India is fast becoming a driving force behind the hospitality boom in the Asia-Pacific (APAC) region, according to the Colliers Asia Pacific Hospitality Insights May 2025 report. Despite overall subdued investment volumes in the region’s hospitality sector during the first quarter of the year, India has stood out as a resilient and high-performing market, showing strength in both outbound travel and domestic growth.

The report showcases how Indian outbound travelers are not only fueling demand in international hotspots like Thailand, Vietnam, and South Korea, but are also helping to reshape regional tourism strategies, with implications for pricing, infrastructure, and investor sentiment. Simultaneously, India’s domestic hospitality landscape is evolving rapidly, with emerging trends around spiritual tourism, Tier-II city growth, and experience-led investments.

India's Rising Influence in APAC Hospitality

Despite a 19% drop in overall hospitality investment volumes in APAC during Q1 2025, India’s contribution to the sector remains exceptionally strong. The Colliers report notes that Indian travelers now represent a dependable, year-round source of demand in key tourism markets across Asia.

This has translated into:

• Higher average room rates in destinations favored by Indian tourists

• Strong revenue per available room (RevPAR) performance for hotels in Indian-preferred regions

• Stable occupancy levels despite broader global economic uncertainties

Countries like Thailand, Vietnam, and South Korea are experiencing structural shifts in hospitality demand patterns, thanks in large part to steady Indian outbound travel.

Outbound Tourism: Experience Over Expense

One of the most prominent shifts is the growing preference among Indian travelers for experiential travel, which includes luxury stays, wellness retreats, and personalized travel experiences. This trend is visible in the rising popularity of:

• Luxury and boutique hotels

• Wellness resorts and eco-lodges

• Heritage-based accommodations

• Destination weddings and bespoke MICE events

With rising disposable incomes, a young population, and increasing familiarity with global travel, Indians are now spending more on quality stays, immersive activities, and premium hospitality services than ever before. Indian tourists are no longer seasonal visitors—they represent a sustained demand base, regardless of travel season.

This makes them particularly valuable in offsetting demand fluctuations in traditional Western tourist inflows, offering revenue predictability for regional hotels and tourism operators.

MICE and Luxury Travel Segments in Focus

India’s influence is also growing in the Meetings, Incentives, Conferences, and Exhibitions (MICE) segment, where corporate travel, destination conferences, and business leisure (bleisure) trips are expanding. Indian companies are increasingly looking at regional APAC destinations for hosting events, given the relatively short flight durations, cost efficiency, and high-quality infrastructure.

This has resulted in a boost for:

• Convention center hotel bookings

• Group packages tailored for corporate India

• Increased weekday hotel occupancy driven by MICE-related travel

Indian travelers’ preference for experience-led luxury—combined with the scale of outbound travel from India—has further helped maintain premium pricing for hotels across the APAC region, even as other global markets face slowdown pressures.

Spiritual Tourism and Domestic Growth in India

While Indian travelers are impacting regional hospitality trends, India’s domestic tourism story is equally significant. Tier-II cities and spiritual destinations are witnessing a surge in both demand and investment.

The report highlights spiritual centers such as:

• Ayodhya

• Dwarka

• Puri

• Shirdi

• Tirupati

• Varanasi

These cities are undergoing rapid transformation through infrastructure upgrades, airport development, rail connectivity improvements, and government-led tourism promotion. As a result, they are attracting:

• Domestic leisure travelers

• Religious pilgrims

• Hospitality investors looking to capitalize on rising occupancy rates and footfall

This trend is also balancing the distribution of tourism revenue away from traditional urban centers like Delhi, Mumbai, and Bengaluru, bringing economic uplift to smaller towns and creating new hospitality clusters.

Tier-II Cities as Hospitality Frontiers

Tier-II cities such as Lucknow, Indore, Kochi, Bhubaneswar, Amritsar, and Surat are becoming focal points for new hotel developments. These cities offer:

• Lower land and construction costs

• High traveler footfall due to regional events, business hubs, or religious significance

• Untapped hospitality potential

Brands are moving quickly to establish mid-scale and upscale properties in these cities, encouraged by favorable state-level policies, tourism incentives, and strong performance metrics.

Moreover, increased air and road connectivity, thanks to government initiatives like UDAN, is reducing travel barriers and making these destinations more accessible to both leisure and business travelers.

Investor Sentiment Remains Robust

Even as Asia-Pacific hospitality investments dipped by 19% in Q1 2025, India’s hospitality sector continues to attract investor attention due to:

• Strong RevPAR growth

• Stable domestic demand

• High outbound travel volume

• Improved transparency and regulatory environment

Investors are showing particular interest in experience-led hospitality assets, such as:

• Heritage hotels

• Wellness and spa resorts

• Cultural and eco-tourism retreats

• Branded residences with hotel services

The alignment of traveler preferences with investment viability is creating a performance-led growth trajectory that is likely to continue into the next decade.

Government Policies Accelerate Momentum

India’s proactive stance on tourism and infrastructure is further strengthening the hospitality ecosystem. Initiatives such as:

• Dekho Apna Desh

• Swadesh Darshan

• Prasad Scheme

• National Digital Tourism Mission

are integrating technology, local community involvement, and public-private partnerships to boost travel experience and safety, as well as create job opportunities in remote regions.

In addition, state tourism departments are increasingly collaborating with hospitality players to brand and promote local destinations, thereby driving increased footfall and diversified revenue streams.

Conclusion

India’s expanding role in the Asia-Pacific hospitality ecosystem is a testament to its rising economic clout, shifting travel behaviors, and strategic integration with global tourism circuits. As outbound Indian travelers boost room rates in regional hubs and domestic Tier-II cities fuel the next wave of internal growth, the hospitality sector across APAC is undergoing a structural realignment.

India is no longer just a travel origin market—it is a growth engine for hospitality. With a large middle class, digital-savvy consumers, and ambitious travel preferences, Indian tourists are set to reshape how destinations market themselves, how hospitality is designed, and how investors prioritize their capital.

The Colliers report underscores that even amid short-term investment dips, India’s unique market dynamics ensure strong valuations, resilient demand, and a sustainable hospitality growth path for the broader Asia-Pacific region.

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