Indian Hotel Industry to Reach $13 Billion by 2027: What's Driving This Growth

Domestic and inbound tourism, along with a growing MICE segment, are the Indian hotel industry's biggest bets, as demand continues to outpace supply.

The Indian hotel sector is expected to cross INR 1 trillion ($11.7 billion) by the end of the current financial year and touch INR 1.1 trillion ($13 billion) by 2026-27, according to risk management and monitoring platform Rubix Data Sciences. This figure stood at INR 820 billion ($9.6 billion) at the end of the 2024 fiscal year.

In its recent industry report, the firm projected that the country’s hospitality sector will grow 10.5% annually till March 2027. Three key factors are expected to drive this growth: domestic travelers, foreign arrivals, and MICE (meetings, incentives, conferences, and exhibitions) segment.

Rubix estimates that domestic travelers will contribute 50% of the incremental growth in revenue, while foreign tourists are projected to account for a 30% revenue share. The MICE segment is expected to account for the remaining 20% increase in revenue, the report said.

“These drivers are expected to remain sustainable over the next three years and will significantly fuel the sector’s expansion,” it said.

On foreign tourist arrivals (FTAs), the report said that there was a positive correlation between foreign tourists and the average daily rates (ADRs) in the premium hotel segment. “For businesses like Chalet Hotels, which derive 35%-40% of their revenue from foreign guests, FTAs are a key driver of ADR performance. Foreign tourists, with higher spending power and a preference for luxury services, are vital contributors to the demand for premium rooms.”

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