India’s hotel sector to add over 70,000 keys by 2030

According to CBRE, India’s hospitality sector is set for sustained growth driven by demand, investment, and expansion

India’s listed hotel operators are projected to add over 70,000 keys by 2030 to capitalise on strong underlying growth potential, according to the India Alternate Sectors Outlook 2026, released by leading real estate consultancy and infrastructure company CBRE South Asia Pvt. Ltd. The report notes that the sector is transitioning from a phase of post-pandemic recovery into structural maturity, characterised by disciplined expansion and pricing stability.

Market growth and demand trends

According to the consultancy, the industry’s market size is projected to rise from approximately USD 24.6 billion in 2024 to ~USD 31 billion by 2029. Domestic tourism is likely to lead this growth, having posted a 40% year-on-year (YoY) rise in visits to 4.1 billion in 2025.

Industry perspective

“The hospitality sector’s trajectory is a testament to India’s economic resilience, supported by rising disposable incomes and improving accessibility facilitated by large-scale infrastructure development,” said Anshuman Magazine, Chairman & CEO – India, South-East Asia, Middle East & Africa, CBRE. “As the industry accelerates its transition towards experience-driven travel and captures institutionalised demand across spiritual and cultural centres, we anticipate robust and long-term expansion for the country’s hospitality ecosystem.”

Performance indicators in 2025

The sector maintained strong growth momentum throughout 2025 despite year-end headwinds such as geopolitical tensions and operational disruptions in aviation sector.

During the year, overall occupancy levels reached ~64%, providing a foundation for improved financial performance for operators. Revenue per available room (RevPAR) rose 11% year-over-year, surpassing the 9% growth recorded in 2024, while average daily rates (ADR) increased by 8.7%.

Shift towards premiumisation

The supply pipeline in 2025 shifted decisively towards premiumisation, addressing the heightened consumer appetite for luxury experiences. The Upper Midscale, Upper Upscale, and Upscale categories cumulatively accounted for ~60% of new openings.

Investment activity and capital markets

Since 2024, India’s hospitality sector has seen a sharp rise in investment activity, with institutional players acquiring large stakes. In 2025, hotel deal value reached USD 456 million, marking a 2.5x YoY increase from USD 184 million in 2024.

This momentum is expected to continue, with investors exploring portfolio-led deals and targeted acquisitions, while major players tap public markets through IPOs to raise capital and support expansion.

Investor outlook and strategic realignment

“Institutional players are aggressively acquiring large stakes in the hospitality sector,” said Rami Kaushal, Managing Director, Consulting & Valuations, India, Middle East & Africa, CBRE. “Investor interest is increasingly shifting towards diversification into leisure destinations, pilgrimage centres, and emerging commercial cities with a constrained supply of branded inventory. The strategic realignment towards asset-light expansion models is enhancing the sector’s institutional appeal, paving the way for sustained consolidation and M&A activity as operators look to scale their platforms.”

Asset-light growth and consolidation trends

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. This is likely to enhance the sector’s institutional appeal, according to the report. As the industry expands, consolidation activity is expected to gain momentum in 2026.

Expansion into emerging markets

Moreover, operators are increasingly exploring acquisition-led growth strategies to scale portfolios and broaden market presence. Major hospitality players are evaluating such opportunities across tier-II and tier-III cities, supported by improving connectivity and expanding tourism infrastructure. Additionally, the country’s extensive base of independent and unbranded hotels presents opportunities for asset aggregation and brand conversions.

Outlook for investment activity

Against this backdrop, 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.

Evolving development strategies

Developers and operators are also transitioning towards higher-yield, experience-driven assets. They are 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. Recent policy initiatives are expected to support the continued development of this ecosystem.

Infrastructure and policy support

The spiritual and heritage segment is emerging as a year-round demand driver, supported by infrastructure upgrades and improved connectivity.

GST rationalisation in September 2025 boosted competitiveness and affordability, while the Union Budget FY2026–27 proposed measures to strengthen training and long-term sector growth.