly 80% of its May-June bookings, with only one or two clients still in the valley. For now, she is holding on to hopes for the August and September bookings, which have not been cancelled or rescheduled yet, but have merely been put on hold, with customers repeatedly seeking updates on the situation.

"Film tourism, which we had high hopes for this season, has also come to a complete standstill," adds Shaila. The J&K Film Policy had drawn filmmakers to the region, with 102 films and web series being shot in Kashmir in 2023.

Will the Kashmir setback derail J&K’s overall tourism boom?

The union territory has two main divisions – Jammu and Kashmir. In 2024, tourism hit an all-time high with 2.36 crore visitors, including around 65,000 foreign tourists. However, nearly 85% of these tourists were bound for the Jammu division. In contrast, Kashmir hosted only 34.98 lakh visitors, accounting for about 14% of the total tourist footfall.

Additionally, shrine tourism played a major role, with around 42% of total visitors being pilgrims. Of these, 94.56 lakh (roughly 40% of all tourists) visited the Vaishno Devi shrine situated in Jammu division, while the remainder travelled for the Amarnath Yatra, with both the Baltal and Pahalgam routes located in the Kashmir division.

As a result, three key concerns emerge. First, the Amarnath Yatra—a major event for Kashmir that saw 5.11 lakh pilgrims in 2024 (up 15% from 2023)—could be adversely impacted. Scheduled from July 3 to August 9, 2025, registrations had just opened when the Pahalgam attack occurred. While tour operators like Shaila are yet to quantify the impact, the attack is expected to dampen Yatra registrations.

Second, while Jammu’s pilgrimage traffic might cushion overall tourism numbers, it could still face short-term setbacks. May is traditionally peak season for Vaishno Devi pilgrims, accounting for about 12% of annual footfall. Travel agents now expect a noticeable decline in May numbers following the Pahalgam attack.

Third, the longer-term impact on foreign tourist arrivals—already a small but significant segment—could be more severe, as international travellers tend to be more risk-averse.

In the short term, the Kashmir division is expected to bear the brunt of the fallout. However, thanks to the relatively stable Jammu-bound pilgrimage traffic, the overall tourism numbers for the union territory may not collapse entirely in the mid-term. Nevertheless, the immediate outlook for Kashmir remains grim.

For now, travel agents and operators are advising clients not to panic. Those without imminent travel plans are being encouraged to wait and observe, as the situation is expected to stabilise soon. Bilal shares that local authorities are taking swift action to ensure visitor safety and are making concerted efforts to minimise the impact on the region’s tourism economy.