Branded hotels set for big growth on infrastructure push

New Delhi: India's branded hospitality sector is projected to grow at a compound annual growth rate (CAGR) of 13.4% to reach $45.39 billion by 2030, as per Unlocking Hidden Value Edition 2, a new report hospitality consultancy firm NOESIS Hotel Advisors shared with ET.

The current branded supply pipeline in India projects nearly 38% growth in operational rooms by 2029, as per the report, and latent demand for rooms within tier two and tier three markets is particularly pronounced, with over 40% of hotel-related online search queries in 2025 originating from these regions.

The report is an attempt to quantify India’s next wave of hospitality growth, said Nandivardhan Jain, MD and CEO, NOESIS Hotel Advisors. Jain said India is currently undertaking “one of the largest” infrastructure transformations in the world with over Rs 100 trillion under the National Infrastructure Pipeline, 145,000 km of highways, 1,300 railway stations under redevelopment, and airport capacity projected to exceed 220 airports by 2030.


“Yet, significant portions of manufacturing hubs, logistics corridors, coastal ports, spiritual destinations and secondary cities remain underserved by organised hotel inventory,” said Jain.

“In tier one markets, land costs are at historic highs. Land acquisition, approvals and financial closure can take 18-24 months. Construction adds another 30-36 months, followed by nearly two years of stabilisation. Such gestation cycles demand sharper market selection,” he added.

As per the report, destinations such as Surat, Ahmedabad, Vadodara, Vapi, Meerut, Ghaziabad, Varanasi, Mathura, Agra, Lucknow, Bengaluru, Mysuru, Howrah and New Jalpaiguri represent “strategic” locations where enhanced railway connectivity intersects with established economic activity and visitor traffic.

As per the report, building hotels in these markets capitalises on infrastructure-driven demand generation, positioning assets to capture passenger flows that railway modernisation has “permanently amplified.” Despite the scale of highway expansion, formal lodging infrastructure along highways remains limited in India.

According to the report, India has 2,008 branded hotels, comprising 196,464 rooms, largely concentrated in major cities and established tourist destinations. This contrasts sharply with the fact that most travel occurs by road. The report suggests that India now presents diversified highway motel use cases thanks to EV charging integration, leisure and road tourism, and business transit and small events.

“India can draw from both (US and Chinese) models, adopting the convenience and predictability of US-style motels, while integrating them into state-led service infrastructure similar to China’s expressway system,” the report stated.

As per the report, if organised lodging were introduced systematically along economically active transport corridors spanning approximately 325,000 km, the country could support approximately 1,083 structured roadside properties over time. “Assuming an average configuration of 50 rooms per asset, this results in a potential inventory base of 54,200 keys nationally.”

The government's UDAN scheme is unlocking tourism potential and hospitality demand for markets such as Gwalior, Agra, Varanasi, Udaipur, Shirdi and Vijayawada. Greenfield shipping terminals such as Vadhavan Port (Maharashtra), Vizhinjam Port (Kerala) and Tajpur in West Bengal also present potential investment opportunities.

According to the report, India's branded hotel room supply grew at an estimated CAGR of 6-7% between 2015 and 2024 to 1.96 lakh rooms in 2024, compared to China’s CAGR growth of 11-12% during the same period to reach 7.6 million rooms in 2024.

Despite this, India demonstrates stronger momentum and long-term upside, as per the report, supported by rising incomes and infrastructure development. India sees 9.2% supply growth versus China’s 4.68%. India achieved record average daily rates (ADRs) in 2024, while Chinese hotels face deflationary pressure, with ADRs declining 2-3% year on year, the report said.