Check-In to India’s $24B Hospitality Growth Story
From grand weddings to quiet staycations, spiritual pilgrimages to business meets, India’s hotels are now the stage where moments turn into memories.
With a market size of $24.24 billion, the hospitality sector is driving job creation, tourism, and urban development.
Rising incomes, improved connectivity, and a growing love for travel are transforming hotels into symbols of India’s new-age lifestyle.
And with GST rationalisation on the horizon, the momentum is getting stronger.
But what does the hospitality industry cover?
It includes hotels, resorts, restaurants, bars, event venues, and diverse forms of tourism such as religious, medical, business, adventure, and leisure travel.
This quarter, the numbers tell a story of resilience and growth. Occupancy rates across the country are at 72 - 74%.
Revenue per available room (RevPAR) has climbed 12.9% year-on-year and 10% compared to the previous quarter.
Over 80% of new hotel projects are coming up in Tier II and Tier III cities, showing how smaller towns are becoming big travel hubs.
On the investment front, the industry has seen 106 hotel signings with 13,398 keys being added.
Looking ahead, ICRA projects revenue growth of 6 - 8% in FY26.
Premium hotel occupancy is expected to remain steady at 72 - 74%, while average room rates in the premium category are likely to rise to between ₹8,200 and ₹8,500.
So, what’s fuelling this boom?
Better connectivity through upgraded airports, highways, and railways is making travel easier than ever.
Rising disposable incomes and an expanding middle class are bringing more Indians into hotels that were once considered aspirational.
The MICE (meetings, incentives, conferences, and exhibitions) segment is making a strong comeback, as is corporate travel.
Digitalisation is reshaping how people book hotels through direct channels.
Many companies are adopting an asset-light expansion model, focusing on Tier II and Tier III cities where the real growth story lies.
The government is playing a big role too.
In the Union Budget FY26, more than ₹2,500 crore was allocated to tourism, and ₹20,000 crore was earmarked for developing 50 top destinations.
By 2047, the vision is to attract 100 million inbound tourists.
Supportive schemes, such as MUDRA loans for homestays, the expansion of e-visa facilities, and skill development programs, are also giving the sector a fresh energy.
Tax relief could be another game-changer. The GST cut is expected to fuel both travel, employment and investments.
Rooms priced below ₹7,500 per night now attract only 5% GST, down from 12%, giving mid-market hotels a major boost.
Luxury properties above ₹7,500 remain taxed at 18%, with some add-ons taking it up to 40%.
Food and beverage services have also been simplified, with 5% GST without input tax credit and 18% with credit. Finally, GST rationalisation will reduce compliance hassles and cut down on disputes around bundled services.
As for travel trends, they are reshaping the way Indians explore.
Destination weddings and staycations are now mainstream.
A new wave of “bleisure” travel, where 92% of Indians say they want to combine work and leisure, is changing hotel demand patterns.
AI-driven personalisation is allowing hotels to anticipate guest needs in real time. Short weekend breaks are giving way to longer, more immersive trips.
The road ahead is massive. India’s hospitality market is projected to touch $45.40 billion by 2030, growing at a CAGR of 13.38%.
By 2047, the industry could contribute $3 trillion to GDP. The luxury travel market alone is expected to hit $123.7 billion by 2030, growing at nearly 9.8% annually.
The leading hotel chains are preparing for this wave.
The Indian Hotels Company Limited (IHCL) already operates more than 565 hotels with over 57,000 keys, and has a pipeline of more than 140 new hotels with 10,000 keys.
ITC Hotels runs over 140 properties with 13,000 keys and is adding 58 more hotels and 5,300 keys.
EIH Ltd currently has 30 hotels with 4,215 keys, and another 25 hotels in the pipeline with 2,000 keys.
Lemon Tree Hotels has 116 properties with 10,661 keys and is expanding with 110 hotels and 7,500+ keys.
India’s hospitality boom is about more than just rooms and rates. It’s about how people travel and connect.
With growth ahead in every segment and demand spreading from metros to small towns, the next chapter of India’s hospitality story is only just getting started.
Sources:
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