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Indian outbound travel fuels hospitality sector in APAC locations: Colliers
India is rapidly emerging as a central force in the Asia Pacific hospitality sector, according to Colliers' latest report, Asia Pacific Hospitality Insights May 2025. The country is driving both resilient domestic growth and acting as a significant catalyst for outbound travel to key regional destinations.
'India is driving a structural shift in Asia Pacific's hospitality landscape, fuelling resilient domestic growth while emerging as a powerful outbound force,' said Nikhil Shah, managing director, Hospitality & Alternatives, Colliers India. He emphasised the strong demand across luxury, lifestyle and MICE segments, coupled with rising investor confidence in experience-led assets, making India central to regional tourism flows and sustaining premium pricing.
While overall Asia Pacific hospitality investment volumes saw a 19 per cent dip in Q1 2025, India's unique position is reshaping the landscape and sustaining robust valuations. The report highlights that the steady momentum from 2024 has continued into 2025 for the Asia Pacific hospitality sector, shifting towards performance-led growth.
But India stands out. A key development is the burgeoning Indian outbound travel market, which is increasingly fuelling the hospitality sector in destinations such as Thailand, Vietnam and South Korea. With growing disposable incomes and a strong appetite for experience-led travel, Indian tourists are becoming a dependable, year-round source of demand, contributing to strong room rates and marking a structural change in regional hospitality dynamics.
Domestically, the outlook for the Indian hospitality sector remains robust, with Tier II cities poised to become significant contributors to future expansion. Spiritual tourism, in particular, is emerging as a crucial driver of inbound travel within India. Towns such as Ayodhya, Dwarka, Puri, Shirdi, Tirupati and Varanasi are set to unlock new investment avenues and fuel long-term growth, backed by focused government policy support and rapid infrastructure development.
Despite limited liquidity in the broader investment market, robust valuations persist in India, driven by long-term conviction in the sector's future rather than solely cap rate-based transactions.
Across the Asia Pacific, hotel performance remained resilient in Q1 2025, supporting ongoing deal activities. Revenue per Available Room (RevPAR) across the region saw a 2.1 per cent year-on-year increase — a significant improvement from the modest 0.4 per cent growth between 2023 and 2024 — primarily driven by Average Daily Room Rate (ADR) growth and higher occupancy rates. New Delhi and Mumbai were among the top performers in the region for ADR growth, alongside Phuket, Tokyo and Osaka, reflecting strong domestic demand, international travel surges and effective market positioning.
Govinda Singh, Colliers' executive director, APAC Capital Markets, Hotels & Hospitality and Advisory, acknowledged the traditionally slow first quarter for transactions and the cautious 'wait-and-watch' approach due to geopolitical uncertainty. However, he anticipated a pickup in activity as the year progresses, with investors shifting towards value-add strategies focused on cash flow and income growth.
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