The affluent circle in the smaller cities today have been growing. The people are well-travelled and are aware and have experienced premium service across the globe. The expectation is to experience the same level of luxury back home in their own cities. For our brand, that has luxury properties in Coimbatore, Karur, Rameswaram in addition to Chennai and Puducherry, the vision has always been to future proof them keeping in mind the aspirational expectations of our discerning guests.
The shift is largely behavioural. Today’s traveller is actively seeking hidden gems over crowded, overexposed destinations. There is a clear move towards discovering beautiful, lesser-known places within driving distance for quick weekend escapes. This, combined with rising affluence and better connectivity, is naturally directing demand toward Tier 2 and Tier 3 destinations. For brands, it is less about opening up new markets and more about following where the traveller is already going. Additionally, better roads, airports, and business activities have also increased regular travel, not just occasional visits. For hotel brands, these cities offer fresh opportunities with growing demand.
Rising wealth in non-metro India is making luxury more distributed, more visible, and more experience-led. Affluent consumers in smaller cities are not necessarily looking for old-school luxury codes alone. They are looking for privacy, design, personalisation, wellness, exclusivity, and social currency. Digital exposure has compressed aspiration gaps between metros and non-metros, so consumers in these markets are engaging with premium brands and premium travel with far more confidence than before. Reports from Thomas Cook India and SOTC show faster travel growth from Tier II cities, backed by rising discretionary spending.
For hospitality brands, this means luxury can no longer be designed only for the metro business traveller or the international tourist. It now has to speak equally to the entrepreneur from a fast-growing regional city, the family celebrating a milestone, the wedding guest, or the second-home owner who wants a premium nearby escape. In that sense, aspiration is becoming more Indian, more local, and more occasion-led.
The business model definitely needs to adapt. Emerging-city luxury can be very profitable, but it cannot always be priced or operated like metro luxury. In many non-metro markets, the right question is not whether rates can match metros line for line, but whether the product can deliver stronger value perception, better margins, and more resilient occupancy through a sharper fit with local demand.
For luxury homestays and boutique formats, profitability can actually be attractive because the model is more agile. Lower land costs in some markets, leaner staffing structures, and high-yield demand from groups, weddings, buyouts, and celebrations can create a strong return profile even if the pricing logic differs from a metro five-star hotel. In other words, the opportunity is real, but the model has to be destination-first, not template-first.
There is a clear shift toward experiential luxury. Wellness retreats, curated dining, immersive local experiences, and aesthetically driven spaces are now expected. Social media has played a big role here. Guests are seeking moments that are both memorable and shareable. Five years ago, a good room was enough. Today, it is about the entire journey.
Read the full story that first appeared in Luxury Facts here:
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