Voices from the industry

Most industry leaders are upbeat. 

Hotel development in Tier II and Tier III towns will continue to be the theme on the back of micro economy, trade, pilgrimages, and improving connectivity through highways and new airports, feels Jaideep Dang, Managing Director Hotels and Hospitality Group, JLL India. “With the development of hotels around new airports in Tier I cities and emerging business cities—The Aerocity Model—the midscale and budget sector will be the largest direct beneficiary of this growth.

"The sector is also looking at how the demerger of ITC Hotels from its parent company, ITC will play out. Jeffries has predicted that as companies aim to capitalise on the positive sentiment for the Indian hospitality sector, the public listing landscape for hotels in India is likely to attract more listings. Besides ITC, other listings expected this year include those by Schloss Bangalore,  the Brookfield Asset Management-backed parent company of The Leela Hotels; owner and developer Brigade Hotel Ventures, which operates several hotels, largely in Bengaluru; and owner Ventive Hospitality. IPO/listings will continue as investors have taken a liking to the hospitality sector given its stellar performance of the recent past and listing gains,” points out Dang. “However, valuations would need to be measured. Boutique resort developments will continue to gain prominence as domestic travellers explore India.”

Manav Thadani, Founder and Chairman, Hotelivate opines: "With most markets continuing to record strong occupancies and amid average daily rate (ADR) growth, we do not expect too much pressure to be exerted by new supply. As a result, hotels should be expected to continue their strong performance and record ADR growth of over 7-8% in 2025.”

Dang points out that there are early signs of slowing down of GDP growth, which may lead to reduced travel allowances and discretionary spending on travel and leisure. “Demand growth continues to outpace supply growth. However, the pace of growth will be more measured owing to a higher base effect. Domestic tourism will continue to dominate demand growth, while Foreign Tourist Arrivals still await complete recovery to pre-COVID levels. Free or easy visas and attractive travel and lodging pricing of surrounding markets such as Thailand, Vietnam, Kazakhstan, and Middle Eastern countries—which provide more options, variety, culture and experiences—could further impact Indian leisure markets such as Goa, unless we correct course on pricing—including the increasing cost of domestic air travel.

“Demand in travel will continue to be supported by enhanced infrastructure and air connectivity, backed by a strong commercial office sector outlook and the opening of multiple new convention centres across the country,” adds Dang. “There will be growth in occupancies in certain micro-markets but not across the board. Rate growth could only be restricted to certain leisure markets like Rajasthan, especially in luxury and experiential segments as the rupee depreciates against the US dollar, which will make such destinations more attractive to foreign travellers. Similarly, the MICE segment, especially social/ weddings will continue to grow as overseas destination weddings will get expensive because of rupee depreciation against the US dollar.”

Anuraag Bhatnagar, Chief Executive Officer,  The Leela Palaces, Hotels and Resorts states: “The Indian hospitality industry in 2025 will be shaped by a growing demand for experiential and premium travel. Segments like heritage, wildlife, spiritual, and wellness tourism are expected to see continued momentum, reflecting a shift in consumer preference toward immersive and curated experiences. Increased domestic travel, driven by rising disposable incomes and government-backed tourism initiatives, will remain a key driver. The luxury hospitality segment, especially in Tier II and Tier III cities, is poised for growth due to improving connectivity and infrastructure. Additionally, the revival of MICE travel and the increasing popularity of destination weddings will also play pivotal roles in defining the industry’s trajectory.

Factors impacting Indian hospitality

Several key factors will impact the pace of growth in the hospitality industry in the coming years, points out Saxena. “On the positive side, evolving traveller preferences, especially the shift from destination-centric to experience-driven journeys, are likely to accelerate growth. South Asia, with its rich cultural heritage and diverse offerings like Ayurvedic wellness retreats in Kerala and culinary trails in Rajasthan, is well-positioned to cater to this demand for immersive, personalised experiences.

"Additionally, rising disposable incomes and improved infrastructure in Tier II and III cities are driving significant growth in emerging markets. These regions offer immense potential for hospitality development, with opportunities to provide world-class services across a variety of product types, including luxury, focused, and full-service hotels. However, challenges may arise in areas like over-reliance on certain markets, regulatory hurdles, and the need for sustainable practices. While innovation and new technologies in guest services and operations are enhancing the industry's adaptability and efficiency, these advances must be carefully integrated to maintain service quality and meet evolving consumer expectations. Overall, the industry’s pace of growth will be largely influenced by its ability to tap into new markets, adapt to shifting traveller demands, and implement technology and sustainability measures effectively.”

Another key trend is increased reliance on technology, including robotics, points out Ajay Bakaya, Managing Director, Sarovar Hotels & Resorts.  “While India has a large population, there's a growing labour shortage in the hospitality sector. Robots can help with tasks like cleaning guest room corridors and banquet halls, especially during off-peak hours, to address the staffing challenges in hospitality. We may even see robots being used in some hotels for guest interaction, like delivering drinks, mainly for the novelty factor or a bit of drama and adding a 'wow' factor. We will see more hotels being developed within a two to four-hour driving distance from major cities. This is due to lower land costs and the desire for quick getaways, especially with rising stress levels and increasing airfare which makes road travel a far better option.”

On a growth trajectory

Bakaya anticipates similar growth for the next four years. “Factors like infrastructure development, a stable government, and consistent policies all contribute to this positive outlook. We are failing to attract foreign travellers and that is sad. We need to create conditions where foreign travellers will want to come to India. Despite a strong domestic market, we need to promote India internationally. Domestic tourism will remain strong, but destinations like Goa need to improve their infrastructure and tourist-friendliness. Outbound travel will likely grow due to easier visa processes and affordability, but domestic travel will remain the dominant force.”

Sarovar has major expansion plans in 2025. “We currently operate 135 hotels across 80 destinations, with an ambitious pipeline of 15 new properties slated for 2025. We aim to expand our footprint to 150 hotels across 90 destinations. Notable upcoming projects include Sarovar Portico in Sindhudurg, Royal Tulip in Kathmandu, and Sarovar Premiere in Srinagar, among others. We are expanding into Nepal with three hotels, including the largest in the country. We've been working on this for 10 years, and it's finally coming to fruition. We are also opening hotels in Kampala, Uganda, and Hargeisa, Somaliland. We aim to grow in Africa, although it's a challenging market.”

The growth trajectory we saw in 2024 is likely to continue in 2025, propelled by strong domestic tourism, the increasing spending power of India’s middle class, and strategic government initiatives like the development of cultural corridors and enhanced infrastructure, says Nikhil Sharma, Managing Director and Area Senior Vice President, Radisson Hotel Group South Asia. “The growing popularity of Tier II and Tier III cities is another factor fuelling this expansion, as travellers explore beyond metros in search of authentic and less commercialised experiences. Our presence in these regions reflects our confidence in this trend. Several factors will shape the Indian hospitality landscape in 2025, with technology playing an increasingly pivotal role. From AI-driven personalisation to seamless, app-based services, technology will continue to enhance guest experiences, making stays more intuitive and tailored. Travellers now expect more convenience and flexibility, which digital tools can deliver effortlessly.

“The Indian hospitality industry is undergoing a significant transformation, driven by evolving traveller preferences,” underscores Sharma. “In 2025, we will see an increased focus on personalisation, sustainability, and immersive experiences. Guests, today, are looking for more than just a place to stay—they want meaningful connections to the destinations they visit. This means hotels will focus on offering authentic local experiences, from incorporating regional design and architecture to curating menus inspired by local cuisines. Sustainability will also be at the forefront. Travellers are becoming more eco-conscious—and hotels must adapt by employing green technologies, reducing single-use plastics, and supporting local communities. Wellness tourism is another trend gaining momentum, with guests seeking properties that prioritise mental and physical well-being through offerings like yoga retreats, spa therapies, and nature-based activities. While global economic uncertainties may pose challenges, our diversified portfolio and adaptability ensure we are well-positioned to navigate them. We remain optimistic about the resilience of the Indian hospitality sector. At Radisson Hotel Group, we’ve strategically expanded our footprint to 130 operating hotels across India, with a strong pipeline for the future. By combining innovative guest experiences with operational excellence, we are well-equipped to sustain growth while delivering exceptional value to our guests.”

India’s growth story is the wind beneath our wings, says Anil Chadha, Managing Director, ITC Hotels Limited. “The nation is witnessing a golden era of development, from rising disposable incomes and urbanisation to improved infrastructure and government initiatives promoting tourism. Each of our brands is poised to ride this tide, contributing to our growth in its unique way. The future demand drivers for tourism seem to be working well for the Indian market. ITC Hotels is looking at accelerated growth taking the current rooms count up from 13,000 keys in 140 hotels to 18,000 keys in 200 hotels by 2030 via the asset right strategy,” says Chadha. “Our brands—Welcomhotels, Storii, and Fortune—are positioned to drive scale and growth in Tier II and Tier III cities. We currently have a strong pipeline of managed hotels i.e. 45 hotels with about 4,000 keys across brands. Among these, 25 hotels are expected to join the operating portfolio in the next two years (upcoming hotels: Storii Sirmaur, Storii Kufri, Fortune Pahalgam and Welcomhotel Prayagraj).  On the other hand, our luxury brands—ITC Hotels and Mementos—will continue to be our flag bearers for the luxury portfolio. These hotels are more than just properties; they are destinations in themselves.

"Moreover, the flexibility of our brands allows us to collaborate with hotel owners across different geographies, property types, and scales. Whether it’s a luxury resort in the hills or a mid-sized business hotel in a metro, we have a brand that caters to the respective segment. The demand drivers are robust—be it the booming MICE segment, the rise of experiential travel, or the increasing popularity of wellness tourism. Going forward, the appetite for experiences is only growing. Today, travellers are willing to spend on curated stays, culinary adventures, and cultural immersions rather than just ticking off destinations.”

Vijay Thacker, Managing Director, Horwath HTL India, also expects the positive trend for hospitality to continue in 2025, thanks to greater business travel and greater inbound demand. "The sentiment is positive and that itself helps maintain buoyancy. At the same time, key issues must be tackled so that a stronger framework and grounding are put in place.”

K B Kachru, President, Hotel Association of India and Chairman, Radisson Hotel Group South Asia identifies leisure and business travel, weddings and events as the main drivers for the sector’s continued growth. “The demand outlook is healthy, supported by several factors such as enhanced infrastructure, including convention centres, roads, airports and rail that have improved connectivity; growth in Tier II and Tier III cities; India’s burgeoning middle-class taking more than three leisure trips in a year; and events like Maha Kumbh and the Coldplay concert, in addition to the demand for weddings and other events.” For the fiscal 2023-2024, he highlights, the branded and organised hotel sector in India closed with a nationwide occupancy of 67.5%, with a record high ADR of ₹8,055 and a RevPAR of ₹5,439, just short of the lifetime high achieved in 2007/08. Reportedly, the supply is expected to grow at a CAGR of 4.5-5%, lagging demand—and this will improve yields as well. 

The few and scattered clouds that could threaten an otherwise bright and shiny 2025 are perhaps the spread of HMPV, subdued GDP growth, the continued turmoil in the world and escalation of wars, points out Kachru. “India’s fundamentals and demographics are strong, and we are optimistic about maintaining the momentum in growth against all KPI like Occupancy, ADRs, RevPARs, signings and openings of hotels. Location specific/hotel specific variations, however, are to be expected.”

Indian hospitality is expected to see a 7-9% revenue growth in FY2025, over the 19% growth in FY2024, estimates ICRA. It is especially optimistic about domestic leisure travel, MICE demand, weddings and business in FY2025. In the face of stagnating inbound travel, domestic travel is expected to again take centre-stage this year, it predicts.

India’s growing economic clout means there are a lot of business and trade events too, many of which see participants travel from around the world.