India’s Hotel Supply Crunch Set to Push Room Rates Higher

India remains a market where hotel supply is far below the demand level, and as a result, the margins for hotels are expected to be much higher than pre-Covid levels, according to credit ratings firm ICRA.

Fresh data from ICRA reveals that the country’s current supply pipeline is smaller than what it was post the global financial crisis in 2009.

Supply growth in India’s premium hotel segment stood at just 3% in fiscal 2024, down from 5% the year before. Projections for fiscal 2025 show modest growth of 5% while in a fiscal 2026 this is expected to lower to 4%.

Meanwhile, demand is racing ahead, growing 9-10% in fiscal 2024. ICRA predicts this strong momentum will continue with 8-9% growth in fiscal 2025 and 2026.

ICRA expects the industry to record revenue growth of 7-9% this fiscal year, and 6-8% next year. “Demand has remained strong so