India’s Hotel Industry Faces Disparity: Luxury Properties Shine In Mumbai, Delhi, And Bengaluru While Budget Hotels Struggle Nationwide, Important Details To Be Aware Of

Published on October 3, 2025

India’s edifice manufacture continues to acquisition important growth, but nan description is not evenly distributed crossed nan country. Luxury and upscale properties, peculiarly successful awesome metropolitan cities specified arsenic Mumbai, Delhi, Bengaluru, and Hyderabad, are flourishing, benefiting from precocious request driven by some business and leisure tourism. These cities are seeing important increases successful room rates and revenue per disposable room (RevPAR), signaling a thriving luxury segment. However, nan fund and mid-market edifice sectors are facing slower request and mounting challenges, particularly successful smaller cities wherever edifice oversupply and constricted pricing powerfulness person created a little favorable environment.

Disparity successful Growth Between Luxury and Budget Hotels

In FY 2024–25, nan mean nightly complaint for five-star deluxe hotels successful India surged to INR 16,797 successful March 2025, marking a emergence of astir INR 1,200 compared to nan erstwhile year. On nan different hand, fund hotels knowledgeable a overmuch slower maturation rate, pinch an mean nightly complaint of INR 3,581, reflecting a humble 4% year-on-year increase. This stark opposition has resulted successful a widening spread betwixt luxury and fund accommodations, pinch nan costs of premium rooms now astir five times higher than fund rooms.

Metro Markets Lead nan Charge

Across India, wide edifice occupancy saw a flimsy increase, rising to 68% successful March 2025 from 67.3% a twelvemonth earlier. Furthermore, nan mean regular complaint (ADR) grew by 4.7%, reaching INR 8,432, and gross per disposable room (RevPAR) accrued by 5.7% to INR 5,736. However, metropolitan cities person acold outpaced smaller cities. In cities for illustration Mumbai, Delhi, Bengaluru, and Hyderabad, mean room rates roseate by 8.3%, while RevPAR climbed by an awesome 12.1%. In contrast, smaller cities recorded only 3% growth successful these cardinal metrics.

Reasons Behind nan Uneven Growth

The crisp quality successful capacity tin beryllium attributed to nan beardown request successful metro cities driven by some firm and leisure travelers. These areas are awesome economical hubs, offering precocious occupancy rates, lucrative business opportunities, and tourism. Conversely, secondary cities are dealing pinch oversupply successful nan edifice market, which has constricted their expertise to summation room rates.

Many newer hotels successful these smaller markets are struggling to execute pricing maturation owed to nan readiness of excessively galore rooms comparative to nan number of visitors. On nan different hand, older and much established hotels successful metro areas are outperforming nan market, pinch their gross per disposable room (RevPAR) averaging 9.2% higher than nan nationalist average.

Future Growth and Hotel Pipeline successful India

India’s edifice pipeline reveals that nan marketplace is still connected an description trajectory. As of March 2025, nan state had complete 114,000 branded rooms successful development, pinch an expected 58% increase successful proviso complete nan adjacent 5 years. Interestingly, astir half of this caller proviso is expected to autumn successful nan mid and upper-mid marketplace segments, while only astir 4.8% will beryllium added to nan luxury sector.

This description signals a shifting attraction towards catering to nan increasing mediate class, which is seeking affordable and value accommodations. Furthermore, consolidation wrong nan manufacture is evident, pinch nan top 10 edifice chains controlling a important 65.3% of nan branded edifice supply. Marriott remains nan leader pinch much than 24,000 rooms, followed by Indian Hotels Company Ltd (IHCL), which holds a 12.2% marketplace share.

Impact of Geopolitical Factors connected nan Sector

The edifice manufacture has besides faced unexpected disruptions owed to geopolitical tensions, peculiarly nan Israel–Iran conflict and location unrest earlier successful 2025. These events led to impermanent declines successful world travel, affecting some inbound and outbound tourism. However, domestic tourism and religious tourism person been resilient, helping to mitigate immoderate of nan antagonistic impacts caused by nan simplification successful world arrivals.

Despite these challenges, luxury and metro markets person shown singular resilience, while fund and mid-scale hotels successful smaller cities person continued to look pressure. As world aerial recreation recovers, experts expect a rebound successful demand, particularly successful cardinal metro hubs.

What Should Travelers Know?

Travelers visiting India will announcement a increasing disparity betwixt nan types of accommodations available. Luxury travelers will find an abundance of high-end hotels pinch exceptional services, peculiarly successful awesome metropolitan areas for illustration Mumbai, Delhi, and Hyderabad. These cities connection a plethora of premium options, often successful convenient, centrally located areas. In contrast, fund travelers mightiness look challenges successful smaller cities, wherever oversupply issues person led to constricted options and higher-than-expected prices.

As nan Indian edifice assemblage continues to evolve, those seeking a much affordable enactment should see booking accommodations good successful beforehand to unafraid nan champion rates. Travelers whitethorn besides research caller developments successful mid-market segments, which are group to supply much assortment successful nan coming years. For those focused connected sustainability, eco-friendly accommodations are becoming much common, particularly successful areas pinch increasing tourer traffic.

Looking Ahead: What nan Future Holds for India’s Hotel Industry

The Indian edifice manufacture is poised for growth, but nan travel up will require addressing nan disparities successful nan market. With a dependable pipeline of caller hotels coming to market, nan mid-market and luxury segments will stay competitive, while fund hotels will request to accommodate to expanding title and rising costs. Whether for business, leisure, aliases belief tourism, India’s divers edifice offerings cater to a wide scope of travelers, pinch each conception continuing to germinate to meet nan changing needs of tourists.