India will require an estimated 1.9 lakh to 2.1 lakh additional hotel rooms by 2035, translating into 120-125 million square feet of new hospitality real estate, as domestic tourism, business travel and demand for premium experiences drive sectoral growth, according to a report by CBRE.
The report said India's hospitality sector had moved beyond the post-pandemic recovery phase into a sustained growth cycle, supported by rising incomes, infrastructure development and evolving travel preferences.
“India’s hospitality sector has transitioned from a period of post-pandemic recovery to a more sustained phase of growth, positioning itself as one of the most resilient alternative real estate sectors,” CBRE said.
Demand is expanding across corporate travel, leisure, experiential tourism and spiritual tourism. The report noted that growing preference for premium stays, coupled with relatively limited supply additions in the upscale and luxury segments, had supported hotel room rates and occupancy levels.
India's organised hospitality sector had approximately 4.5 lakh hotel rooms, with overall occupancy reaching nearly 64% by the end of 2025. Revenue per available room (RevPAR), a key indicator of hotel performance, grew around 11% in 2025 to approximately Rs 5,500, according to CBRE.
Upscale and Midscale Hotels to Drive Room Demand
The projected addition of hotel rooms will span economy, midscale, upscale and luxury categories, reflecting demand across different traveller segments.
The upscale segment is expected to require around 43,000 additional rooms by 2035, while midscale hotels could need approximately 42,000 more rooms. The luxury segment is projected to require around 29,000 additional rooms over the same period.
The report also highlighted opportunities in emerging hospitality markets beyond established hotel destinations. Improved connectivity and growing interest in spiritual tourism, wellness retreats and experience-led travel are encouraging operators to explore smaller leisure and cultural destinations.
“Gateway markets offer pricing-led upside for luxury and upper-upscale additions, backed by strong corporate, MICE, and international demand,” the report said. Other destinations, it added, offer opportunities for resort-led and experience-driven hospitality formats.
Hospitality Investment Gains Momentum
Investment activity in the sector has also strengthened. India's hospitality industry attracted approximately USD 905 million in real estate investments between 2024 and the first half of 2026, according to CBRE.
Hotel operators are increasingly adopting management contracts and franchise partnerships to expand their presence without committing substantial capital to property ownership. At the same time, investors are showing greater interest in larger hospitality platforms and strategic joint ventures.
CBRE said the sector's long-term growth would depend on evolving demand patterns, asset quality, location advantages and operators' ability to deliver experiences that match changing consumer preferences.
