As the country’s domestic tourism grows, riding India's buoyant leisure travel trend, listed hospitality companies are rapidly signing up hotels in obscure micro-markets from Barapani to Maniyagarh Hills and Omkareshwar.
Hotel companies are fanning out, looking aggressively for contracts to increase not only their income from management fee but also to widen their presence across tier-III and IV markets as development peaks in the bigger cities.Recent signings include ITC Hotels’ Storii at Amchong Tea Estate on the outskirts of Guwahati and a Welcomhotel in Salasar, Rajasthan. Taj parent Indian Hotel Companies Ltd added properties in Jawai, Bharatpur, in Rajasthan, Sindhudurg in Maharashtra and signed one in Barapani, Meghalaya.
Lemon Tree announced hotels in Omkareshwar and Chitrakoot in Madhya Pradesh in January, Khurpatal in Uttarakhand, Barog in Himachal Pradesh and Gorakhpur in Uttar Pradesh.
Scale is becoming less about room count alone and more about the breadth of brands and distribution that a company can offer owners and guests. Oberoi Hotels parent EIH has been taking its brands to destination-led markets, with recent and planned properties including Makaibari Tea Estate in West Bengal, Kabini and Hampi in Karnataka, and Rajgarh Palace atop the Maniyagarh Hills in Chandra Nagar, Madhya Pradesh.
The expansion is not simply about moving into smaller cities, said consultants. Hotel companies are looking for pockets of demand that can support branded accommodation, with destinations increasingly built around a specific travel proposition rather than simply the size of the city.
IHCL opened a 30-room Ginger in Siwan in Bihar in June, followed by boutique resort Tree of Life Himalaya in Hartola, Uttarakhand, and another one in Chettinad, Tamil Nadu.
Dimitris Manikis, president, EMEA, at Wyndham Hotels & Resorts, the world’s largest hotel franchising company and operator of brands including Ramada, Days Inn and Microtel, said: “India is changing so rapidly that a tier-III city can become a tier-II market within months as new airports and highways come in. Look at the infrastructure pipeline: 27 airports are being developed in India and another 50 are in the pipeline, compared with virtually none in Europe.”
India's domestic travel market is increasingly underpinning the hotel industry, with the World Travel & Tourism Council, a global travel and tourism industry body, estimating domestic visitor spending at $203 billion in 2025, or 86% of total travel and tourism spending.
Consultancy HVS Anarock, in its January 2026 review of 2025, said domestic tourism remained the sector's strongest pillar, with short breaks, drive-to leisure travel, pilgrimages, weddings and social celebrations helping tier-II and III cities gain ground on the travel map.
For hotel management companies, this offers a way to expand without having to own the underlying real estate, said Rattan Keswani, deputy managing director of Lemon Tree Hotels and former president of Trident Hotels.
“Portfolio breadth is now becoming as important as the hotel or room count. It is really about strengthening and carpet-bombing locations. Once one brand enters a market, others follow because owners realize they cannot survive on their own and consumers trust a brand,” he said.
Demand in smaller locations can also be generated locally in the form of weddings, pilgrimages, regional trade and family occasions, with guests travelling in from surrounding towns and villages.
“A destination does not necessarily need a large corporate base if it has a strong enough reason for people to visit, and the branded hotel can become part of the infrastructure that supports that travel,” Keswani said.
Royal Orchid is exploring emerging micro-locations such as Kevadia near the Statue of Unity in Gujarat. French hospitality major Accor is taking Novotel to Sambalpur, Odisha, with a 120-room property signed to open in 2031, expanding its footprint to fast-growing regional markets.
Keswani said owners of hotels in emerging markets are realizing that they may struggle to compete independently as the arrival of one recognized brand can encourage other hotel companies to follow. The advantage lies not only in the brand but in its distribution network: a guest searching for a hotel in one emerging destination can potentially become a customer elsewhere within the chain's network.
