Just last week, the Ladhani group (Coca-Cola’s largest bottler), which owns the Taj Hotel and Convention Centre in Agra, announced ₹3,000 crore investment to open more hotels. From 500 currently, it plans to have 1,500 rooms within three years, including two new resorts in Rishikesh in partnership with the Oberoi hotels group. It also plans to bring either a Ritz Carlton or Four Seasons to Agra.

In Mumbai, the K Raheja Corp-promoted Chalet Hotels is moving rapidly to open more hotels across Khandala, Bengaluru, New Delhi, Mumbai, Goa and Thiruvananthapuram. The biggest of these will be the 390-room Taj property slated for launch at Delhi International Airport by Q1 of FY27. It will also open a 280-room Hyatt Regency at Airoli in Navi Mumbai in the first half of FY27. Another property at Varca, in Goa, with 170 keys, will be operational in FY28. From 3,052 keys currently, Chalet Hotels will boast nearly 4,227 keys in a couple of years.

Move to Bengaluru and the Brigade group, with nine hotels and 1,604 keys, is the second largest owner of chain-affiliated hotels and hotel rooms in South India. “We plan to develop five new hotels across Chennai, Bengaluru, Hyderabad, and Vaikom, increasing our inventory to 2,600 keys by fiscal 2029,” says Nirupa Shankar, Managing Director, Brigade Hotel Ventures Limited.

In the east, the Ambuja Neotia group plans to invest ₹2,700 crore in the tourism sector in West Bengal. According to chairman Harshvardhan Neotia, “The group plans to develop a luxury hospitality circuit in partnership with the Taj Hotels, featuring seven premium hotels in key destinations such as Darjeeling, Kalimpong, Gorumara, Digha, the Sundarbans, Shantiniketan, and Raichak, adding 600 keys at an investment of ₹1,200 crore.”

It will also develop one convention hotel each in Kolkata and Siliguri, with 800 keys, at a cost of ₹1,500 crore.

Building with fervour

Across India, the hotel industry is on a massive capacity expansion drive, fuelled by an unprecedented surge in demand from travellers. Significantly, real estate players are opening their war chests to build hotels, even those with no prior exposure to hospitality. Take Sobha group, whose chairman PNC Menon had earlier told businessline that the group planned to set up 8-10 hotels, at nearly $100 million investment each, across West Asia, India and the US. It includes a hotel each in Kochi and Ahmedabad. “Sobha plans to diversify from building and selling to having its own properties,” Menon had said.

So too Gopalan Enterprises, which entered the hospitality sector with Hotel Grand Mercure in Bengaluru and Gateway Bekal in Kerala. “This year, we have two more new hospitality ventures, backed by a ₹100 crore investment,” says its director, C Prabhakar.

Nearly a third of the upcoming hotel room additions in India is in the luxury segment, according to analysts.

Three of Brigade group’s five new hotels are in the luxury segment — Intercontinental Hyderabad, Grand Hyatt Resort in Chennai, and a luxury resort in Vaikom; the other two — near Bengaluru Airport and Hosur, respectively — are upper midscale hotels. Recently listed Ventive Hospitality, a joint venture between Blackstone and Panchshil group, operates 11 hotels in the luxury and upper-scale segment, across two countries; it plans to double its portfolio in the next three to five years, with properties in Mumbai, Delhi, Chennai and Hyderabad. It now has a presence in Pune and Bengaluru.

Surging demand

The vacant rooms of the Covid years are a distant memory as most hotels are now doing brisk business and often have sold-out days. Kahraman Yigit, co-founder and CEO, Olive by Embassy, says premium hotels are expected to reach 72-74 per cent occupancy by FY2026, with average room rates (ARRs) climbing to ₹8,000 in FY2025.

He cites a Euromonitor report estimating that trips by Indians will increase from 2.3 billion in 2019 to 5 billion by 2030. Olive by Embassy will expand capacity “through strategic developments and brand partnerships”.

Demand is seen growing at 10.4 per cent over the next four years, with supply lagging at 9 per cent, according to a YES Securities report. Where chain-affiliated hotels have major presence, it projects 5.3 per cent supply growth over FY24-29E, against demand growth of 8.5 per cent.

But given the notorious cyclicity of the hotel sector, is there a danger that the capacity addition may eventually backfire? The boom in 2016 was followed by the big downturn in 2018, when regulatory hurdles, economic slowdown and the arrival of Airbnb saw revenues crashing and even some players bowing out. This time around, however, the industry is confident. Yigit asserts, “The Indian hospitality industry is entering its strongest performance decade, and this is here to stay.”

Rate impact

Many point out that the hospitality sector in India is under-supplied. According to consultancy Hotelivate, the country has just around 1,80,000 keys in branded hotels. This is abysmally low. In Thailand, Bangkok alone has 1,39,628 rooms, according to LH Bank’s report. New York has even more.

Would added capacity lower room rates? Neotia disagrees. “Rate rationalisation depends on factors like growing demand, premium experiences and exotic locations,” he says. “Economic health, tourism, and local policies also heavily influence room rates.”

At the moment, the sector is charging top dollar. But, as we have seen, it takes very little to change the picture.

(With inputs from Meenakshi Verma Ambwani)

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Published on March 30, 2025