A decade of opportunities ahead

The Indian hospitality sector has showcased robust growth in 2024 and will be looking towards continuing the trajectory in 2025 with the key performance metrics indicating an intense year of development ahead. According to the HVS Anarock Monitor report, during the month of November 2024, the occupancy rates increased by 8 to 10 percentage points compared to the previous year, while the Average Room Rate (ARR) rose by an impressive 11 to 13 per cent year-on-year. This dual growth propelled Revenue Per Available Room (RevPAR), underscoring the sector’s upward trajectory as it continues to recover and thrive post-pandemic.

Regarding the industry’s performance, Zubin Saxena, Senior Vice President and Regional Head, South Asia, Hilton, states, “The Indian hospitality industry continued to mark ascendancy in 2024, fuelled by sustained demand across both established and emerging markets. The sector’s performance has been marked by a significant 10.8 per cent year-over-year growth in RevPAR in Q3 2024, a clear indicator of the industry’s resilience and the growing confidence in travel. This upward trajectory is not only driven by higher Average Daily Rates (ADR) but also by a consistent rebound in both leisure and business travel segments.”

Top performers and newcomers

Mumbai emerged as a top performer, achieving occupancy rates exceeding 80 per cent, driven by the Meetings, Incentives, Conferences, and Exhibitions (MICE) segment and major events, including Dua Lipa’s concert. Pune recorded the highest growth in occupancy, with an increase of 12 to 14 percentage points, bolstered by hosting the India International Travel Mart 2024. Bengaluru, Jaipur and Chandigarh also experienced double-digit occupancy growth, indicating strong demand across diverse markets.

Saxena adds, “While major metropolitan cities such as Mumbai, Bengaluru, Hyderabad and Chennai have continued to lead the way, this year has been particularly exciting as over 60-70 per cent signings have happened in Tier II and III cities including markets like Udaipur, Mussoorie, Ranchi, Tirupati and Kochi to name a few. This reflects a broader trend toward decentralisation, where improved infrastructure, enhanced connectivity, and a growing demand for both leisure and business travel are opening new opportunities for expansion.”

Post-Diwali, the sector witnessed a notable rise in ARRs across most major markets. Mumbai maintained its position as the leader, with ARRs ranging between Rs 13,500 and Rs 15,000. Hyderabad recorded the most substantial growth, with rates increasing by 28 to 30 per cent year-on-year, reflecting heightened demand in the city. Bengaluru, Kochi and Gurugram followed closely, each achieving year-on-year growth exceeding 20 per cent.

Conversely, Kolkata and Ahmedabad experienced declines in ARRs. Kolkata recorded a modest drop of one to three per cent, while Ahmedabad faced a sharp decrease of 27 to 29 per cent due to the inflated rates witnessed during the ICC Cricket World Cup Final in the previous year. These fluctuations highlight the varying dynamics of demand across Indian markets.

Trends

While travellers have always evolved year-on-year, relaxation-focussed travel has continued to remain a key focus. Hilton’s 2024 Trends Report predicted 2024 to be the ‘Year of the Great Recharge’ with travellers prioritising rest and relaxation with notable emphasis on sleep quality. Suhail Kannampilly, Managing Director, The Fern Hotels & Resorts, sheds light on what trends the hospitality industry embraced in 2024, “Sustainability, wellness tourism and personalisation were dominant trends in 2024. The industry has embraced greener practices, such as energy-efficient technologies, waste reduction and eco-friendly materials. Wellness tourism has gained momentum, with travellers seeking experiences that promote not only physical but also mental and emotional well-being. Personalisation has surged as guests now expect tailored experiences, from customised room settings to curated local activities. Technology continues to reshape the industry with AI tools enhancing guest interactions and operational efficiency.”

He also suggests that sustainability will shift from a trend to a standard, and wellness tourism will continue to thrive. Technology will advance toward smarter, more integrated systems, offering guests increasingly personalised experiences. Guests will also seek more authentic, off-the-beaten-path experiences, favouring local culture and community engagement.

Saxena, on the outlook for trends in 2025, states, “Looking ahead, this will be the ‘Year of Travel Maximiser’ where travellers aim to maximise their vacation experiences by combining adventure with relaxation. Slow, meaningful and immersive travel will continue to be a common denominator where nearly 80 per cent of Indian families using travel as an opportunity to explore their heritage, underscoring a deep-seated desire for cultural exploration and authenticity.”

Technological advancements

As the hospitality industry continues its inevitable push towards immense growth and strategic development technology has become the driving factor towards it. In 2025, technology will be pivotal in reshaping guest experiences and operational efficiency. AI-driven personalisation will allow hotels to offer real-time insights into guest preferences, providing bespoke services like customised room settings and tailored recommendations.

According to Kannampilly, “Contactless technology, including mobile check-ins, digital keys, and touchless services, will become standard. Smart rooms with voice-activated controls for lighting, temperature, and entertainment will enhance convenience and energy efficiency. The use of robots for housekeeping, concierge services, and food delivery will streamline operations and reduce human error. Block chain technology will also enhance booking transparency, improving security, and offering flexible payment options. Additionally, the rise of hybrid travel, with an increasing blend of work and leisure, will drive demand for high-tech, flexible workspaces in hotels.”

Saxena synchronises and states, “Technology will continue to rapidly reshape the hospitality industry, making travel more personalised, efficient and seamless. One of the biggest trends is hyper-personalisation, powered by AI and data. Hotels are getting better at understanding guest preferences, allowing them to offer customised experiences, from personalised room settings to curated activity suggestions, making every stay feel unique.”

He also suggests that, “Smart room technology is another game-changer. IoT devices let guests control everything from lighting to temperature with just a tap or a voice command, giving them more control over their environment. Virtual and augmented reality are also becoming part of the experience, allowing guests to take virtual tours before booking and offering interactive features like maps and translations during their stay. Mobile check-ins, keyless entries and AI concierges streamline guest services, while sustainable practices like energy management respond to eco-conscious travellers. In 2025, technology will create more connected, efficient, and personalised stays, meeting the evolving needs of modern travellers.”

Expansion and development

The branded hotel market has continued its expansion, with 37,105 new keys signed year-to-date in November 2024, reflecting a 44.3 per cent increase compared to the previous year. The majority of these signings occurred in Tier I and Tier II cities, which accounted for 48.2 per cent and 31.6 per cent of the total keys signed, respectively. Greenfield projects dominated the signings, making up 44 per cent, followed by conversions and brownfield projects.

The openings also reflected this growth, with 10,042 keys added across 130 properties by November 2024. Tier I cities continued to dominate openings, representing 39 per cent of the total keys, followed by Tier II and Tier III and IV markets.

Reflecting on Accor’s growth strategy throughout 2024, Garth Simmons, Chief Operating Officer, Accor Premium, Midscale, and Economy Division in Asia, says, “Over the past year, we have significantly expanded our footprint by adding 860 rooms across the luxury, premium, midscale and economy segments. Notably, we launched five new hotels: Raffles Jaipur; Grand Mercure Goa Candolim; Mercure Chandigarh; Novotel Goa Panjim and ibis Styles Mysuru. These openings highlight our commitment to offering meaningful and diverse experiences to our guests while reinforcing our presence in key markets.”

He adds, “This year also saw several exciting new signings that align with our robust growth strategy – these include Sofitel Jaipur; Pullman Varanasi; Pullman Amritsar; Novotel Tirupati; ibis Styles Tirupati; Novotel Bengaluru Varun Airport; and ibis Styles Bengaluru Varun Airport. Together, these developments reflect Accor’s focus on bringing our global hospitality expertise to diverse locations in India, enhancing our portfolio to meet the needs of travellers in this dynamic market. The much-anticipated Novotel New Delhi City Centre is set to open shortly, further strengthening our offerings in the nation’s capital.”

The Indian aviation achieved a historic milestone in November 2024, with over five lakh passengers travelling domestically in a single day for the first time. This significant achievement underscores the increasing mobility and travel enthusiasm among the population. Overall, domestic air traffic grew by 11.9 per cent year-on-year, further driving the demand for hospitality services across the country.

Saxena suggests the hospitality industry in South Asia is poised for sustained growth. The number of international arrivals is expected to rise sharply. This growth will be driven by improved infrastructure, better connectivity, and the region’s growing appeal as a cultural and natural hub. The Meetings, Incentives, Conferences, and Exhibitions (MICE) segment is also set to expand, supported by investments in infrastructure in key cities. South Asia is increasingly becoming a preferred destination for business events, which will continue to boost the region's hospitality sector.

He adds, “The next decade holds immense potential for the Indian hospitality industry, as it continues to embrace innovation, sustainability, and international growth, positioning itself as a key player in the global tourism and hospitality landscape. However, sustaining this growth will require addressing critical challenges.”