Robust pipeline: Hotel chains look beyond metros for growth
India's hospitality sector is set to add 161,074 branded hotel rooms over the next five years. Approximately 117,000 of these rooms are currently in active development across various locations. Notably, four in five new rooms will be situated outs...
New Delhi: India's hospitality industry is poised for a major expansion, with 161,074 branded hotel rooms expected to be added in the next five years. Of the total, nearly 117,000 rooms are in active development. The planned five-year branded hotel pipeline, equivalent to around 77% of the country's existing branded inventory, is the largest commitment in more than a decade, according to the Hotelivate-Savills 2026 Indian Hospitality Trends & Opportunities Report shared with ET.
Notably, four in five rooms will be built in locations beyond the country's largest hospitality markets, per the report. Nearly 80% of the pipeline is outside tier-1 markets, including nearly half in tier-3 sites. Destinations such as Tirupati and Varanasi alone have proposed pipelines equivalent to about 477% and 442% of their existing branded inventory, making demand assessment increasingly critical.
Despite several disruptions to travel last year, India's branded hotel industry maintained its performance in FY26. Nationwide occupancy remained broadly steady at 68.1%, while average daily rate increased by 6.4% to ₹8,962 and revenue per available room rose by 6.2% to ₹6,099, according to the report. "The sector faced a lot of disruptions in the last fiscal year due to factors such as Operation Sindoor, the Air India crash, the IndiGo crisis, seasonal challenges in the hills and the West Asia conflict," said Manav Thadani, founder chairman, Hotelivate-Savills. "We do believe the current year will be stronger than last year."
"A lot of conversions are happening in tier-2, three markets, and the opportunities to enter secondary and tertiary markets have gone up in India for branded chains," said Thadani. "In terms of future growth prospects, we expect Delhi NCR to be one of the hottest markets in the country considering future supply and Delhi becoming the only market among the major 20 markets to record occupancy levels above 80% in both FY25 and FY26."
About 73% of hotels recorded positive revenue per available room (RevPAR) growth, the lowest share since FY22. This reflects a gradual moderation from the exceptional gains clocked during the immediate post- pandemic recovery period, according to the report. National growth, however, continued to be disproportionately influenced by the country's four largest markets by room revenue of Mumbai, New Delhi, Bengaluru and Hyderabad.
Together, these markets accounted for about 27% of the nationwide supply and recorded average daily rate growth of 10.2% and a RevPAR growth of 9.7%. Bengaluru (14.8%), Hyderabad (13.2%), and New Delhi (10.9%) led RevPAR growth while Mumbai recorded a more measured increase of 3.2%.
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Bengaluru remained India's largest branded hotel market with 17,057 rooms, followed by Mumbai and Delhi with 16,413 rooms and 15,369 rooms respectively, per the report.
