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AI, contactless tech, mobile apps revolutionising HoReCa
Thursday, 17 July, 2025, 16 : 00 PM [IST]
Venkatesh Ganapathy
The Indian HoReCa (Hotel, Restaurant, and Catering) sector is poised for significant growth, with its market value expected to nearly double from $223.41 billion in 2024 to $442.5 billion by 2035. This expansion is forecasted at a compound annual growth rate (CAGR) of about 6.41% between 2025 and 2035. A mix of social and economic factors drives the industry’s rapid development. A notable increase in the middle-class population, combined with rapid urbanisation, has boosted demand for dining out and food delivery services. Consumers now have greater disposable income, leading to higher expenditure on restaurants, hotels, and cafes, especially in urban areas. The impact of globalisation has also heightened interest in international cuisines, encouraging establishments to diversify their culinary offerings.

Online food delivery platforms have revolutionised how people access meals, making it simpler for restaurants to reach customers and encouraging them to enhance delivery services. Sustainability is also becoming an important trend, with many businesses adopting eco-friendly practices such as sourcing local ingredients, reducing food waste, and introducing plant-based menus. These efforts not only appeal to environmentally conscious consumers but also support broader sustainability objectives.

Following the pandemic, the hospitality industry has experienced renewed investment and innovation. New business models, including cloud kitchens and hybrid dining spaces that merge food with entertainment, are gaining popularity. Consumer preferences are shifting, with increasing focus on health-conscious, organic, and locally sourced foods.

Several key factors are driving the industry’s growth. As India’s urban population is projected to reach 600 million by 2031, the demand for a wide range of dining and hospitality options is rapidly increasing, prompting new players to enter the market and existing businesses to expand their offerings. Alongside this urbanisation, the expanding middle class is enjoying higher disposable incomes, which have translated into greater spending on dining out and hospitality experiences. Social media platforms such as Instagram and Facebook have become essential marketing tools for restaurants and hotels, enabling them to showcase visually appealing content, engage customers, and strengthen brand loyalty. Additionally, the ongoing surge in both domestic and international tourism is further fueling demand for hotels, restaurants, and catering services, particularly in major urban centres and popular tourist destinations.

The market is segmented into single outlet establishments and HoReCa chains. Single outlets focus on unique, localised experiences and often highlight traditional recipes and ingredients, while chains provide standardised services and benefit from economies of scale and broad brand recognition. Both segments are experiencing growth due to changing consumer lifestyles and rising demand for food services.

The industry is highly competitive, with businesses striving to differentiate themselves through innovation, improved customer experiences, and operational efficiency. Key players are leveraging technology, global cuisines, and creative marketing strategies to stay ahead. The Indian HoReCa market is characterised by its diversity, adaptability, and significant growth potential, driven by a rich cultural landscape and an expanding consumer base.

The Indian HoReCa industry is rapidly evolving in 2025, with sustainability and health at the forefront of food trends. Climate-conscious menus featuring organic, locally sourced ingredients and reduced kitchen waste are gaining prominence, along with mushroom and plant-based options catering to vegan and eco-aware consumers. Functional foods offering specific health benefits are in high demand, especially in urban areas. Fusion and third-culture cuisines, such as Indo-Chinese and American-Italian, are popular among younger diners, while bold spices, tropical flavours, and international dishes like Korean BBQ and Lebanese cuisine are driving menu innovation. European classics, including Mediterranean and Italian fare, continue to attract health-conscious and adventurous eaters alike.

The rise of e-commerce and online food ordering has further reshaped the HoReCa market. These platforms allow businesses to reach customers beyond their immediate locations, significantly expanding their potential market and revenue. For consumers, the convenience of ordering food from anywhere increases satisfaction and loyalty. Additionally, the data generated through online ordering offers valuable insights into customer preferences and behaviour, enabling businesses to tailor their menus, pricing, and marketing strategies more effectively. Personalised experiences, such as customised dietary options and targeted promotions, help strengthen customer relationships.

However, the shift to online platforms also brings challenges. The digital marketplace is crowded, making it harder for individual businesses to stand out. Profit margins are often squeezed due to commissions charged by delivery platforms and the additional costs of packaging and delivery. Furthermore, attracting and retaining customers requires effective marketing, customer relationship management, and a strong focus on service quality to build loyalty in a competitive environment.

The HoReCa industry, which includes hotels, restaurants, and catering services, is undergoing a significant transformation driven by rapid technological advancements. These innovations are enhancing guest experiences, streamlining operations, and opening new opportunities for growth and profitability. Artificial intelligence is playing a pivotal role by enabling advanced personalisation, automation, and predictive analytics. AI-powered systems help suggest menu items based on customer preferences, optimise ordering processes, and improve inventory management, resulting in faster service and increased customer satisfaction.

Contactless technologies have become essential, especially in the wake of heightened hygiene concerns. Features like mobile check-in, digital room keys, and contactless payments reduce physical contact and wait times, creating a safer and more convenient experience for guests. These technologies have become standard expectations, with many customers preferring touchless interactions during their visits. Mobile applications also play a crucial role by providing guests with seamless access to services such as self-check-in, digital concierge, mobile ordering, and loyalty programmes, thereby enhancing engagement and convenience.

To succeed in this evolving landscape, HoReCa businesses should consider partnering with established delivery platforms to broaden their reach quickly. Investing in a strong online presence, including a user-friendly website and active social media engagement, is essential to attract and retain customers. Optimising online menus with clear, appealing visuals and descriptions can entice more orders. Leveraging data analytics allows businesses to personalise customer experiences, optimise pricing, and identify trends that inform menu development and marketing efforts. Above all, maintaining excellent customer service through prompt order fulfilment, responsive communication, and effective complaint resolution is critical to fostering loyalty.

The integration of AI, contactless technologies, and mobile applications is revolutionising the HoReCa industry. While the growth of e-commerce and online food ordering presents both opportunities and challenges, businesses that embrace innovation and data-driven strategies are well-positioned to enhance guest experiences, improve efficiency, and achieve sustainable growth in this dynamic market.

(The author works at IBS, Bangalore. He can be reached at kalakadvganapathy@gmail.com)
 
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