A new CBRE report projects consumer spending on experiences to grow at a 10.3% CAGR by 2030, outpacing physical goods. Hotel accommodation is expected to be the fastest-growing category at 10.6%, fueled by Generation Z's demand for lifestyle-focused travel. This trend highlights potential shifts in the Indian hospitality market and investment landscape.
What Happened
Indian consumers are steadily shifting their spending priorities, moving from physical goods toward experiential services. A recent report by CBRE Research projects that between 2025 and 2030, household expenditure on experiences will grow at a compound annual growth rate (CAGR) of 10.3%, compared to 9.1% for physical goods. Within the services sector, hotel accommodation is set to lead this transformation with a projected annual growth rate of 10.6%. This data suggests a long-term structural change in how Indian households, particularly the younger demographic, allocate their discretionary income.
The Gen Z Influence
The post-pandemic landscape has reshaped consumer behavior, with travel and leisure becoming central to lifestyle choices. CBRE identifies Generation Z, born between 1997 and 2012, as the primary engine for this trend. As this demographic enters the workforce and gains financial independence, their demand for unique, shareable, and digitally integrated travel experiences is reshaping the hospitality industry. These consumers are actively seeking hotels that offer more than just a place to stay, looking for communal spaces, integrated wellness facilities, and technology-driven convenience.
The Rise of Lifestyle Hotels
In response to these changing demands, the 'lifestyle hotel' segment is growing rapidly. These properties sit between traditional global chains and smaller, niche boutique hotels. They combine the unique design and local character of boutique properties with the scale and operational distribution of larger brands. While the wider hotel market is expected to see steady growth, the lifestyle segment is projected to expand its supply at 10% annually through 2030, significantly faster than the 2% projected for the broader hotel sector. This indicates that major hospitality chains are actively repositioning their portfolios to capture this specific demand.
Business and Financial Context
The shift toward lifestyle hotels is not just about demand; it is also about revenue efficiency. The report notes that lifestyle hotels often command a premium in Revenue Per Available Room (RevPAR). In 2025, upper-upscale lifestyle hotels in the Asia Pacific region achieved a 13% RevPAR premium over traditional properties in the same category, while upscale lifestyle brands saw a 7% premium. This is driven by better operational efficiency and stronger revenues from food and beverage services. Listed players in the Indian hospitality space, such as Indian Hotels Company (IHCL), EIH Ltd (Oberoi), Lemon Tree Hotels, and Chalet Hotels, have been expanding their presence in both luxury and mid-market segments to tap into this evolving market.
Risks and What Investors Should Track
While the growth outlook for the hotel sector appears positive, investors should remain mindful of the inherent risks in the hospitality business. The industry is highly cyclical, meaning profitability is sensitive to economic downturns, rising interest rates, and changes in discretionary spending. Developing lifestyle hotels often requires significant capital spending, which can impact cash flows and increase debt levels if not managed efficiently. Furthermore, successful execution depends on the company's ability to maintain a competitive RevPAR and manage operational costs. Investors monitoring this sector may track metrics like occupancy rates, average daily room rates, debt-to-equity ratios, and the timeline for new property openings compared to demand cycles.