Why India Has Too Few Hotel Rooms

Why India has far fewer branded hotel rooms per person than China or the US, the reasons including land costs and long payback periods, and why rates are rising.

India has relatively few branded hotel rooms for its size.

The gap

India has around 2 lakh branded hotel rooms, according to industry estimates, compared with millions in China and the US.

Why supply is limited

Land costs in cities are very high.
Long approvals: dozens of licences may be needed.
Long payback: hotels take many years to recover investment.
High interest rates compared with developed countries.
Past downturns: oversupply in some cities after 2008 made investors cautious.

Consequences

Rising room rates during peak demand, like wedding seasons and big events.
Cities like Mumbai, Delhi, Bengaluru and Goa saw strong price growth after 2022.

Signing boom

Hotel chains signed record numbers of new hotels in 2023-25, especially in tier-2 cities and pilgrimage towns.

Infrastructure status

The industry has sought infrastructure status for hotels to get cheaper long-term loans; the 2025 Budget included large hotels in the harmonised infrastructure list.

The event week

During a big cricket final in Ahmedabad, hotel rates jump several times their normal levels because the city has too few rooms for the crowds.

Thinking hotel prices are high because of greed

Limited supply and high costs drive prices.

Key takeaways

India has around 2 lakh branded rooms, far fewer than China or the US.
Land costs, approvals and long payback limit supply.
Room rates rose strongly after 2022.
Infrastructure status aims to ease financing.