The hospitality sector in India is experiencing a significant and subtle transformation—one that is breaking down traditional categories such as budget, mid-scale, and luxury, replacing them with a more dynamic concept: intent-driven travel.
At the heart of this evolution is a modern traveller who defies conventional segmentation. The same individual may choose to stay in a social hostel, a comfort-oriented hotel, and a boutique luxury establishment—all during a single journey.
“The change in travel patterns among Indian consumers is now fundamentally structural rather than just anecdotal,” observes Abhishek Khandelwal, Co-Founder of Moustache. “Travellers are moving away from fixed categories like budget or luxury, opting for accommodations based on the specific intent of each segment of their journey.”
The emergence of ‘situational travel’
This behavioural shift—often termed situational travel—is reshaping how hospitality brands develop, price, and market their services.
“The critical change is that hostels are increasingly being selected for the unique experiences they provide, not merely for cost savings,” Khandelwal points out, highlighting a hostel market that already surpasses ₹1,400 crore and is growing beyond metropolitan areas.
The ramifications are extensive. Traditional segmentation, which has long relied on pricing tiers, is losing its effectiveness.
“Standard hotel categories such as budget, mid-scale, and luxury will persist as pricing remains a key consideration, but they no longer adequately clarify consumer choices,” he adds.
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Value of experience over price—yet nuanced
While it may seem straightforward to interpret this trend as a shift from price to experience, the reality is more intricate.
“Travellers are not dismissing price or location; rather, they are expanding their evaluation criteria. The change is that pricing must now align with the overall experience being offered,” Khandelwal explains.
This evolution is being driven by digital consumer behaviour. Social media, mobile-first bookings, and real-time discovery are narrowing the gap between inspiration and action. Almost 40% of travellers now book immediately after engaging with travel content online, while mobile bookings are predominant for last-minute decisions.
The outcome is a more informed and intentional traveller.
Multi-format strategy emerges
This transformation is prompting hospitality companies to rethink their strategies.
Moustache, initially launched as a hostel-focused brand in 2016, has diversified into a three-tier structure—Hostels, Select (mid-market), and Luxuria (boutique premium).
“We expanded our offerings when we recognized that Indian travel demand was no longer linear,” notes Co-Founder Deepak Agarwal. “People are travelling more frequently, but not always for the same reasons, and certainly not with uniform expectations of their accommodations.”
This multi-format strategy enables brands to access various customer segments while maintaining a cohesive identity.
“We are constructing a hospitality platform that adapts as travel needs change, all while upholding a consistent brand promise,” Khandelwal states.
Growth in mid-market and premium segments
While all segments are on the rise, the most significant growth is observed in mid-market and premium experiential offerings.
“The mid-market segment is particularly robust because it balances comfort, reliability, and value,” Agarwal explains.
Simultaneously, demand for premium options continues to exceed supply, enhancing pricing power at the high end. Boutique hospitality, in particular, is projected to grow significantly, driven by a desire for privacy, aesthetic design, and experience-oriented travel.
Clarity as a competitive edge
In a saturated digital marketplace, where travellers can quickly browse numerous options, brand clarity is becoming a vital differentiator.
“If a brand fails to clearly articulate who its audience is, it risks being overlooked,” Khandelwal remarks.
Moustache’s recent restructuring into distinct verticals was designed specifically to address this challenge.
“The three-tier structure minimizes decision fatigue, clearly communicates the purpose of each format, and simplifies the process for guests to identify an accommodation that meets their needs.”
The broader perspective
With India’s hotel industry expected to undergo significant expansion in the coming years, the sector is steering towards sharper segmentation, a more distributed demand across emerging destinations, and heightened premiumisation.
However, at its essence, the shift is behavioural.
“The defining trend will be the emergence of intent-driven travel, where individuals choose destinations based on the feelings they seek to experience, not merely on geographical preferences,” Khandelwal concludes.
For players in the hospitality sector, this implies that merely selling rooms is insufficient. The future belongs to those who can provide experiences aligned with consumer intent.
