The New Silk Sheets: What’s Fueling India’s Luxury Hotel Boom?  

When the Fairmont Udaipur Palace opened its doors this April, it did not slip quietly into Rajasthan’s backdrop of havelis, becoming another palace hotel. The sprawling 327-room Rajput-style structure built into the Aravallis and spread across ballrooms, gardens and terraces, launched with a spectacle: a 700-guest wedding. The hotel was sold out on Day 1.

Over the next few weeks, it hosted 19 more weddings through the summer months (considered off season), each generating Rs 5-6 crore. Starting October and all the way to March, when the high season begins, the property is booked for seven-eight weddings a month, with bills exceeding Rs 10-11 crore per wedding. In India, the peak wedding season is between November and February, when business is brisk.

“What Udaipur lacked was scale,” says Somesh Agarwal, Chairman and Managing Director of ROCKWOOD Hotels & Keystone Hotels that owns the property. “Most luxury hotels here are in the 80- to 130-room range. We brought in scale, which is difficult to achieve in a luxury context.”

The Fairmont Udaipur Palace, managed by Accor, is the third Fairmont in India, coming on the heels of Jaipur (2012) and the 446-room Fairmont Mumbai, which opened around the same time.

The launch of two Fairmonts in quick succession is a turning point in India’s luxury hospitality industry—the beginning of a nationwide boom driven by wealth creation, domestic demand, lifestyle shifts, and the Rs 10 lakh crore wedding economy.

For decades, India’s luxury hotel market was dominated by palace conversions and a handful of urban flagships. The Taj group (Indian Hotels Company Ltd), Oberoi Hotels & Resorts (EIH Ltd.), ITC Hotels, and The Leela Palaces, Hotels and Resorts created a small but iconic portfolio, appealing to both foreign tourists and India’s elite.

International brands arrived cautiously. Marriott, Accor, Hilton, and Hyatt tested the waters with select properties in Bengaluru, Mumbai, and Delhi, but spent much of the past two decades building scale in budget and premium segments.

However, that is changing fast. As of June, India had 35,000 branded luxury hotel keys across more than 200 properties. By 2030, the country is expected to add more than 20,300 rooms, according to HVS ANAROCK, a hospitality industry consultant.

The commitments are aggressive. Marriott International is planning 33 new luxury hotels across JW Marriott, Ritz-Carlton, St. Regis, W, and Luxury Collection, more than doubling its existing footprint of 31.

Besides the Fairmonts in Udaipur and Mumbai, Accor is preparing landmark projects such as Raffles Ranthambore, Sofitel Legend Sukh Bagh Jaipur, and Raffles Goa. Hilton, with only two luxury properties to date (Conrad Pune and Conrad Bengaluru), will introduce Waldorf Astoria in Jaipur and Delhi, LXR in Bengaluru, Signia by Hilton in Jaipur and additional Conrads in Jaipur and Sohna, as part of a plan to manage 300 hotels in India within a decade, from around 66 now.

Hyatt is extending its Alila brand into secondary markets such as Igatpuri in Maharashtra, Kodagu (known earlier as Coorg) in Karnataka, and in Lansdowne, a hill station in Uttarakhand. All three will open next year.

Minor Hotels is targeting 50 new openings in India over the next decade, with a focus on premium and luxury segments, led by its Anantara, Avani and NH Collection brands. Laurent Gardinier, President of Relais & Châteaux, a network of boutique luxury hotels, says India is a priority market and “holds immense strategic importance for Relais & Châteaux”. It is looking at expanding in the country.

Domestic groups are just as ambitious. The Leela has announced eight new hotels across Agra, Srinagar, Sikkim, Ayodhya, Bandhavgarh, Ranthambore, and two in Mumbai, taking the total to 21. ITC will expand the ITC Mementos brand (currently in Udaipur and Jaipur) to Siliguri and open a new hotel in Patna (the city’s first five-star). Oberoi, after a period of quiet, is rolling out new projects—The Oberoi Gir, The Oberoi Hyderabad, Trident Nandi Hills (near Bengaluru), and Trident Fort Aguada (in Goa). These are part of a pipeline of 25 properties scheduled for completion by 2030. Earlier this year it also opened the The Oberoi Vindhyavilas Wildlife Resort, Bandhavgarh.

IHCL has signed 50 Taj properties (38 in India and 12 abroad) in various stages of development that will open over the next two to three years. Of course, Taj has been growing at a phenomenal rate, having moved from 33 hotels in 2017 to 137 today.

The Postcard Hotels, which operates 11 properties in India, Sri Lanka and Bhutan with the latest, The Postcard Himalayan Willows in Leh, opening this April, has signed seven new hotels across Arunachal Pradesh, Dharmshala, Coonoor, etc.

Industry leaders say the timing is structural. “India’s luxury hospitality sector is at an inflection point, driven by a structural rise in wealth and strong economic momentum,” says Mandeep S. Lamba, President & CEO (South Asia), HVS ANAROCK. Morgan Stanley projects the number of high-networth households to quintuple to 25 million by 2035. As per the Mercedes Benz- Hurun India Wealth Report 2025, India has 871,700 millionaire households (with a net worth of over Rs 8.5 crore), up 90% from 2021. In terms of spending categories, tourism tops with 32%. “This growing pool of HNWIs and UHNWIs is increasingly channeling discretionary spending towards premium, experience-led travel, making luxury hotels a natural beneficiary of this shift,” adds Lamba.

While pre-pandemic most luxury hotels reported greater occupancy by international tourists, that has changed significantly in the last five years. “Pre-Covid, only 30-35% of our business came from the domestic market, but this has increased to 50% today,” says Anuraag Bhatnagar, Chief Executive Officer, The Leela Palaces, Hotels and Resorts. He adds that domestic demand for uber-luxury is also very high.

The Leela launched Arq at Pichola, a luxury villa complex on the banks of Lake Pichola in Udaipur last October. The three 5,500-sq ft villas are priced at over Rs 3.5 lakh a night each and have been sold out since launch, with most of the bookings coming from Indians. “Guests today are seeking experiences and memories, and not just a luxury product per se. So, that shift has happened, and that shift is here to stay,” says Bhatnagar.

Similarly, the Kohinoor Suite at The Oberoi Amarvilas in Agra that has wall-to-wall windows for uninterrupted views of the Taj Mahal and costs approximately Rs 11 lakh per night, or the 5000-sq ft Tata Suite at the Taj Mahal Palace in Mumbai, where reportedly Kim Kardashian stayed during the Anant Ambani wedding, and which costs upwards of Rs 9 lakh per night are also increasingly being booked by Indians.

Adds Anil Chadha, Managing Director of ITC Hotels, “Luxury is no longer restricted to big hotels. The domestic consumer is willing to pay. Give him a good product and he will come back. Our boutique brand Storii is doing quite well.” Besides investing in its flagship brand ITC and opening ITC Narmada (Ahmedabad), ITC Kohinoor (Hyderabad), ITC Royal Bengal (Kolkata) and the most recent ITC Ratnadipa in Colombo, over the last few years, ITC has introduced two new brands—ITC Mementos, a luxury brand and Storii by ITC, a boutique brand. Both are managed by ITC as part of its ‘asset-right’ model.

Growth is also coming from Tier II and III cities. Puneet Chhatwal, MD and CEO, IHCL, says, “What used to be the right product for a market seven or eight years ago today has an opportunity to upgrade to a luxury product in the same market, because the market and its needs have changed.” For instance, the Vivanta in Guwahati is being upgraded to a Taj. So is Vivanta at Srinagar.

One reason behind the growth of the hospitality sector is improved infrastructure such as roads and airports. This is giving hoteliers the option of developing hotels in newer destinations. “Luxury today is all about experiences and we have planned hotels in these destinations keeping that in mind. One is in the middle of a coffee plantation, one is a mountain resort, and to reach Igatpuri, you have to go through waterfalls,” says Sunjae Sharma, Managing Director for India and Southwest Asia, Hyatt.

Hyatt signed 21 new hotels across categories in 2024. Sharma says Igatpuri is close to Mumbai, Nashik and Shirdi and will cater to leisure as well as religious guests.

Zubin Saxena, Senior Vice President & Regional Head, South Asia of Hilton, says a combination of spiritual circuits, wine and culinary experiences and wellness-integrated stays is leading to opening of new markets such as Ayodhya, Bodhgaya and Kodagu. “These markets weren’t there 10 years ago!” he says. “The demography of the guest is also changing. They are younger, digitally connected and willing to explore new places and that’s opening new markets for us,” he adds.

Data from Hotelivate, a hospitality consultancy service, supports this. While a majority of this new supply is concentrated in the top 10 branded markets, luxury hotels are set to expand into 64 new Tier-II and III markets. Inventory in Tier-I cities has grown modestly, with a 14% increase since 2018-19, Tier II markets have seen luxury supply more than double, and Tier III markets have recorded nearly 60% growth. Looking ahead to 2030-31, the pipeline indicates a continued shift toward Tier-II and III locations, with luxury supply in the latter expected to grow more than 75%.

And while the domestic tourist’s newfound wanderlust is great news for luxury hotels, there is no doubt that weddings and MICE (meetings, incentives, conferences, exhibitions) are truly filling up resorts and hotels.

Bhatnagar says around 12% of their revenue comes from weddings. He expects it to go up to 15% over the next four-five years. Hyatt saw 50% year-on-year growth in weddings in 2023 and double-digit growth in MICE business in 2024.

Weddings are so important for the group that it has introduced Hyatt Superstars, a rewards programme designed to recognise and celebrate the contribution of wedding and event planners. Even city hotels have become destination wedding spots for some. The Fairmont Mumbai has hosted two “destination” weddings; several more are in the pipeline. Since opening in April, it has hosted over 20 MICE events. “Our location next to the Mumbai airport and our huge banqueting spaces make it ideal,” says Nitan Chhatwal, Chairman & MD, Shrem Group, the owner of the hotel.

Chadha says earlier, if corporate travel was not generating numbers, hoteliers focused on leisure or weddings or MICE. “But today all four cylinders are firing at the same time.” Occupancy rates for ITC have increased from 69% to 73% in the past one year.

Vineet Mishra, Vice President – Operations Accor India & South Asia, says occupancy is predicted to touch 74% across the portfolio. “While our primary focus remains driving growth through average rates in 2025, we anticipate a further 3–5% increase in occupancy in 2026.”

Higher occupancy is also leading to higher RevPar (revenue per average room). Overall, for luxury hotels, in the last three years, the RevPar has nearly doubled compared to other hotel segments, achieving a compound annual growth rate of around 16%, according to Hotelivate.

But will the addition of new rooms lead to a drop in RevPar? Industry observers don’t think so. “Demand is likely to outstrip supply, especially in gateway cities and high-value leisure destinations, ensuring pricing power and occupancy strength for well-positioned operators,” says Lamba of HVS ANAROCK.

Supporting these shifts is a wave of investment. JLL projects $1 billion hotel investments by 2028, nearly triple the $340 million recorded last year. However, India remains deeply underpenetrated in luxury hospitality compared with its peers. As of 2024, it had only 23 luxury keys per million residents, versus 973 in Australia, 690 in Thailand, and 177 in China. This shows that while the new additions are welcome, there is still a lot of headroom for growth.

With domestic demand rising, foreign brands committing, and capital flowing, India’s luxury hospitality market is no longer a niche defined by a few palace hotels. It is becoming a national industry—one measured not just in rooms and revenues, but in scale, experiences, and the redefinition of what luxury means for a new generation of Indian travellers.

@smitabw