AI, Premiumisation & Experiences Will Drive Hospitality in 2026
India's hotels have moved beyond recovery. Demand is steady, supply is disciplined, and guests are more selective. Expect 2026 to reward teams that stay relevant, personalise at scale, and operate with speed.
As Tarun Seth, General Manager, Grand Hyatt Gurgaon, puts it: "Guests are becoming more discerning, and success will depend on relevance, personalisation and operational agility." That mindset will separate strong brands from the rest.
2025 Reset: Pressure with Pockets of Strength
Last year tested the sector: a military conflict between India and Pakistan, tariff moves, uneven corporate sentiment, and an airline crunch late in the year. Hospitality reacts fast to shocks, and recovery often hinges on sentiment more than data.
Some segments-especially rooms-held up. Events and corporate groups were flat. At Grand Hyatt Gurgaon, performance remained balanced across rooms and F&B with a clear focus on guest experience. The bigger unlock nationally: stronger alignment between industry bodies and policymakers, with infrastructure status critical for long-term financing and growth in emerging destinations.
Tier II/III Demand Is Real-and Here to Stay
2025 made one thing obvious: domestic travel in smaller cities is no longer a side story. New projects accelerated, and the market proved deeper than expected.
For 2026, growth will lean "smart" rather than fast. Think disciplined development, targeted positioning, and sharper value delivery. Guests want meaning-not templates.
What Guests Actually Want in 2026
- Experience-first stays: Culinary discovery, wellness, culture, and story-rich itineraries.
- Authenticity: Local ingredients, regional menus, community-led activities.
- Premium domestic travel: Destination weddings, pilgrimage circuits, curated MICE.
- Personalisation: Choice architecture over one-size-fits-all.
"Guests are no longer seeking standardised offerings, they are looking for authenticity, storytelling and emotional connection," says Tarun.
Sustainability: Quiet Changes, Big Impact
Energy efficiency, water stewardship, and waste reduction are moving from PR to operations. Many corporates now review sustainability metrics when selecting hotels. This is changing purchasing decisions, not just press releases.
Hotels that combine local culture, global standards and personalised service will lead the next phase.
Forecast for FY2026
- Revenue growth: ~6-8% for the sector.
- Occupancy: Premium hotels at ~72-74%.
- ARR: Modest increases on a stable base.
For benchmarking and market signals, keep an eye on industry trackers such as STR.
Headwinds You Can't Ignore
- Talent: Availability, retention, and rising labour costs.
- Energy: Volatile costs and grid constraints in some markets.
- Regulation: Complex compliance across states and categories.
- Supply chain: Price swings for key inputs and imported items.
"The recognition of hospitality as a key economic and employment driver is essential to unlock the sector's full potential," says Tarun. Expect energy, payroll and supply chain lines to stay under pressure. The answer: efficiency, technology enablement, and people-first leadership.
AI, Partnerships, and Practical Upgrades
Partnerships will do the heavy lifting in 2026-culinary experts, wellness brands, cultural institutions, and tech collaborators. They help teams stay culturally relevant and deliver differentiated experiences without ballooning fixed costs.
AI is an enabler, not a replacement. Use it for demand forecasting, predictive maintenance, personalised pre-arrival comms, and efficient upselling. The service stays human; the system gets smarter.
Renovation priorities are clear: timeless design, sustainability, and intuitive functionality. On talent, retention hinges on career paths, continuous learning, internal mobility and a clear sense of purpose and belonging-not compensation alone.
Playbook: 12 Moves for Hospitality and Events Teams
- Audit micro-markets in Tier II/III cities; build weekend and mini-moon packages with local partners.
- Price with discipline: protect premium positioning; offer value through inclusions, not discounts.
- Productise experiences: chef's tables, farm visits, temple trails, artisan sessions.
- Stand up sustainability dashboards; share metrics in RFPs and on your website.
- Lock energy savings: LED retrofits, HVAC optimisation, smart meters, linen reuse with guest opt-ins.
- Build a wedding and pilgrimage calendar; pre-negotiate vendor clusters for speed and margin.
- Reboot MICE with curated agendas: wellness breaks, local storytelling, and F&B that reflects place.
- Deploy AI where ROI is clear: forecasting, housekeeping scheduling, and guest messaging flows.
- Cross-train teams; create internal gig pools for peak periods to reduce overtime burn.
- Use collabs to stay fresh: pop-ups with chefs, spas with wellness brands, museum tie-ins.
- Strengthen airline disruption SOPs: real-time rebooking support and stranded guest packages.
- Report value, not features: map every touchpoint to a guest outcome and a P&L metric.
If you're upskilling your team on practical AI for hotel ops and guest engagement, explore curated learning paths by job role at Complete AI Training.
The Bottom Line
2026 rewards operators who stay focused: premium positioning, experience-led products, clean operations, and calm execution. Keep the service human. Let technology do the heavy lifting in the background. That mix wins guest trust-and the P&L.
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