India’s hospitality sector is closing 2025 with its strongest performance in over a decade.

Occupancy across branded hotels has hovered near 66–67%, Average Room Rates (ARRs) have crossed ₹8,300, and RevPARs are tracking almost 10 % above 2024 levels, driven by buoyant domestic travel, expanding business mobility, and a wave of Tier-II demand that continues to surprise operators.

Beyond the hotels themselves, the ecosystem around them tells the same story of acceleration. According to Knight Frank’s Q3 2025 Real Estate Market Report, India’s office stock has surpassed one billion sq ft, residential sales have held firm, and the premium housing segment, homes priced above ₹10 million, now contributes more than half of all transactions. Together, these indicators reflect not a short-term rebound but a structural re-balancing of the Indian economy: growth is no longer metro-bound; it is radiating outward into the country’s emerging corridors of wealth and consumption.

Spectra Hospitality calls this unfolding shift “The Prosperity Periphery.”

It’s the silent expansion of India’s wealth and consumption map, a ring of Tier-II and Tier-III cities now emerging as epicentres of affluence, investment and experience-led living.

The Redistribution of Wealth — and Confidence

The Mercedes-Benz Hurun India Wealth Report 2025 provides a starting clue: ten states still house nearly 79% of India’s millionaire households, but the surprise lies beneath the headline. Cities such as Ahmedabad, Surat, Jaipur, Vadodara, Nagpur, Visakhapatnam and Lucknow have entered the top ten by millionaire count.

This decentralization of affluence mirrors India’s broader capital flow. Founders of wealthtech firms such as Dezerv, Centricity and Ionic Wealth report that roughly 30% of their new clients now come from beyond the top 18 state capitals, while digital platforms like Zerodha, Angel One and Groww claim over 80% of new retail investors hail from non-metro India.

Technology has made wealth management borderless, yet physical trust remains local. Many firms are setting up small advisory offices in Morbi, Rajkot, Dehradun and Tiruppur, pairing digital convenience with regional language engagement. This evolution marks a profound shift: wealth is not only being created in smaller cities, it is being retained, diversified, and reinvested there.

Where wealth settles, lifestyle follows. The widening of India’s millionaire belt signals the next phase of hospitality opportunity, one defined not by postcode prestige, but by purchasing power density.

Real Estate: The Ground-Level Evidence of Affluence

The Knight Frank India Real Estate Market Report (Q3 2025) reveals the physical manifestation of this financial confidence.

India’s office market has hit a new milestone with over 1 billion square feet of stock, and year-to-date leasing volumes up 24% YoY. Global Capability Centres (GCCs) alone accounted for 32% of total transactions, expanding fastest in Hyderabad and Chennai, which saw 33% and 9% YoY leasing growth respectively.

In parallel, flexible workspace operators captured over 20% of the market, reflecting India’s deep embrace of hybrid work. Office rents continue their thirteenth consecutive quarter of YoY growth,  led by Kolkata (+14%), Mumbai (+11%), and NCR (+9%) — confirming that corporate India is no longer geographically concentrated.

Residential data tells an equally compelling story. Despite a volatile global environment, 87,603 housing units were sold in Q3 2025, up 1% YoY. More tellingly, homes above ₹10 million now form 52% of total sales, while mid-premium homes (₹10–20 million) rose 17% YoY, and super-luxury segments (₹100–200 million) spiked 170% YoY.

Cities such as Chennai (+12% YoY sales) and Ahmedabad (+3%) posted their strongest performances in years, while Hyderabad and Bengaluru sustained double-digit price growth. This is no longer metro exceptionalism,  it’s a distributed real estate boom aligned with new income pools.

Travel Behavior: The Lifestyle Expression of Prosperity

The Booking.com “How India Stays 2025” report adds behavioral texture to these economic shifts. Nearly 84% of all Indian trips remain domestic, and the sharpest growth is in Tier-II leisure corridors such as Coorg, Rishikesh, Varkala and Jaipur, where occupancy levels now reach 63% of peak-season volumes even in off-peak months.

The Indian traveler’s mindset has evolved: the stay itself has become the holiday. Meaningful design, local culture, and emotional connection outweigh traditional five-star formality. The ₹10,000 experience now carries more prestige than the ₹20,000 room, and 67% of travelers are willing to upgrade to luxury, but only when it feels authentic and bundled with experiences.

Spectra’s own project data across spiritual and heritage destinations like Ujjain, Cuttack, Kochi, Haridwar, Rishikesh etc shows tourism growth between 8 to 12% annually, led by boutique heritage conversions and experiential programming. Domestic midweek travel is up nearly 30%, reflecting how flexible work culture sustains year-round occupancy.

Together, these patterns confirm that affluence is no longer just earning capacity,  it’s experiential curiosity. As prosperity spreads, so does the appetite for travel that feels personal, rooted, and rewarding.

The Tier-II Momentum: City Archetypes for a Polycentric Future

For decades, hospitality investment followed a metro logic: “build where corporates cluster.” That logic has expired. India’s emerging cities now combine three critical traits. affluence, aspiration, and affordability,  making them the new centers of gravity.

Spectra classifies them into three archetypes that define the next wave of hospitality growth:

First, Affluence Corridors such as Ahmedabad, Surat, Jaipur and Lucknow,  where rising millionaire density and luxury housing growth are unlocking demand for upper-midscale, boutique, and branded residential-hotel hybrids. These cities mirror Knight Frank’s data where homes above ₹10 million now dominate sales, confirming sustainable purchasing power.

Second, Enterprise Ecosystems, Hyderabad, Chennai, Kochi, Indore, where GCCs and third-party IT services drive weekday business travel. Here, hospitality models that blend work and wellness, tech and texture, will find the fastest maturity.

And third, Experience Hubs,  Rishikesh, Coorg, Varkala, Ujjain,  the cultural and ecological centers powering India’s “micro-holiday” trend. Their tourism seasons are flattening; their occupancies, diversifying. For investors, these are the testing grounds for high-yield, low-footprint hospitality.

Market Outlook: 2026 and Beyond

Based on current data and Spectra’s forecasting model, all-India occupancy is expected to rise by 100–150 basis points in 2026, with average rates up 4–6% and RevPAR growing 6–8%, led by GCC-heavy southern cities and affluent northern corridors.

Risks remain moderate: the luxury housing pipeline is swelling, but absorption (with a Quarters-to-Sell ratio of 5.8) indicates stability; inflation has cooled to 2.07%; and GDP growth has been upgraded to 6.8% for FY2026. With both affordability and liquidity intact, India’s hospitality upcycle appears sustainable through the decade.

Spectra’s Perspective: From Metro Monoculture to Multi-City Opportunity

For over two decades, India’s hospitality conversation was dominated by a handful of metros. But today, that monoculture is giving way to a multi-city mosaic of opportunity.

From Surat’s business class to Lucknow’s cultural resurgence, from Coimbatore’s manufacturing prosperity to Visakhapatnam’s coastal ascendancy, the next hospitality boom is taking shape in markets once deemed secondary. Land costs remain rational, state incentives are rising, and digital connectivity has erased discovery barriers.

Spectra projects that by 2030, nearly 45% of all new branded hotel keys will open outside India’s top eight cities, nearly double the 2020 share. That statistic encapsulates a generational pivot,  from expansion to diffusion, from density to diversity.

The Spectra Thesis: Growth Has Become Polycentric

India’s next decade will be defined not by where growth started, but where it’s heading.

The cities driving the new prosperity, Ahmedabad, Lucknow, Hyderabad, Surat, Jaipur, Vijayawada and Coimbatore are not waiting for validation; they are building their own demand ecosystems. At Spectra Hospitality, we integrate data from financial behavior, real-estate absorption, and travel sentiment to forecast where hospitality demand will crystallize next. Our models suggest that the intersection of wealth creation, workspace expansion, and leisure mobility will define India’s hospitality hotspots through 2030.

The message for investors is clear: the next ₹10,000 crore of hotel value won’t come from new towers in Mumbai. It will rise from new ambitions in India’s Tier-II cities, where people are not just earning more, but living, traveling, and investing differently.