India’s hospitality sector is experiencing record demand growth, particularly in tier-2 and tier-3 cities, but hotel supply is struggling to keep pace. While around 15,000 new rooms are slated for addition in 2025 — a 50% jump over 2024 — experts warn the gap between demand and supply will likely persist until FY27.
“India’s hospitality sector is undergoing substantial expansion, steadily strengthening its position as a global hub,” said Anshuman Magazine, Chairman & CEO – India, Southeast Asia, Middle East & Africa, CBRE. He noted that hotel room supply is set to grow at a 2.5% CAGR through 2026, but will remain outpaced by demand, supporting strong performance metrics.
Hotelivate projects demand to rise at a 9.7% CAGR through FY28, while supply lags behind. This imbalance is already visible — Lemon Tree Hotels saw Q1 FY26 ARR climb 10% YoY to INR6,236, occupancy rise to 72.5%, and RevPAR jump 19% to INR4,523. ITC Hotels projects luxury and upscale demand to grow at 10.5% CAGR until FY29, ahead of 7.4% supply growth, with Q1 FY26 occupancy at 73%, up from 70% a year earlier.
The trend is echoed in Bengaluru, where Brigade Hotel Ventures reports demand growing at 10% annually versus 7% for supply, pushing rates and occupancies higher.
source: Money Control
