India’s hospitality sector is entering a more durable growth phase, supported by strong demand fundamentals, rising institutional participation, and a clear shift toward premiumisation and disciplined expansion. According to Anshuman Magazine, Chairman & CEO – India, South-East Asia, Middle East & Africa at CBRE, the current momentum reflects a structural re-rating rather than a cyclical rebound. In an exclusive interaction with Asmita Mukherjee, Anshuman Magazine outlines the key indicators underpinning this upcycle.
India’s hospitality sector is moving from recovery to structural growth. What are the strongest indicators that this is a sustained upcycle rather than a cyclical rebound?
The sector has maintained a strong growth momentum throughout 2025 despite year-end headwinds such as geopolitical tensions and operational disruptions in the aviation sector. Occupancy levels reached approximately 64%, while RevPAR rose 11% year-on-year, surpassing the 9% growth recorded in 2024, and ADR increased by 8.7%. What is particularly compelling is the demand composition underpinning these numbers. The sector is transitioning from post-pandemic recovery into a phase of structural maturity, marked by disciplined expansion and stable pricing strategies. Domestic tourism posted a 40% year-on-year rise in visits to 4.1 billion in 2025, and CBRE estimates the hospitality market will grow from approximately USD 24.6 billion in 2024 to roughly USD 31 billion by 2029. It is not a rebound but a re-rating.
With over 70,000 new keys expected by 2030, how should developers and operators approach supply expansion to avoid the risk of overbuilding?
Scale without discipline is a risk, and our data makes this clear. The sector is witnessing a realignment, with operators increasingly adopting asset-light expansion models such as management contracts and franchise partnerships to strengthen balance sheets and pursue more disciplined growth strategies. Geography matters as much as format. Major hospitality players are evaluating opportunities across tier-II and tier-III cities, supported by improving connectivity and expanding tourism infrastructure, where the country’s extensive base of independent and unbranded hotels presents opportunities for asset aggregation and brand conversions. A phased, demand-anchored approach, calibrated to infrastructure timelines and the clear consumer shift toward premium and experience-led formats, will be the defining discipline of this expansion cycle.
Hotel deal activity has surged significantly. What is driving this renewed institutional interest, and how are investment strategies evolving?
The numbers reflect a genuine shift in conviction. The sector witnessed a significant surge in investment activity in 2025, with total hotel deal value reaching approximately USD 456 million, a 2.5-fold year-on-year increase from USD 184 million in 2024. As CBRE notes, this momentum is structural rather than opportunistic. Investment activity in the hospitality sector is likely to remain active through 2026, supported by sustained travel demand and continued investor interest in scalable hospitality platforms. The strategic playbook has also evolved, consolidation activity is expected to gain momentum in 2026, with operators increasingly exploring acquisition-led growth strategies to scale portfolios and broaden market presence. Major players have also turned to public markets, using high-profile IPOs to raise capital, reduce debt, and accelerate regional expansion, a sign of the sector’s growing institutional confidence.
There is a clear shift toward upper-midscale and upscale developments. Is this purely demand-driven, or are developers also influencing this premiumisation trend?
It is both simultaneously. The supply pipeline in 2025 shifted decisively towards premiumisation, addressing the heightened consumer appetite for luxury experiences, with the upper midscale, upper upscale, and upscale categories cumulatively accounting for 60% of new openings. Developers are not simply responding to demand signals, they are actively steering inventory toward higher-yield segments as a margin strategy. Developers and operators are transitioning towards higher-yield, experience-driven assets, increasingly focusing on integrated mixed-use hubs and residential-style luxury offerings to cater to high-net-worth individuals seeking a “hotel-at-home” lifestyle. Premiumisation is therefore as much a supply-side conviction as it is a demand-side response.
Tier-II, Tier-III, and spiritual destinations are gaining traction. What makes these markets investment-ready today?
The investment case for these markets has been fundamentally strengthened by infrastructure. The spiritual and heritage landscape is evolving into a year-round institutional demand segment, supported by government investments and the overhaul of national transit networks. Infrastructure developments such as proposed high-speed rail corridors and the ongoing expansion of the national aviation sector are enhancing accessibility and enabling premium operators to enter emerging markets. Institutional players are increasingly diversifying into leisure destinations, pilgrimage hubs, and emerging commercial cities where branded room supply remains constrained, opening space for conversion, greenfield, and brownfield opportunities. Lower land costs, limited branded competition, and a diversified demand mix spanning leisure, spiritual, and decentralisedcorporate travel further strengthen the investment thesis. Brands entering these markets must anchor offerings in local cultural context, wellness retreats, heritage conversions, and immersive formats that resonate with the character of the destination.
Beyond room revenue, how are hotels rethinking asset utilisation to maximise returns?
The most forward-looking operators have already repositioned themselves. Developers and operators are transitioning towards higher-yield, experience-driven assets, with an increasing focus on integrated mixed-use hubs and residential-style luxury offerings catering to high-net-worth individuals. Beyond rooms, destination-led F&B, MICE infrastructure, branded residences, and curated wellness experiences are becoming core revenue levers. We expect investment activity to remain active through 2026, driven by sustained travel demand and growing investor interest in scalable hospitality platforms, with institutional investors increasingly exploring opportunities in both operational assets and development projects. This multi-revenue model enhances guest engagement, drives higher spend per customer, and creates more resilient, diversified income streams that reduce dependence on occupancy-driven room revenue alone.
What are the key risks that could disrupt this growth trajectory, and how should stakeholders prepare?
Resilience has already been tested, and the sector has held. The sector maintained strong growth momentum throughout 2025 despite geopolitical headwinds and operational disruptions in the aviation sector. But this resilience should not breed complacency. Macroeconomic volatility, demand disruptions, and cost inflation remain live risks. The strategic response, as CBRE’s data reinforces, lies in structural preparedness, asset-light models that strengthen balance sheets, diversification across geographies and demand segments, and acquisition-led growth strategies that build scale without concentrating risk. Stakeholders who treat resilience as a design principle rather than a reactive response will be best placed to navigate future volatility.
Which segments within hospitality are currently attracting the most investor interest, and why?
Investor interest is broad-based but increasingly purposeful. Investor interest is shifting towards leisure destinations, pilgrimage centres, and emerging commercial cities with constrained branded supply, markets where entry barriers are lower and yield potential is higher. Within segments, both ends of the quality spectrum are drawing capital: midscale for its scalability and strong domestic demand base, and premium, upscale, upper upscale, and luxury, for superior yield and alignment with India’s premiumisation trend. Developers and operators are also transitioning towards higher-yield, experience-driven assets, increasingly focusing on integrated mixed-use hubs and residential-style luxury offerings.
Alternative formats such as wellness retreats and experiential stays are emerging as attractive investment avenues given their differentiated positioning and ability to capture premium demand.
Which micro-markets or regions are emerging as the most attractive for hospitality development, and what is driving this shift?
Metro cities continue to anchor institutional portfolios with stable, year-round demand. But the growth frontier has decisively moved. The rise in domestic travel has led to a broader distribution of demand beyond traditional metro cities, with increased activity in tier-II and tier-III locations, encouraging hotel operators to expand their footprint in emerging markets where branded supply remains limited. Spiritual and heritage tourism is emerging as a year-round demand driver, supported by infrastructure upgrades such as aviation expansion and high-speed rail projects. Destinations such as Varanasi, Shirdi, Puri, Ujjain, and Rishikesh exemplify this shift. The convergence of infrastructure improvement, undersupply of branded inventory, and diversifying demand makes these among the most compelling micro-markets in the current cycle.
How do you see India positioning itself within the global hospitality landscape over the next decade?
The combination of a large and fast-growing domestic travel base, accelerating premiumisation, deepening institutional participation, and a maturing asset-light operating model positions India as one of the most structurally attractive hospitality investment destinations globally. With strong travel demand, improving connectivity, and sustained investor interest, we expect continued deal activity, consolidation, and long-term expansion across India’s hospitality sector through 2026 and beyond. Policy tailwinds, from GST rationalisation to hospitality skills development, will further consolidate India’s standing as a high-growth, long-cycle market with significant and sustained upside.
