India's hospitality sector sees Q3 2025 dip, but is growth still on the horizon?
After a positive performance in Q2 2025, the Indian hospitality sector saw a slight dip in Q3 2025. In this quarter, the Average Room Rate (ARR) was Rs 7,500-7,700 and the occupancy was 60-62 per cent. The RevPAR stood at Rs 4,500-4,774.
The key markets of New Delhi, Mumbai, Bengaluru, and Chennai showed ARR growth of 1-9 per cent compared to Q3 2024.
Similarly, occupancy rates in markets such as Mumbai and Bengaluru remained stable, whereas Ahmedabad and Goa saw increases by 5-12 percentage points, as per the recent HVS ANAROCK Hospitality Monitor report.
Q3 also saw many new announcements, such as the ITC Hotels launching a new premium brand, 'Epiq Collection', to shift to an asset-light model. During this period, Chalet Hotels also introduced a premium lifestyle brand named 'Athiva'.
The report points out that good traction is expected in the northeast, with branded hotel rooms expected to double by 2030. Also, the report mentions that smaller cities are leading India’s greenfield hotel projects, showing growth potential beyond metro centres.
The report further observes that there will soon be a Rs 9,000 crore IPO boom in India's food and beverage sector, due to rising demand.
From January to September 2025, there were 308 branded hotel signings covering 38,806 keys, out of which Tier-1 cities accounted for maximum signings, followed by Tier-2 cities. Domestic air travel from January to August 2025 also saw healthy growth and reached 110.7 million passengers—up 4.99 per cent as compared to the same period in 2024.
The report also says that during Q3 2025, September showed healthy growth for the hospitality sector in the country due to growth in ARR and stable occupancy. Corporate travel contributed to this growth.
In September 2025, Bengaluru and Hyderabad led the market with strong double-digit rate growth. Goa, on the other hand, witnessed a dip in average rates. The other markets showed moderate growth during this period.
In terms of occupancy trends, the year-on-year growth in September 2025 was led by Ahmedabad, which had the highest occupancy rates. This was due to trade shows, expos, and corporate activity in the city.
In Q2 2025, the Indian hospitality sector had performed much better.
As per JLL's Hotel Momentum India (HMI) report, during Q2 2025, the Indian hospitality segment had achieved exceptional growth, with RevPAR surging to 12.9 per cent. In the same period, Bengaluru had strong growth in RevPAR, while Chennai, Delhi, and Mumbai showcased consistent performance strength, proving diversified growth across India's key metropolitan markets.
During Q2 2025, there were 106 hotel signings totalling 13,398 keys.
This also reflects increasing investor confidence in India's hospitality segment. The period was also characterised by strong corporate movement, government activities, and summer travel, which drove healthy growth in the market.
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