India’s hotel industry is entering a sustained growth phase and is expected to deliver robust earnings expansion over the next three years, supported by strong demand, rising room rates and improving operating metrics.
Industry earnings are projected to grow at a compound annual rate of 16 to 21 per cent through FY28, driven primarily by consistent increases in average room rates and record-high occupancy levels across major urban and leisure destinations. Demand has remained broad-based, supported by domestic travel, corporate activity and a steady recovery in international tourism.
Higher contribution from meetings, incentives, conferences and exhibitions, along with weddings and large social events, continues to play a critical role in revenue generation, accounting for a significant share of industry income. These segments offer strong margin visibility and recurring demand.
Profitability is expected to strengthen further as hotel operators benefit from improved traffic mix, operational efficiencies and a shift towards managed room inventory, which typically delivers higher margins. EBITDA margins are projected to expand steadily over the medium term as scale benefits and cost discipline take hold.
Despite strong fundamentals, valuations remain relatively attractive, offering scope for re-rating as earnings visibility improves. Limited new room supply continues to lag demand growth, creating a favourable pricing environment for operators.
With domestic travel at record levels and foreign tourist arrivals improving, India is increasingly being viewed as one of the most promising hospitality markets globally, underpinned by long-term demand visibility and structural growth drivers.
