India Hospitality Market Size & Share Analysis - Growth Trends and Forecast (2026 - 2031)

India Hospitality Market Trends and Insights

Rising Domestic Middle-Class Leisure Spend

Rising incomes among India’s growing middle class are driving strong growth in domestic leisure travel. According to the India Tourism Data Compendium 2025, domestic tourism far exceeds inbound travel, with spending reaching around USD 185 billion in 2024. Younger travelers are increasingly opting for experience-led trips, including cultural, adventure, and wellness travel, boosting per-trip expenditure. Supportive government initiatives like improved connectivity and Dekho Apna Desh campaigns have made travel more accessible, making the middle class a key driver of India’s tourism growth. ^{[1] Ministry of Tourism, Government of India, “India Tourism Data Compendium 2025,” Ministry of Tourism, tourism.gov.in.} Operators benefit from greater spend per trip and more frequent weekend getaways, trends that support occupancy and allow careful revenue management during peak seasons. The dispersion of demand beyond metros into Tier-1 and key Tier-2 cities strengthens local corridors, lifts room-night absorption, and encourages conversions of unbranded properties into organized flags. The India hospitality market, therefore, draws strength from domestic leisure resiliency, which limits volatility from corporate cycles and inbound shocks. These shifts support steady pricing power in urban and leisure clusters where branded supply is still building out.

Government Initiatives Supporting Market Growth

Tourism programs focused on circuits, destinations, and digital discovery continue to expand the investable landscape in the India hospitality market. The Ministry of Tourism has sanctioned projects under Swadesh Darshan 2.0 and PRASHAD to strengthen infrastructure at high-traffic religious and cultural sites, and it is rolling out connectivity projects that improve access to secondary destinations. The government’s Incredible India initiatives and the digital platform have enhanced awareness and discovery, with large volumes of domestic visits recorded on official platforms in 2024 as part of sustained promotion of top destinations. ^{[2]Press Information Bureau, “PRASHAD Scheme Press Release,” Press Information Bureau, pib.gov.in.} Expansion in operational airports has improved airlift into multiple state capitals and leisure hubs, reinforcing traffic into both business and holiday markets. Budget allocations to tourism infrastructure in FY26 underscore a steady policy impetus that helps de-risk investment planning for operators and developers. Over time, these measures are expected to distribute demand more evenly across regions, reduce seasonality, and drive a healthier mix of trip purposes.

Budget & Mid-Scale Chain Expansion

Asset-light growth is transforming India’s hospitality market, with chains prioritizing management contracts and franchise conversions to scale rapidly. Organized brands currently represent a small share of total room inventory, leaving significant unbranded capacity available for conversion. Mid-scale global brands are expanding with locally adapted offerings, such as Marriott’s Series, targeting corporate and pilgrimage corridors at accessible price points. Growth in Tier-2 and Tier-3 cities formalizes grey-market inventory and improves hygiene and safety standards, boosting guest confidence. This approach reduces capital intensity for operators, allows faster market entry, and increases repeat bookings through direct channels. Expansion of budget and mid-scale chains is supported by rising domestic travel and demand for affordable, quality stays, with organized hotel inventory projected to exceed 300,000 branded rooms by 2029. Government initiatives, including lower GST on rooms under USD 90.35, further enhance investment, occupancy, and overall market growth. ^{[3]India Brand Equity Foundation, “Tourism & Hospitality,” India Brand Equity Foundation, ibef.org.}

Upgraded Pilgrimage Circuits Driving Spiritual & Wellness Tourism

Pilgrimage circuits continue to create multi-night stay opportunities that lift room-night demand near major temples and spiritual hubs. Government programs have directed spending toward religious corridors and amenities that ease travel for families and elderly visitors, which translates to longer stays and higher per-visit spending at destination-adjacent hotels. Ayodhya’s 2024 consecration created a surge of pilgrim movement that lifted room demand, and enhanced airport and road links are unlocking similar trends in Varanasi and other spiritual centers. A segment of guests now seeks premium lodging with wellness add-ons such as Ayurveda-based treatments and yoga experiences, which further supports higher-rate inventory around leading spiritual destinations. Operators are responding by refurbishing heritage buildings and adding boutique properties calibrated to high-spend spiritual travelers. The India hospitality market gains a durable demand spine from spiritual and wellness travel that complements urban corporate traffic and beach-leisure segments.

High GST on Premium Room Tariffs

The current GST structure imposes a higher tax on rooms above a certain tariff threshold, which reduces net yields for premium city hotels and upscale leisure resorts. This limits India’s price competitiveness compared to some Southeast Asian destinations for high-value leisure and MICE travelers. Margin pressures also arise for operators when input costs and tax credits are restricted at lower tariff bands, affecting pricing flexibility for budget and mid-scale hotels. These challenges are particularly pronounced in top metros, where mid-tier average daily rates often approach or exceed the GST threshold. Operators must carefully balance occupancy and rate strategies to maintain demand while protecting profitability. In the near term, the market needs to design offerings that preserve rate integrity while ensuring value for guests managing higher trip expenses.

Transport Infrastructure Gaps in Tier-2/3 Airports & Rail

Connectivity challenges continue to constrain supply expansion in smaller cities and remote destinations with high leisure potential. Limited flight options, inadequate last-mile road infrastructure, and inconsistent local utilities can increase project timelines and development costs, delaying hotel openings and discouraging private investment. Regions like the North-East remain under-penetrated despite rich cultural and biodiversity assets, reflecting access and perception barriers. Even where new airports are operational, workforce readiness often lags, requiring operators to invest in training and relocation to maintain service standards. Until connectivity programs mature and transportation links stabilize, these infrastructure gaps will continue to limit the growth of the hospitality market in Tier-2 and Tier-3 locations.

Segment Analysis

By Type: Asset-Light Franchise Models Accelerate Chain Rollouts

Independent Hotels held 56.45% of the India hospitality market share in 2025, while Chain Hotels are projected to grow at a 16.76% CAGR through 2031 as asset-light models support wider, faster expansion. Operators are converting unbranded inventory into standardized flags that leverage loyalty, distribution technology, and brand quality audits to lift visibility and rate realization. The India hospitality market benefits from conversions that enhance hygiene and safety standards, which increases trust among family travelers and international visitors. Global chains are also positioning mid-scale brands in Tier-2 and Tier-3 cities to close the quality gap in corporate corridors and pilgrimage circuits. Organized brands continue to add management contracts that reduce upfront capital needs for developers while creating fee-based revenue streams for operators.

Independent operators still anchor local markets where entrepreneurial ownership and location advantages remain strong. Even so, brand affiliation is gaining traction because it can reduce marketing and distribution spends and help stabilize occupancy across seasons. With organized hotels representing a small portion of total rooms, conversion-led growth remains a durable theme for the India hospitality market. Digital reviews and meta-search comparisons also reward standardization, nudging independents to adopt brand systems to protect demand from OTA-driven price wars. As a result, Chain Hotels’ share should rise as conversions accelerate and new management agreements add keys in strategically important nodes.

Note: Segment shares of all individual segments available upon report purchase

By Accommodation Class: Luxury Premiumization Meets Mid-Scale Workhorse Growth

Mid and Upper-Mid-scale properties commanded 38.55% share in 2025, serving demand from corporate travelers, domestic leisure families, and small meeting groups at accessible price points. The India hospitality market size advantage for this class rests on dense urban distribution and proximity to industrial and IT hubs, which provide weekday volume and steady event traffic. At the same time, Luxury is projected to grow at 15.13% CAGR through 2031 as affluent guests seek heritage stays, wellness immersion, and high-touch service near key spiritual and leisure destinations. Spiritual-circuit upgrades and destination marketing improve destination appeal for premium guests who prefer curated experiences and short-stay renewals. These trends support rate integrity at the top end while mid-scale continues to deliver volume.

Service Apartments are maturing as a flexible option for long-stays, relocations, and hybrid-work professionals. International brands operate multiple residences in India that offer kitchenettes, flexible leases, and loyalty integration, which complement traditional hotels in gateway and secondary cities. Budget and economy hotels provide essential coverage for price-conscious travelers, though staffing and input-cost pressures can limit service upgrades without tariff changes. Operators balance these realities by focusing on efficiency, select-service design, and technology for lean operations. The India hospitality market benefits from this layered supply, which matches diverse price points and trip purposes across regions.

By Booking Channel: Direct Digital Platforms Reclaim Margin from OTA Dominance

Online Travel Agencies accounted for 42.51% of bookings in 2025, having improved discovery and price transparency for travelers and independents alike. The India hospitality market's exposure to OTAs remains significant for seasonal spikes and last-minute segments, where mobile discovery drives quick conversion. Direct Digital is projected to grow at a 15.53% CAGR through 2031 as brands deepen loyalty benefits, improve websites and apps, and offer member-only rates to shift repeat guests to proprietary channels. Brands are pairing direct offers with targeted communications and better user experiences to reduce friction at checkout and improve retention. Corporate and MICE contracts continue to be valuable for city hotels due to bundled room and F&B commitments that can stabilize weekday utilization.

Traditional agents remain relevant in inbound leisure because language support and itinerary curation reduce planning complexity for long-haul travelers. For premium properties, direct concierge relationships support bespoke packages, destination experiences, and tailored wellness add-ons that OTAs do not deliver. The India hospitality industry will continue to use a mix of OTA reach for discovery and direct channels for repeat conversion and margin protection. Over time, operators that successfully blend the two can optimize RevPAR, balance occupancy and rates, and build higher lifetime value across cohorts. This multi-channel balance is now a core strategic pillar in most branded chains’ commercial playbooks.

Note: Segment shares of all individual segments available upon report purchase

Geography Analysis

West India accounted for a 30.13% share in 2025, combining Mumbai’s corporate traffic, Goa’s leisure draw, and Gujarat’s industrial corridor demand. As India’s financial capital, Mumbai supports year-round business stays and sustained premium ADRs at top business districts. Goa continues to attract heavy seasonal leisure traffic from domestic and international visitors, while improved airlift supports better year-round occupancy for resorts and boutique properties. Gujarat’s hubs provide steady weekday demand sourced from manufacturing and services, extending the business travel network that underpins regional performance. The India hospitality market remains resilient in West India as diversified demand streams and strong infrastructure protect base occupancy.

South India presents balanced growth drivers that span IT services, pharmaceuticals, manufacturing, wellness, and pilgrimage. Bengaluru captures a high share of corporate room nights due to its technology base and meeting infrastructure, while Chennai and Hyderabad add export-led and research-led traffic to the regional mix. Kerala’s wellness positioning sustains high-spend inbound demand, and a supportive policy stance continues to promote culture and nature-based experiences that lengthen stays. CRZ rules in coastal states influence resort footprints by capping height and floor area parameters in designated zones, which shape new project economics and push some developments to inland locations. The India hospitality market benefits from South India’s diverse demand profile, which helps mitigate single-sector cyclicality.

North, East, and North-East India together add depth and newly addressable demand pools. North India balances pilgrimage, leisure, and government-seat business travel, with Ayodhya and Varanasi drawing high pilgrim volumes and Delhi-NCR anchoring international gateways. East India’s mix of temple tourism in Odisha and heritage-led leisure around Kolkata sustains occupancy, though growth rates can lag due to slower industrial expansion. The North-East holds a smaller 2025 base but is projected to grow at 16.46% CAGR through 2031 as regional connectivity and accommodation options improve from a low starting point. As airport capacity and hospitality training expand, new keys are expected across Guwahati, Shillong, and other gateways, with early moves by selected chains and boutique players. West India’s position remains strong, and North-East India’s acceleration illustrates how connectivity unlocks latent cultural and adventure demand in the broader India hospitality market.