India's Hotel Boom Expands into Untapped Markets

24 April, 2025 1 category

Skift reported last year that the hospitality boom in India was being driven by smaller cities. Now the industry is going even further afield.

This week, IHG Hotels & Resorts signed a Holiday Inn Express-branded hotel in Uttar Pradesh’s Hapur, a city without any significant presence of branded hotels. It is expected to open in 2027 with 120 keys.

“With its location along National Highway (NH) 9 and connectivity to key business hubs, the hotel is well-positioned to cater to both business and leisure travelers,” said Sudeep Jain, IHG’s managing director for Southwest Asia.

Indian hotel chain Sarovar Hotels is also looking at the expanding highway network in India to expand its portfolio. Last December, Sarovar Hotels chairman Ajay Bakaya said, “Highway hotels and resort-concept properties close to cities, within three to four-hour journeys, are a new high-growth segment for hospitality, at a time when competition is getting intense in urban centers.”

The New Hot Areas for Investment

Cities like Amritsar, Udaipur, Pune, Jammu, Guwahati, Jim Corbett, and Ayodhya are already in the portfolios of most major hotel chains in India.

New destinations include cities such as Siliguri, Gangtok, Barnala, and Chail, and scenic leisure locations, such as Daman and Diu, and Lakshadweep.

Earlier this month, Lemon Tree Hotels signed a hotel in Siliguri under the Keys Select by Lemon Tree Hotels brand. Last month, Hilton signed its first DoubleTree by Hilton Hotel in Siliguri.

At the time of this announcement, Hilton said in a statement: “Siliguri, located at the confluence of four international borders – India, Nepal, Bhutan, and Bangladesh – is an emerging hub for business, tourism, and trade. The city has been rapidly gaining prominence as a gateway to popular destinations like Darjeeling, Kalimpong, and Sikkim.”

Industrial hubs in interior parts of the country are also on the radar of big hospitality chains. Last September, Taj-parent Indian Hotels Company (IHCL) announced the signing of a Gateway hotel in Barnala in Punjab. “This signing is in line with our strategy of growing IHCL’s presence in Tier II and III cities in India. Barnala, a commercial and industrial centre bordering Ludhiana is an emerging market in Punjab,” said Suma Venkatesh, executive vice president – real estate and development at IHCL.

The company also signed a Gateway resort in the “important” industrial hub and port city of Kandla in Gujarat.

New leisure destinations are emerging, too. IHCL alone has properties coming up in unexplored leisure destinations such as Chail in Himachal Pradesh, Diu, and Lakshadweep.

The expansion is also reaching untapped religious tourism destinations. Accor signed a Novotel hotel in Guruvayur City last year. The company has set its sights on Tier 3 cities. “We are pretty excited in India and exploring Tier 3 cities as growth in this space is huge. India is super important for the next 10-30 years of Asia as a whole,” Garth Simmons, chief operating officer at Accor Asia said during a press conference in February this year.

IHG has brought its new midscale conversion brand Garner in India with the signing of two hotels, both of which are lesser-known locations: Etawah in Uttar Pradesh and Kathua in Jammu and Kashmir.

Lesser Inventory, Event Spaces

Even as hotel companies are investing in these unexplored cities, the properties have very few keys. But each has dedicated facilities for events:

IHG’s Garner Etawah is set to have 40 keys, along with a “spacious” ballroom for small-size weddings, social gatherings, and events as well as meeting spaces.
The 45-key Garner Kathua will have “versatile” event spaces fit to hold business meetings, celebrations, and leisure stays.
DoubleTree by Hilton in Siliguri will have 120 keys, coupled with 17,000 square feet of meeting and event space.
Gateway Kandla is slated to have 93 rooms, but a banqueting space of over 19,000 square feet for hosting large-scale social events, corporate meetings, and destination weddings.
The 100-room Gateway Barnala will also sport a banquet hall spanning 7,000 square feet, along with meeting rooms.

“There’s genuine demand for hotels in suburban, lesser-known towns. This is due to increasing trade activity and consumer patterns. Consumption of food and beverage and banqueting have gone through the roof,” Jaideep Dang, managing director, Hotels & Hospitality Group at JLL, told Skift. He noted that in these cities, a large banqueting space will be attached with a small room inventory, because there will be banqueting demand from the local population as well.