India’s hospitality sector continued its strong post-pandemic trajectory in the first quarter of 2025, outperforming several Asia Pacific (APAC) peers and confirming its position as a key engine of regional growth. In its recently released Quarterly Hospitality Monitor for 2025, Hotel Momentum India, real estate consultancy JLL reported that the hospitality sector posted a 16.3% year-on-year increase in Revenue Per Available Room (RevPAR), supported by resilient domestic demand, a vibrant event calendar, and rising investor confidence.
This growth trajectory places India among the top-performing hotel markets in the APAC region, where overall RevPAR grew by 2.1% year-on-year, as per Colliers’ Asia Pacific Hospitality Insights report. While mature markets like Japan, South Korea, and Australia dominated transactional activity, India stood out as a demand-led growth frontier, especially with a surge in domestic and outbound travel.
Domestic Demand Drives Growth
According to JLL, India’s top urban markets recorded robust year-on-year growth in Q1 2025. Bengaluru led the charge with a remarkable 38.3% jump in RevPAR, propelled by the Aero India 2025 event. Delhi (26.2%) and Mumbai (21.3%) also posted solid gains, underpinned by high occupancy levels and rising average daily rates (ADR). Chennai, supported by corporate activity and trade events like the Annual Leather Fair and USICON, saw an 18.7% RevPAR growth, while Hyderabad recorded a 15.1% increase despite a dip in occupancy.
The sector’s resilience was further evidenced by a sequential growth of 8% in RevPAR from Q4 2024, marking a consistent upward trend.
Expanding Footprint
India’s hotel development pipeline continues to strengthen, reflecting rising investor conviction. Q1 2025 saw the signing of 79 new hotels, amounting to 9,478 keys, and the opening of 31 branded properties with 3,253 keys across the country, as per the JLL report.
Tier-II and Tier-III cities led this growth. Tier II cities accounted for 50 hotel signings with 5,904 keys, while Tier III cities saw 15 hotel signings totalling 1,508 keys. This aligns with Colliers’ observation that cities such as Ayodhya, Shirdi, Puri, and Varanasi are becoming new investment hotspots, driven by spiritual tourism, infrastructure development, and government policy focus.
Luxury and upper-upscale segments also remained active, with six luxury hotels (1,150 keys) and 17 upper-upscale hotels (2,233 keys) signed during the quarter.
Investment Activity and Strategic Alliances
Although overall APAC hotel deal volume declined by 19% in Q1, capital allocation remained focused on high-liquidity markets. India continued to attract investor interest, evident in transactions such as Chalet Hotels’ ₹530 crore acquisition of The Westin Resort & Spa in Rishikesh.
Meanwhile, global hotel chains are expanding their India footprint through strategic partnerships. Hilton’s alliance with NILE Hospitality to launch 75 Hampton-branded hotels across India, with openings expected in Gujarat, Rajasthan, Punjab, and Bihar by 2026, underscores the long-term growth outlook.
JLL estimates that India’s hospitality sector could attract $1 billion in investments by 2028, a sharp increase from the $340 million in hotel transactions recorded in 2024.
India’s Regional Impact
India’s growth narrative is no longer confined to domestic borders. According to Colliers, Indian travelers are increasingly shaping demand patterns across APAC destinations like Thailand, Vietnam, and South Korea. With rising disposable incomes and a growing preference for experience-driven travel, Indian tourists are now considered a year-round demand source in many regional markets. This structural shift has helped maintain strong room rates in popular APAC destinations.
In the region, cities such as Phuket, Tokyo, New Delhi, Mumbai, and Osaka topped the average daily rate (ADR) growth charts, reflecting a broader shift towards rate-led performance strategies. India’s inclusion in this cohort signals its increasing alignment with mature hospitality markets.
Outlook
The Indian hospitality sector is expected to sustain its growth trajectory through 2025, buoyed by strong fundamentals, widening geographical demand, and strategic investments. With RevPAR and ADR trends staying positive and capital deployment showing signs of gradual recovery, India’s performance in Q1 sets a firm foundation for continued expansion in the quarters ahead.
While challenges such as geopolitical uncertainties and rising construction costs remain, market experts believe that operational precision, experience-focused offerings, and disciplined asset strategies will define the next phase of sector growth in India.
Sources: 1. JLL Hotel Momentum India Q1 2025 Report
2. Colliers Asia Pacific Hospitality Insights May 2025
Image Credit: Adapted from Canva
