India’s Hospitality Sector Set To Surpass Rs 1.1 Trillion By FY2027: Report

The western region recorded the highest RevPAR and the peak occupancy rate at 69.5 per cent. Emerging high-yield markets include spiritual and leisure destinations

India’s hospitality industry has made a remarkable comeback since the pandemic, with occupancy rates rebounding from a low of 35 per cent to 68 per cent in FY2024

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India’s hospitality industry is poised for robust growth over the next few years, despite regional tensions and broader geopolitical uncertainties, according to a report by Rubix Data Sciences. The report projects that the sector will surpass Rs 1.1 trillion in revenue by FY2027, growing at a compound annual growth rate (CAGR) of 10.5 per cent. 

This growth is being fueled by a resurgence in domestic tourism, a steady increase in foreign tourist arrivals (FTAs), and the rapid expansion of the Meetings, Incentives, Conferences, and Exhibitions (MICE) segment.

FTAs, a key driver for premium hotel performance, are expected to reach 30.5 million by 2028. Rubix notes a significant shift in demand dynamics, with domestic travellers now contributing 50 per cent of the incremental revenue growth, followed by FTAs at 30 per cent, and the MICE segment accounting for the remaining 20 per cent.

Post-Pandemic Rebound

India’s hospitality industry has made a remarkable comeback since the pandemic, with occupancy rates rebounding from a low of 35 per cent to 68 per cent in FY2024. Branded and organised hotels have led the recovery, posting decade-high metrics, including an Average Daily Rate (ADR) of Rs 7,500 and a Revenue Per Available Room (RevPAR) of Rs 5,439.

The western region recorded the highest RevPAR and the peak occupancy rate at 69.5 per cent. Emerging high-yield markets include spiritual and leisure destinations such as Rishikesh, Udaipur, and Varanasi.

Beyond Metros: A New Growth Map

“India's hospitality sector is no longer metro-centric; it is thriving in new routes driven by local demand, spiritual tourism, and mid-range experiences. With the industry set to cross $1 trillion by FY2027, the size of the opportunity is huge, but so is the need for risk-aware growth,” said Mohan Ramaswamy, CEO and Co-Founder of Rubix Data Sciences. 

"Supported by strong infrastructure spending, state-level tourism pushes, and digital-first travel behavior, India's hospitality industry is entering a structurally stronger phase," the report added.