India's Consumer Spending Tilts Toward Experiences, With Hotel Stays Leading Growth

Indian consumers are increasingly prioritizing experiences over material purchases, a shift that is reshaping the hospitality sector across the country. According to research from CBRE, a global real estate services firm, this reorientation promises to reshape spending patterns significantly over the coming years.

Data analysis conducted by CBRE using Oxford Economics figures reveals that between 2025 and 2030, Indian household spending on physical goods will expand at a 9.1% compound annual growth rate. By contrast, spending on experiential categories—encompassing dining, travel, entertainment, and cultural pursuits—is forecast to grow at 10.3% annually. Hotel accommodation stands out as the fastest-growing segment within this category, projected to expand at 10.6% annually.

The pandemic played a catalytic role in accelerating this trend. As restrictions eased after 2022, pent-up consumer appetite for travel and leisure activities surged, with many seeking to reclaim experiences lost during lockdowns. This momentum has carried forward into the present economic environment.

Generation Z as the Primary Driver

Generation Z, born between 1997 and 2012, represents the largest demographic cohort across the Asia Pacific region and is the primary engine behind this spending shift. As members of this generation achieve financial independence, their consumption patterns are expanding faster than any other living generation, according to the research.

This cohort brings distinctive preferences to the hospitality sector. Gen Z travelers seek visually striking, thoughtfully designed spaces that serve as compelling backdrops for social media sharing. They expect personalized service that moves beyond standardized corporate offerings and value communal areas hosting wine tastings, live performances, and local cultural programming. Technology integration—from mobile check-in to room automation—has shifted from being a premium feature to a fundamental expectation.

The Rise of Lifestyle Hotels

In response to these evolving consumer demands, a new hotel category has gained prominence: the lifestyle hotel. These properties occupy a distinctive market position, combining the distinctive design and local authenticity of independent establishments with the operational efficiency, distribution reach, and membership benefits of major institutional brands.

The growth trajectory of this segment underscores its market appeal. Between 2015 and 2025, Asia Pacific's overall hotel supply expanded at a steady 5% annually, yet lifestyle hotels surged ahead at 19% annually. Looking forward to 2030, lifestyle hotels are anticipated to maintain 10% annual growth—a rate five times higher than the projected 2% expansion for the conventional hotel market.

These properties demonstrate clear financial advantages. Across Asia Pacific in 2025, upper upscale lifestyle hotels commanded a 13% premium in revenue per available room compared to traditional properties in their category. Upscale lifestyle brands achieved an additional 7% premium, accomplishing this through stronger food and beverage performance and leaner operational models, despite offering smaller room sizes.

India currently lags markets like Singapore and Hong Kong in lifestyle hotel penetration, a gap that investors and developers increasingly view as a significant opportunity.

Structural Shift in Consumer Behavior

Anshuman Magazine, CBRE's Chairman and CEO for India, South-East Asia, Middle East and Africa, emphasized the permanence of this transformation. "Today's consumer seeks more than lodging—they want distinctive, culturally rooted, and digitally shareable experiences," he stated. "This movement toward experiential consumption reflects a fundamental economic shift. For asset owners and institutional investors, lifestyle hotels offer a dual advantage: measurable revenue premiums and ADR improvements over standardized properties, alongside a capital-efficient conversion pathway that enhances long-term value."

Ada Choi, Head of Research for Asia Pacific at CBRE, framed the phenomenon as a lasting reset rather than a passing fad. "The experience economy represents a structural transformation of consumer behavior," she noted. "The Asia Pacific hospitality sector stands at a pivotal juncture. In India specifically, growing disposable incomes, an increasingly sophisticated Gen Z consumer base, and a substantial shortage of lifestyle hospitality supply are creating one of the region's most compelling investment opportunities."

Conversion Strategy Over New Construction

Developers are increasingly favoring the conversion of existing properties over ground-up construction, driven by escalating land acquisition and building costs. India's substantial inventory of older, independent, unbranded hotels presents a particularly attractive conversion opportunity, often achievable at significantly lower cost than new development.

The transaction landscape reflects this shift. Across Asia Pacific, hotel deals under $100 million grew from 31% of total investment volume in 2020 to 42% by 2025. Approximately 30% of transacted assets comprise independent hotels suitable for repositioning as lifestyle properties.

CBRE recommends that developers pursuing this opportunity adopt location-specific strategies, identifying underserved market segments, maintaining design adaptability to preserve future flexibility, and leveraging food and beverage programming alongside public spaces as community-oriented amenities that appeal to both hotel guests and local residents.