India’s hospitality sector is undergoing a transformational boom, with forecasts suggesting that the industry will add over 1,00,000 new hotel rooms in the next five years, marking a 20-30% growth from its current levels. This surge is being driven by strong domestic tourism demand, a rising middle-income population, and a widening demand-supply gap, which has positioned India as one of the most promising markets in global hospitality.

As per sector insights from Hotelivate Chairman Mr. Manav Thadani, the traditional pace of growth—where 7,000 to 8,000 rooms were added annually—has accelerated to 12,000–15,000 rooms being added each year, especially in the branded hotels segment. These figures signal a significant shift in the trajectory of India’s hotel development and underscore the increased appetite for luxury, comfort, and branded accommodation experiences among Indian travellers.

According to the India Hotel Market Review 2024, published by Horwath Hotel, Tourism and Leisure, the total number of rooms across India is expected to cross 3,00,000 by 2029, further cementing the country’s position in the global hospitality growth map. The hospitality sector, once considered sluggish in terms of new supply, is now experiencing one of its most active development phases ever.

Key Players Expanding Aggressively in India

Multiple global and domestic hotel chains are now in expansion mode, ramping up their portfolios and brand presence across the country:

• Ascott, the Singapore-headquartered hospitality company, aims to double its inventory to 12,000 rooms by 2028.

• Hilton Hotels, known for its premium offerings, is planning tenfold growth in India over the next decade.

• Marriott International, which has become increasingly bullish on India, revealed that 70% of its recent signings are in the luxury segment. The company is on track to make India its third-largest market globally.

• Radisson Hotel Group, too, has declared this period as a “golden phase,” with 36 signings last year and over 20 additional deals already closed this year.

• Lemon Tree Hotels, a dominant player in the mid-market segment, signed 50 new deals in 2024 alone and has reported a consistent 15-20% annual revenue growth since the pandemic ended.

Why This Boom is Happening Now

The key drivers behind this meteoric rise in hospitality investments and new hotel launches are multifaceted:

1. Rising Domestic Tourism: With millions of Indians travelling across the country, both for leisure and business, there has been an unprecedented demand for quality accommodation across Tier I, II, and III cities.

2. Expanding Middle-Class Demographic: India’s burgeoning middle class is increasingly seeking better hospitality experiences. This growing purchasing power has sparked demand for branded hotels, luxury stays, and world-class amenities.

3. Demand-Supply Imbalance: While India has made significant economic strides, its hospitality infrastructure hasn’t always kept pace. With a large gap between available rooms and actual demand, there’s a pressing need to build new inventory, especially in emerging tourist hotspots and underpenetrated cities.

4. Government Push & Infrastructure Development: The Make in India initiative, the boost to domestic tourism, and improvements in transport infrastructure like expressways, regional airports, and smart city developments have provided fertile ground for hotel expansions.

5. Post-Pandemic Travel Rebound: Since the easing of COVID-19 restrictions, there has been a strong resurgence in travel, both for leisure and business. This revival has triggered aggressive growth strategies among hotel operators who want to capitalise on the demand surge.

Tier II & III Cities in Focus

While metro cities like Mumbai, Delhi, and Bengaluru continue to attract hotel investments, a significant share of the upcoming 1,00,000 keys is expected to be deployed in Tier II and Tier III cities. Destinations like Jaipur, Kochi, Lucknow, Indore, Bhubaneswar, and Coimbatore are increasingly becoming lucrative due to rising footfall, business expansion, and government-backed tourism initiatives.

Hotel chains are no longer confining their growth strategies to the big cities. Many companies have realised the untapped potential in smaller cities, where land acquisition is more affordable and competition is less intense.

The Role of Luxury in the Expansion

The surge is not just about quantity—it’s also about quality. Industry executives noted a sharp rise in luxury hotel signings, with international brands prioritising India in their global growth plans. India’s appetite for luxury experiences has evolved, fuelled by higher disposable incomes, experiential travel trends, and the influence of global culture.

Wellness resorts, heritage hotels, boutique luxury brands, and experiential retreats are gaining popularity, leading to a diversification in the types of properties being developed. The luxury hotel segment has become a primary area of focus, with chains like Marriott, Hilton, and Radisson launching ultra-luxury brands to capture high-end clientele.

Sustainability and Technology to Define New Builds

With sustainability becoming a global mandate, new hotel developments are incorporating green building practices, energy-efficient infrastructure, and technology-driven operations. Smart hotels equipped with automation, contactless check-ins, AI-based services, and integrated digital systems are increasingly becoming the norm.

Many developers are also partnering with state governments for Public-Private Partnerships (PPP) to develop eco-resorts, adventure tourism lodges, and hill station properties, ensuring a wider reach across various demographics and traveller interests.

Challenges Ahead

Despite the optimism, the sector does face challenges such as:

• Manpower Shortage: With more hotels being built, there’s a rising demand for trained hospitality professionals, and the industry is racing to close this gap.

• Land Acquisition and Regulatory Delays: High land costs and complex clearances in some states could slow down timelines.

• Operational Costs: Inflation and cost control remain concerns, especially for mid-market players.

Conclusion

India’s hospitality sector is clearly entering a golden era of growth, with the addition of 1,00,000 new rooms over the next five years likely to reshape the landscape of travel and tourism in the country. With luxury leading the charge, supported by strong demand fundamentals and strategic investments, India is on track to become a hospitality powerhouse globally.

As branded hotel chains expand their footprints across metros and smaller cities alike, travellers can look forward to a wider range of quality accommodations that meet global standards while offering local flavour. For investors, developers, and consumers alike, this hospitality boom signals enormous opportunity, innovation, and growth in the years to come.

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