Many tourists are attracted to Srinagar by the charm of staying on a houseboat, which provides the unique experience of living on the water in a cedar-panelled elegant bedroom, with all the conveniences of a luxury hotel. Srinagar's thousand or so houseboats are moored along sections of the Dal and Nagin Lakes and river Jhelum, each decorated fancifully and named romantically and even whimsically. Like hotels, houseboats vary in degree of luxury and have been accordingly graded by the Department of Tourism. A luxury houseboat, like a luxury hotel has fine furniture, good carpets and modern bathroom fittings, while the ‘D category’ (the lowest category) of houseboats, like low-budget hotels, is spartanly furnished. Like hotels too, houseboats vary widely in their locations. Some overlook the main road, others look out onto lotus gardens and yet others face tiny local markets and villages, all right in the middle of the lake! All houseboats, regardless of category, have highly personalized service. Not only is there always a "houseboy" for every boat, but the owner and his family are never far away. The cost per day of hiring a houseboat includes all meals and free rides from the houseboat to the nearest jetty and back, as no houseboat on the lakes is directly accessible from the banks.

Every standard houseboat provides a balcony in the front, a lounge, dining room, pantry and 3 or more bedrooms with attached bathrooms. All houseboats not moored to the bank of the river or lakes provide a shikara as a free service from the houseboat to the nearest ghat (jetty). Virtually every houseboat in Srinagar has been provided with a municipal water connection.