Hospitality Industry in India Size & Share Analysis - Growth Trends & Forecasts (2025 - 2030)

India Hospitality Market Analysis

The Hospitality Industry In India Market size is estimated at USD 281.83 billion in 2025, and is expected to reach USD 541.70 billion by 2030, at a CAGR of 13.96% during the forecast period (2025-2030).

India's hospitality sector has undergone significant transformation driven by favorable government policies and infrastructure development initiatives. The government has implemented several measures to boost investments, including allowing 100% FDI through the automatic route and offering five-year tax holidays for hotels located around UNESCO World Heritage sites. The Ministry has established the Hospitality Development and Promotion Board to streamline hotel project clearances and approvals. Additionally, the government has allocated INR 2 billion for developing tourist circuits at pilgrimage sites across the country, demonstrating its commitment to enhancing tourism infrastructure. These initiatives have positioned India among the top 100 countries globally for ease of doing business, particularly in the hospitality sector in India.

The industry is witnessing a fundamental shift in ownership and operational models, with franchise and lease arrangements gaining prominence over traditional owned-hotel structures. Hotel chains are increasingly adopting asset-light strategies, focusing on management contracts rather than property ownership to drive revenue growth. This transformation is particularly evident in the organized hotel industry, where the consumer internet market is concentrated in urban and affluent cities. The trend has led to hotel conversions nearly doubling, with domestic hotel chains showing greater flexibility in terms of hotel size and maintaining a 65:35 ratio over international brands in conversion rates.

Technology integration and personalization have become crucial differentiators in the hospitality sector in India. Data analytics and AI technologies are revolutionizing the supplier side of the hotel industry, enabling personalized recommendations and targeted promotions based on guest preferences and behavior patterns. Hotels are increasingly investing in digital solutions for everything from booking systems to guest experience management, with many properties introducing advanced features such as mobile check-in, digital room keys, and AI-powered concierge services. This technological evolution has particularly benefited the online booking segment, with most reservations now originating from tier-1 and tier-2 cities.

Consumer preferences have evolved significantly, with a growing emphasis on experiential travel and authentic local experiences. The tourism sector has emerged as a significant employment generator, currently accounting for 39 million jobs, representing 8% of the country's total employment. Staycations have emerged as a prominent trend, with major hotel chains introducing specialized packages to cater to this growing demand. Properties are increasingly focusing on incorporating local cultural elements, sustainable practices, and unique experiences to differentiate their offerings. This shift has led to the development of various tourism themes, including nature, heritage, cultural, wellness, and MICE (Meetings, Incentives, Conferences, and Exhibitions) segments, each requiring specialized tourism and hospitality services and amenities.

India Hospitality Market Trends

Government Support and Infrastructure Development

The Indian government's proactive approach in developing tourism infrastructure has become a significant driver for the hospitality industry. The government's ambitious plan to revitalize 50 additional airports, heliports, and water aerodromes is strengthening regional air connectivity, making previously underserved destinations more accessible to tourists. This infrastructure development is complemented by the comprehensive mission to develop fifty tourism destinations as complete packages for both domestic and international tourists, creating new opportunities for hotel establishments across various locations.

The implementation of innovative schemes and digital initiatives has further catalyzed industry growth. The revitalization of the Swadesh Darshan Scheme as Swadesh Darshan 2.0 (SD2.0) demonstrates the government's commitment to sustainable tourism development. Additionally, the introduction of NIDHI+, an upgraded version of the National Integrated Database of Hospitality Industry, has streamlined operations by incorporating various stakeholders including accommodation units, travel agents, tour operators, tourist transport operators, food and beverage units, and convention centers, significantly improving ease of doing business in the sector.

Rising Domestic Tourism and Business Travel

The robust growth in domestic tourism has emerged as a fundamental driver of India's hospitality industry, with states like Uttar Pradesh, Tamil Nadu, Andhra Pradesh, Karnataka, and Gujarat leading in domestic tourist visits. This surge in domestic travel has directly contributed to improved operational metrics across the hospitality sector, with occupancy rates reaching between 60-67% and average room rates (ARR) showing a substantial increase of 37-39% compared to previous periods, indicating strong domestic demand for quality accommodation.

The business travel segment has shown remarkable resilience and growth, particularly evident in the expansion of hotel chains into new territories. Hotels are increasingly focusing on Tier-3 and Tier-4 cities, recognizing the untapped potential in these markets. This expansion is supported by the growing corporate presence in these regions and the development of business infrastructure, creating a sustained demand for quality accommodation options. The success of this strategy is reflected in the significant improvement in Revenue per Available Room (RevPAR), which has witnessed an impressive growth of 89-91%. This trend underscores the growing hospitality sector in India, marking a significant milestone in the growth of the hospitality industry narrative.

Strategic Hotel Chain Expansion

The aggressive expansion strategies adopted by major hotel chains have become a crucial driver for market growth, with companies accelerating their development plans to meet increasing demand. This is evidenced by the more than 35% increase in brand signings by keys compared to previous periods, demonstrating the industry's confidence in long-term growth prospects. The expansion is particularly noteworthy in its strategic approach, with hoteliers targeting both established markets and emerging destinations to create a more comprehensive hospitality network across India.

The scale of expansion is reflected in the significant pipeline of new projects, with major players making substantial commitments to growth. For instance, Marriott International's plan to open 12 new hotels and Radisson Hotel Group's signing of 21 hotels across nine brand portfolios demonstrate the industry's robust expansion trajectory. This strategic growth is characterized by a diversified approach, with companies developing properties across various segments and locations, ensuring market penetration across different consumer segments and geographical areas. This expansion is a testament to the booming hospitality sector in India, highlighting the growth of the hospitality industry.

Economic Growth and Disposable Income

The reduction in personal income tax rates has emerged as a significant driver for the hospitality industry by increasing disposable income levels among potential domestic travelers. This economic stimulus has directly contributed to increased spending on leisure travel and hospitality services, creating a positive cycle of demand for hotel accommodations across various segments. The impact is particularly noticeable in the rising demand for experiential travel and premium hospitality services, as consumers have more financial flexibility to explore diverse travel options.

The industry's growth is further supported by the government's emphasis on public-private partnerships, which has created a favorable environment for investment in the hospitality sector. This collaborative approach has not only facilitated the development of new properties but has also contributed to the sector's role as a significant employment generator. The multiplier effect of increased disposable income, combined with improved infrastructure and accessibility, has created a sustainable growth ecosystem for the hospitality industry, attracting both domestic and international investments in various hospitality projects across the country. This dynamic environment underscores the future of the hospitality sector in India, with a focus on the growth and development of the hospitality industry.

Segment Analysis: By Type

Independent Hotels Segment in Indian Hospitality Industry

Independent hotels dominate the Indian hospitality landscape, commanding approximately 72% of the hotel market size in 2024. These establishments include resorts developed by independent owners, guesthouses, local spas, and various other accommodations. The segment's strength lies in its ability to offer authentic Indian cultural experiences, with properties ranging from mountain retreats and forest lodges to beachside accommodations. Independent hotels have gained significant traction among millennial travelers who prefer varied experiences over traditional hotel stays. The segment has witnessed tremendous supply growth in recent years, with small property owners converting their assets into guesthouses, backpackers' hostels, and homestays. These properties typically operate through a property leasing model, taking up facilities on long-term leases with fixed monthly payments, which helps maintain an asset-light business structure and achieve faster break-even periods.

Chain Hotels Segment in Indian Hospitality Industry

The chain hotels segment is projected to experience robust growth of approximately 6% during the forecast period 2024-2029, emerging as the fastest-growing segment in the Indian hospitality segment. This growth is primarily driven by the increasing relevance of international brands in the Indian hotel landscape and the rising trend of hotel conversions. Chain hotels are leveraging their advantages of centralized reservation systems, management expertise, financial strength, and promotional capabilities to expand their presence across the country. The segment has shown particular strength in tier 3 cities, which have seen the maximum number of brand signings, with both domestic and international operators showing increased flexibility in their approach to minimum key counts and food & beverage offerings to cater to specific market requirements.

Segment Analysis: By Segment

Mid and Upper-mid-scale Hotels Segment in Indian Hospitality Industry

The mid and upper-mid-scale hotels segment continues to dominate the Indian hospitality industry, commanding approximately 59% of the hotel sector in 2024. This segment's strong performance is driven by its appeal to both business and leisure travelers seeking quality accommodations at reasonable prices. These hotels typically offer essential amenities like room service, coffee shops, and airport/railway station transfers, while maintaining a balance between comfort and cost-effectiveness. The segment's success is particularly evident in key metropolitan areas, with cities like Delhi, Mumbai, and Bengaluru showing robust occupancy rates and consistent demand from corporate travelers and domestic tourists.

Budget and Economy Hotels Segment in Indian Hospitality Industry

The budget and economy hotels segment has emerged as the fastest-growing segment in the Indian hospitality market, projected to grow at approximately 6% annually through 2024-2029. This remarkable growth is primarily driven by increasing domestic tourism, rising middle-class travel aspirations, and the growing preference for affordable yet comfortable accommodations. The segment has witnessed significant technological adoption, with many properties implementing digital solutions for bookings and operations. The expansion is particularly notable in tier-2 and tier-3 cities, where there is a growing demand for standardized, no-frills accommodation options that offer essential amenities at competitive prices. This growth trajectory underscores the increasing budget hotel market size within the accommodation sector.

Remaining Segments in Indian Hospitality Industry

The luxury hotels and service apartments segments complete the Indian hospitality market landscape, each serving distinct customer needs. The luxury hotels segment caters to high-end travelers and business executives, offering premium amenities and personalized services that set them apart in the market. Meanwhile, the service apartments segment has carved out its niche by catering to long-stay corporate travelers and families, providing home-like comfort with hotel-style services. Both segments have adapted to changing consumer preferences by incorporating modern technologies and sustainable practices while maintaining their unique value propositions in the market. These segments highlight the diverse 5 segments of hospitality within the industry.