India Hospitality Trends 2024: Tier 1 & Tier 2 Market Outlook

# India Hospitality Trends 2024: Tier 1 & Tier 2 Market Outlook

India’s hospitality sector has experienced strong recovery and expansion in 2023/24, with rising ADRs, stable RevPAR, and increasing hotel supply across Tier 1 and Tier 2 cities. Corporate travel, M.I.C.E. events, leisure tourism, and infrastructure developments are driving demand and revenue growth, making India a key hospitality investment destination.

• India’s total air passenger traffic reached 350 million in 2023/24, showing a 35% growth from 2021/22.
• Tier 1 cities (Delhi, Mumbai, Bengaluru, Chennai, Hyderabad, Kolkata) saw a 30% rise in air travel, strengthening corporate and leisure demand.
• Tier 2 cities (Jaipur, Ahmedabad, Chandigarh, Pune, Lucknow, Kochi) recorded a 40% growth, indicating a shift towards regional business and tourism expansion.

• Tier 1 ADRs range from ₹7,500 – ₹9,500, with strong demand from corporate, luxury, and M.I.C.E. segments.
• Tier 2 ADRs range from ₹5,500 – ₹7,500, driven by business travel, emerging tourism, and government projects.
• RevPAR in Tier 1 cities remains above ₹6,000, while Tier 2 RevPAR growth is outpacing Tier 1 due to supply constraints.
• Occupancy across Tier 1 cities averages 70.5%, while Tier 2 cities have seen an increase to 68.3%.

• Tier 1 cities added 12,500 new rooms in 2023/24, bringing total inventory to 180,000+ rooms.
• Tier 2 cities added 9,800 new rooms, reflecting an accelerated supply expansion.
• Luxury and upscale segments account for 40% of new openings in Tier 1, while Tier 2 sees growth in mid-market and budget hotels.

• Mumbai leads in RevPAR (₹8,866), followed by Delhi (₹7,886), Goa (₹8,186), and Bengaluru (₹7,200).
• Ahmedabad, Pune, and Chandigarh show rising RevPAR (above ₹5,000), supported by corporate travel growth.
• Tier 2 cities like Jaipur, Lucknow, and Kochi are recording 20%+ year-over-year RevPAR growth.

• Tier 1 cities generated ₹250+ billion in room revenue, led by Mumbai, Delhi, Bengaluru, and Hyderabad.
• Tier 2 cities contributed ₹85 billion, with Jaipur, Pune, and Ahmedabad leading growth.
• M.I.C.E., weddings, and leisure travel drive revenue surges in secondary cities.

• M.I.C.E. bookings increased by 22% in Tier 1 cities, with demand for large-scale convention spaces.
• Tier 2 wedding market is booming, with Jaipur, Udaipur, and Goa becoming premium destination wedding hubs.
• Luxury hotels in Tier 2 cities are capitalizing on high-end event demand.

• Tier 1 hotels are 45% luxury/upscale, 35% mid-market, and 20% budget.
• Tier 2 cities have 55% mid-market, 30% upscale, and 15% luxury/budget mix.

• Tier 1 revenue per key stands at ₹28-35 lakh, while Tier 2 cities range between ₹18-24 lakh.
• Revenue per key is growing faster in Tier 2 cities due to limited supply and high occupancy rates.

• Tier 1 hotel supply expected to grow by 12% over five years, with expansions in premium and lifestyle segments.
• Tier 2 hotel supply projected to rise by 18%, focusing on midscale and business-friendly properties.
• Demand from expanding industries, international tourism, and alternative accommodations will shape future trends.

✅ Tier 1 cities remain dominant, but Tier 2 growth is accelerating.

✅ Business and leisure travel continue to drive ADR and RevPAR increases.

✅ Total room revenue crosses ₹335 billion, showcasing strong market strength.

✅ M.I.C.E. and destination weddings create new revenue streams.

✅ Upcoming hotel supply in Tier 2 cities reflects investor confidence.

• Expand into emerging Tier 2 markets with business-friendly and experiential hotels.
• Leverage digital transformation to optimize pricing, occupancy, and guest experience.
• Strengthen M.I.C.E. and leisure travel offerings to maximize revenue potential.
• Capitalize on rising international arrivals with premium lifestyle and boutique hotels.