Industry Enters a New Growth Cycle
India’s hospitality sector is set for a major expansion phase, with leading listed players such as Indian Hotels Company Limited and ITC Hotels planning to add over 70,000 new rooms (keys) by 2030, according to a report by CBRE Group.
The sector is now transitioning from a post-pandemic recovery phase to a structural growth trajectory, supported by favorable macroeconomic trends and rising travel demand.
Market Size to Expand Rapidly
The hospitality industry is projected to grow significantly in the coming years:
- Market size expected to rise from $24.6 billion in 2024 to $31 billion by 2029
- Strong demand visibility across both leisure and business travel
- Increased penetration of branded hotel chains in emerging cities
This expansion reflects a broader shift in consumer behavior toward travel and experiences.
Domestic Tourism Leads the Surge
Domestic travel continues to be the backbone of India’s hospitality growth story.
- Tourist visits jumped 40% year-on-year to 4.1 billion in 2025
- Rising disposable incomes boosting discretionary spending
- Tier-2 and Tier-3 cities emerging as key growth drivers
Improved road, rail, and air connectivity has further enhanced accessibility, fueling travel demand.
Premiumisation Driving New Supply
A notable trend shaping the sector is the shift toward premium and luxury offerings.
- Around 60% of new hotel supply in 2025 came from upscale segments
- Growing preference for luxury stays, wellness tourism, and curated experiences
- Higher-margin segments attracting both operators and investors
This premiumisation trend is redefining India’s hospitality landscape.
Strong Operational Performance
The sector maintained solid fundamentals despite global uncertainties:
- Occupancy levels: ~64% in 2025
- RevPAR growth: 11% year-on-year
- Average Daily Rate (ADR): Up 8.7%
These metrics indicate improving profitability and sustained demand momentum.
Investment Momentum Accelerates
Investor interest in hospitality assets has surged significantly:
- Total deal value reached $456 million in 2025
- Nearly 2.5x growth compared to 2024
- Institutional investors actively expanding portfolios
Hotel companies are also leveraging IPOs and capital markets to fund expansion and reduce leverage.
Consolidation and Acquisition Strategy
Major players are increasingly focusing on acquisition-led growth to scale operations.
For instance, Indian Hotels Company Limited has expanded its portfolio through strategic acquisitions in boutique and wellness hospitality segments, strengthening its presence across categories.
Resilience Despite Global Headwinds
The sector demonstrated resilience even amid geopolitical tensions like the India–Pakistan conflict and disruptions in aviation.
Strong domestic demand and improving infrastructure have helped offset external challenges.
Long-Term Outlook Remains Positive
India’s hospitality sector is poised for sustained long-term growth driven by:
- Rising middle-class consumption
- Increased business and leisure travel
- Expansion of organized hotel chains
- Government focus on tourism and infrastructure
The addition of 70,000 rooms is expected to significantly enhance capacity and support future demand.
Smart Investment Perspective
The hospitality sector offers a compelling long-term opportunity for investors. Companies with strong brands, diversified portfolios, and expansion pipelines are likely to benefit the most.
As India’s travel economy matures, hospitality could emerge as a key outperforming sector within the services space.