Sarovar Hotels will go ahead with a selective expansion spree in India’s mid-market segment. While the chain crossed ₹2,000 crore in revenue last year and is keen on further growth, its leadership wants to be choosy about locations to hedge against rising land costs and project delays.
The company, majority-owned by Europe’s Louvre Hotels Group, is increasingly prioritizing tier II and tier III cities where infrastructure-led growth is outpacing the entry of branded players. “Growth for the industry overall is going to be much bigger in the smaller cities,” Ajay K. Bakaya, chairman of Sarovar Hotels and director at Louvre Hotels India, told Mint. However, high capital costs and a shortage of hospitality talent are complicating the execution of new projects in these emerging hubs, he added.
The strategic caution comes as industry forecasts predict India’s room supply will need to hit 350,400 by 2030 to keep pace with demand. Competitors like Lemon Tree Hotels are also racing for market share, yet Sarovar is shifting its focus toward mixed-use developments, combining hotels with branded residences to ensure long-term financial viability.
Despite domestic revenues currently tracking 5-6% below forecasts due to geopolitical tensions and soft sentiment, the group is committed to opening 20 hotels this year. By targeting spiritual circuits and industrial centres, Sarovar aims to capture a domestic travel surge that is increasingly substituting expensive international trips with high-end local locations.
- Sarovar aims to achieve revenue of ₹2,300 crore in 2026 through disciplined hotel expansion.
- Demand for branded rooms significantly outpaces India's slow-growing premium hotel supply pipeline.
- High capital costs and rising land prices make stand-alone projects increasingly unviable.
- Sarovar is pivoting to mixed-use developments and branded residences for better profitability.
- A shortage of trained hospitality talent remains the industry’s most critical bottleneck.
The hotel chain is targeting ₹2,300 crore this year, and its next phase of growth will depend as much on viability and execution as on market opportunity.
Small cities leading
“Growth for the industry overall is going to be much bigger in the smaller cities,” Bakaya said.
He added that India’s hotel sector is entering a phase in which demand is likely to continue running ahead of new room supply, held back by long project timelines, high capital costs, and approval bottlenecks. At the same time, he said branded operators need to be far more selective about where they expand, especially as land prices rise and staffing challenges intensify.
The Louvre Hotels Group is owned by China’s Jin Jiang International. In India, Sarovar operates across the three-, four- and five-star categories under brands such as Sarovar Premiere, Sarovar Portico, Golden Tulip and Hometel.
The company currently has a portfolio of 150 operating hotels and another 100 hotels under-development hotels across the country. It has about 11,000 rooms across Africa and Nepal. In 2025, it signed 61 hotels, its highest annual tally so far, Bakaya said and has already signed 12 more hotels this year in locations such as Kasauli, Bharatpur and Deoria, and plans to open more than 20 hotels in 2026.
India’s demand for branded hotel rooms is expected to grow at a compounded annual growth rate of 8-10% during FY25-28, compared with a likely 5-6% rise in premium hotel room supply, according to ratings firm Icra.
Still, Sarovar is trying to stay disciplined in its growth. Bakaya said the company is becoming more selective about new signings, which is also pushing it towards formats that can offer more diversified or predictable revenue streams. India is likely to see more mixed-use developments that combine hotels with retail, offices, residences or serviced apartments, helping improve project viability for owners and operators alike, he said.
Interest in mixed-use projects
Sarovar is already seeing this play out in the National Capital Region, where it has signed one branded residences-linked project in Greater Noida and another in Ghaziabad, reflecting growing developer interest in hospitality-led mixed-use formats.
Even so, Bakaya said the biggest challenge for management companies today is not necessarily demand, but talent. That issue is especially acute in smaller cities, where trained hospitality workers are harder to find and retain.
Sarovar’s largely domestic-demand-driven business has helped cushion it from some of the volatility that has affected more internationally exposed operators
Recently, HVS Anarock managing director (South Asia), Akash Datta, told Mint that the domestic travel opportunity in India is abundant, especially due to the war in West Asia. This summer holiday season, with even a modest shift in outbound leisure travel, may translate into meaningful incremental demand for India’s domestic tourism market.