The Market Segmentation of the India Hospitality Market


The India hospitality market, valued at USD 251 billion in 2023, is a dynamic and rapidly growing sector. The growth of this market can be attributed to various factors, including rising disposable incomes, increased business travel, and a surge in domestic and international tourism. This blog delves into the Indian hospitality market segmentation, exploring its various components and their significance.

By Product Type

Luxury Hotels

In 2023, luxury hotels hold a significant market share in the India hospitality market. These hotels cater to affluent travellers who seek exclusivity, personalized services, and high-end amenities. Luxury hotels are often located in prime areas of major cities and tourist destinations, enhancing their appeal to travellers. The demand for luxury accommodations is driven by both domestic and international tourists who prioritize comfort, exclusivity, and superior service quality.

Luxury hotels also benefit from India’s rich cultural heritage and diverse landscapes, offering unique and memorable experiences that attract high-end tourists. Additionally, the presence of global hotel chains and the introduction of premium services have further solidified the position of luxury hotels in the market.

Mid-Range Hotels

Mid-range hotels cater to a broader audience, including business travellers and middle-class tourists. These hotels offer a balance between cost and comfort, providing essential amenities and services without the high price tag of luxury hotels. The growth of mid-range hotels is supported by the increasing number of domestic travellers who seek affordable yet comfortable accommodation options.

The mid-range segment is also popular among business travellers who require quality accommodations for short stays during business trips. This segment’s growth is further driven by the expansion of corporate travel and the rise of small and medium-sized enterprises (SMEs) in India.

Budget Hotels

Budget hotels play a crucial role in the India hospitality market by providing affordable accommodation options to budget-conscious travellers, including backpackers, students, and solo travellers. These hotels focus on offering basic amenities and services at competitive prices, making travel more accessible to a wider audience.

The budget hotel segment has seen significant growth due to the increasing trend of budget travel and the rise of online travel agencies (OTAs) that facilitate easy booking and price comparison. Budget hotels are particularly popular in tourist hotspots and urban areas where travellers seek economical lodging options.

By Service Type


Accommodation services form the core offering of the India hospitality market, commanding the largest market share. This category includes a wide range of lodging options, from luxury hotels to budget stays, catering to diverse traveler preferences and budgets. Accommodation services are crucial for both leisure and business travellers, providing them with a place to stay during their trips.

The accommodation segment’s growth is driven by the overall increase in travel and tourism activities in India. The development of new hotels and resorts, along with the renovation and expansion of existing properties, has contributed to the availability of varied accommodation options across the country.

Food & Beverage

The food and beverage (F&B) segment is a vital component of the hospitality market, offering dining services to hotel guests and external customers. Hotels often feature multiple dining outlets, including restaurants, cafes, bars, and lounges, providing a range of culinary experiences. The F&B segment enhances the overall guest experience and contributes to the hotel’s revenue.

The demand for diverse and high-quality dining options has led hotels to innovate their F&B offerings, incorporating local cuisines, international dishes, and unique dining concepts. The rise of food tourism has also played a role in boosting the F&B segment, as travellers seek authentic culinary experiences during their trips.

Event Services

Event services include the organization and hosting of events such as conferences, weddings, seminars, and corporate meetings. Hotels with dedicated event spaces and conference facilities attract business clients and social event organizers. This segment has gained importance with the growth of the MICE (Meetings, Incentives, Conferences, and Exhibitions) industry in India.

Event services contribute significantly to the hospitality market by generating additional revenue streams and increasing hotel occupancy rates. The demand for event services is fueled by the rising number of corporate events, destination weddings, and social gatherings.

Others (Spa, Wellness)

The “Others” category encompasses additional services offered by hotels, such as spa treatments, wellness programs, fitness centers, and recreational activities. These services enhance the overall guest experience and attract health-conscious travellers seeking relaxation and rejuvenation.

The wellness segment has gained traction with the increasing awareness of health and wellness among travellers. Hotels offering comprehensive wellness programs and state-of-the-art facilities can differentiate themselves in the competitive hospitality market.

By Customer Type

India Hospitality Market

Leisure travellers

Leisure travellers represent the largest customer segment in the Indian hospitality market. This segment includes tourists who travel for vacation, recreation, and leisure activities. Leisure travel has seen a resurgence post-pandemic, with travellers seeking holiday destinations, cultural experiences, and adventure activities.

The growth of domestic tourism, coupled with the influx of international tourists, has bolstered the demand for leisure travel accommodations. Hotels catering to leisure travellers focus on providing a range of amenities and services to enhance the guest experience, including recreational facilities, tour packages, and entertainment options.

Business travellers

Business travellers form a significant segment of the hospitality market, driven by the expansion of corporate travel and the rise of India’s business hubs. This segment includes professionals travelling for work, conferences, and business meetings. Business travellers require comfortable and well-equipped accommodations that offer convenience and essential amenities for their stay.

Hotels catering to business travellers often provide facilities such as business centres, meeting rooms, high-speed internet, and easy access to transportation. The demand for business travel accommodations is concentrated in major cities and industrial regions.

Others (Backpackers, Pilgrims)

The “Others” category includes niche customer segments such as backpackers and pilgrims. Backpackers are budget-conscious travellers seeking affordable lodging options and unique travel experiences. This segment is characterized by its preference for hostels, guesthouses, and budget hotels.

Pilgrims travel to religious and spiritual destinations across India, seeking accommodations that cater to their specific needs. The growth of pilgrimage tourism has led to the development of hotels and lodges near religious sites, providing comfortable stays for pilgrims.


The Indian hospitality market is a diverse and dynamic sector, segmented by product type, service type, and customer type. Each segment plays a crucial role in shaping the overall market landscape and catering to the varied preferences and needs of travellers. The continuous growth of the hospitality market is driven by the increasing travel and tourism activities in India, supported by rising disposable incomes, business travel, and government initiatives. As the market evolves, hotels and hospitality providers must adapt to changing trends and customer preferences to maintain their competitive edge and drive future growth.