India's hospitality industry has entered a structurally stronger phase with investment activity rising to ₹380 million in 2025, up from ₹320 million in the previous year. According to the HVS Anarock India Hospitality Industry Overview 2025 report, this represents more than double the ₹158 million seen in 2016. The Hotel Valuation Index is projected to grow at a compound average growth rate (CAGR) of 7.4% over FY26-FY30, indicating sustained value appreciation. As reported by Mint, domestic travel crossed 4.5 billion visits in 2025 compared to 3 billion in 2024, with hotel performance strengthening reflected in 8-10% average room rate growth and 10-12% RevPAR growth. The restaurant industry is experiencing parallel growth, with the sector valued at approximately ₹5.760 trillion and growing at a rate of 10-12% annually, driven by urban population growth and changing lifestyle preferences.
Hotel companies signed deals for 64,118 new rooms across 586 properties in 2025, representing a 36% jump in rooms from the previous year and more than three times the level seen in 2019. The average hotel size increased to 110 rooms per property in 2025 from 98 rooms a year earlier. According to the HVS Anarock data, Tier-3 and -4 cities accounted for 44% of all new hotel rooms signed, with more than half of new properties located in these emerging markets. Most growth is greenfield development, accounting for nearly 60% of signed keys, with midscale hotels dominating at 55% of signings. The restaurant sector is experiencing similar expansion, with the QSR market alone projected to be worth up to $38.7 billion by 2027, demonstrating the broader hospitality industry's growth trajectory.
Bengaluru led hotel development with 4,510 rooms signed, followed by Mumbai with 4,499 rooms. However, the significant shift is happening outside major cities, with Ahmedabad, Bhopal, Siliguri, Dehradun and Lucknow seeing steady rise in branded hotel projects. As reported by Mint, Tier-1 cities had a 32% share, while tier-2 contributed 24%, demonstrating the industry's expansion into smaller urban centers. The restaurant industry mirrors this trend, with the market structure remaining very fragmented - approximately 53% of the industry is unorganised, while the organised portion has approximately a 47% share and is steadily increasing its share through improved branding and supply chains. International hotel chains continue building larger properties around 150 rooms per hotel, while domestic operators average about 88 rooms.
The industry is experiencing diversified demand across multiple segments including weddings, large-ticket public events, leisure trips, weekend travel and business meetings. According to Mint, demand in MICE (meetings, conferences and exhibitions) is growing, helping hotels reduce dependence on seasonal peaks. Upscale and upper-upscale properties account for 35% of new supply, while luxury properties represent 8% and budget hotels remain the smallest segment at 2%. The restaurant sector is similarly diversified, with food delivery emerging as a major revenue source, bringing about 30.32% of overall restaurant revenues. In 2025, food-related online payments of over ₹1.9 lakh crore were processed within six months, reflecting the dramatic rise in dine-in and online orders. The branded hotel supply story is entering a far more expansive phase with an existing base of over 213,000 rooms as of February 2026, and a robust pipeline of about 153,000 keys over the next four to five years.
The total inventory is set to cross over 350,000 rooms as the sector enters a structurally stronger phase. According to Mint, Bengaluru, Mumbai and Delhi are expected to lead the hotel development cycle, driven by jobs, corporate travel and infrastructure expansion. Industry expansion is being led strongly by domestic operators, with the next phase of growth dependent on complementary policy support including infrastructure access, taxation frameworks, global promotion and skilling initiatives. The restaurant industry is experiencing parallel growth, with technology playing an increasingly important role in operations - POS systems, kitchen display systems, and workforce tools are becoming standard across formats. As reported by industry experts, restaurants that adapt early to technology trends will have a clear advantage, with gig workers becoming more common and automation reducing repetitive tasks. The sector's future is being shaped by hybrid models combining dine-in with delivery, themed micro-restaurants, and cloud kitchens, positioning India's hospitality industry for sustained growth across multiple formats.
