Infrastructure & Aspirations Become Hotels’ Blueprint for Non-Metro Success

India’s tier II and III cities are no longer peripheral stopovers, rather they’re fast becoming the engines of the country’s next consumption and travel boom. Fuelled by rising incomes, thriving SMEs, stronger transportation links, and booming domestic leisure and social demand, these smaller cities are reshaping how hotel companies plan growth. DHRUVA Rathore, Vice President, Real Estate and Development (India and Southwest Asia), Hyatt Hotels Corporation throws light on how infrastructure, product calibration, talent strategies and disciplined market entry are turning non-metro India into a durable opportunity for owners, operators and travellers alike.

Tier II and III cities in India are evolving into significant economic and social hubs, fuelled by SMEs, universities and a vibrant calendar of weddings and events. Domestic tourism is surging, delivering near double-digit growth in revenue per available room. Leisure, wellness and cultural tourism are gathering momentum, with smaller cities linked to spiritual circuits, heritage destinations and nature escapes. Hospitality professionals note that these are more than emerging markets; they are driving the next wave of consumption and travel. Rising incomes, thriving SME ecosystems and an aspirational middle class have unlocked strong business, social and leisure demand.

Add to these, India’s infrastructure push and these destinations are now part of regular travel circuits, rather than occasional detours. Small wonder then that leading hotel chains like Hyatt Hotels Corporation are focusing strongly on development in tier II and III cities as part of their target of reaching over 100 hotels in India by 2030. “India’s hospitality sector is in the midst of a structural reset, and that’s what gives us the confidence to scale to 100+ hotels by 2030, with a strong presence in tier II and III markets,” confirms Dhruva.

Accessing Revolution

Infrastructure improvements such as new airports, enhanced air connectivity, expressways and upgraded rail networks have dramatically cut travel times, transforming once remote cities into thriving business and leisure corridors. “We are seeing a new traveller emerge: aspirational, domestic and experience-driven,” Dhruva observes. Weekend getaways, short breaks and road trips are now the norm, with guests favouring trusted branded hospitality over informal stays, especially outside metros. This deep demand pool is encouraging hotels to expand beyond metropolitan areas with purpose, patience and confidence.

Hyatt, which offers a diversified brand portfolio from lifestyle to luxury, now appears to be adapting its models for emerging markets by customising its brand architecture, service model and product offerings. “Our global realignment into five portfolios, luxury, lifestyle, classics, inclusive and essentials gives us the flexibility to be intentional and precise in India,” Dhruva explains. In non-metro and emerging-city markets, Hyatt often tends to lean on brands like Hyatt Place and other select-service or essentials-class properties.

These properties are designed with smarter footprints, flexible food and beverage and public space layouts, and efficient operations, all while preserving the warmth, consistency and quality Hyatt is known for. “Every project is calibrated to the local demand profile. In many smaller cities, weddings, social celebrations, regional tourism or local corporate clusters are major business drivers, not just weekday corporate travel. This shapes how we design hotels: flexible banqueting and social spaces, family-friendly room mixes, wellness facilities, locally inspired food and beverage, and efficient yet warm service,” Dhruva elaborates.

A Model that Spells Success

For investors and owners, the model of adapting to the requirements of tier II and III cities combines recognised global branding, disciplined operations and access to leading hotel chains’ global distribution and loyalty network with cost structures and scale aligned to local markets. When it comes to Hyatt, it isn’t about experimenting outside metros, but aligning with sustainable, long-term demand. “We match each micro-market with the right brand; lifestyle or resort offerings for leisure destinations, select-service for corporate and transit hubs,” says Dhruva. This discipline ensures Hyatt places the right product in the right market at the right time.

A recent example is Hyatt Regency Dehradun that caters to multiple segments like leisure travellers, wellness seekers, destination weddings and pilgrimage tourism. Its design emphasises open spaces, scenic views and versatile event venues, while food and beverage and wellness offerings meet global standards with local relevance. “This is how we integrate rising segments into site selection, design and brand planning,” Dhruva points out. Backed by strong economic momentum in India’s tier II and III cities, this clarity gives hotel chains confidence in their growth trajectory.

Tackling New Challenges

At the same time, entering smaller or emerging markets comes with operational realities, primarily, concerning talent. Talent density is lower in these cities, so every new hotel is anchored by experienced colleagues who bring the hotel’s culture, service standards and operating discipline from day one. Alongside that, hotels expanding in such geographies need to hire locally and invest in structured training, cross-exposure and career pathways so that young talent from these communities can grow within the fold, not just within one property. “This balance between internal mobility and local opportunity keeps our brand experience consistent,” Dhruva states.

When teams feel supported and equipped, they deliver the level of care, guests associate with Hyatt, regardless of location. While infrastructure gaps or longer ramp-up curves are part of the landscape, strong, well-trained teams help the brand stabilise faster and operate efficiently. “Our philosophy is simple: take care of our people, and they take care of our guests. That’s been the backbone of our success in emerging markets and a key reason we are confident about scaling further into these cities,” Dhruva adds.

Future-Proof Expansion

Over the next decade, non-metro India will be one of the strongest growth engines for the hospitality industry. These are the markets where the next wave of travellers is emerging; guests who want global standards, meaningful experiences and trusted brands, but delivered with local relevance. Purpose-led travel, rising disposable incomes and improved connectivity will continue to fuel this shift. For Hyatt, the focus is simple: place the right brand in the right micro-market, design hotels that reflect the character of each destination and leverage the World of Hyatt to ensure consistency and loyalty across cities. Non-metro hotels won’t just expand Hyatt’s footprint, but will define the brand’s long-term value creation for guests, owners and communities.

Matching Demand & Supply

Oversupply always remains a risk in fast-growing markets, which is why hotels expanding into non-metro areas need to strategise in a highly calibrated manner. For example, Hyatt doesn’t just follow trends; it enters the market when demand is clear and sustainable, driven by corporate activity, domestic travel, social events and improved connectivity. “Our confidence comes from the breadth of our brand portfolio. With the right brand for each micro-market, we avoid overbuilding and keep hotels competitive even as the markets mature,” Dhruva states.

The focus remains on fundamentals like people, service, food and beverage and experience because they drive long-term share rather than short-term volume. Differentiation matters even more in smaller cities, where guests expect international standards delivered with warmth and local relevance. Hyatt’s strengths in thoughtful design, consistent food and beverage, a sense of place and genuine care make that possible. “Our loyalty ecosystem deepens trust and encourages repeat stays,” Dhruva adds. Ultimately, the strategy isn’t about expanding everywhere, but about expanding where its brands can lead and add value.