)
Hotels across the country are seeing near-full bookings as the year draws to a close. Analysts expect limited pressure from new supply, enabling strong occupancy rates and robust growth in average daily rates (ADR) into the coming year.
The luxury segment, particularly in iconic destinations like Goa, Jaipur, and Udaipur, is anticipated to maintain high average room rates. Affluent domestic and international travelers continue to seek premium experiences in these locations. Similarly, the midscale and budget categories are expected to grow, driven by improved travel infrastructure in Tier II and Tier III cities. Increasing disposable incomes and evolving traveler preferences are further supporting the overall growth in the hospitality sector.
Projections indicate that hotel room rates in India could rise by 8-10% in 2025, with luxury and upper-upscale properties seeing increases of up to 10%, while midscale and budget hotels experience moderate hikes of 6-8%. Inflationary pressures and strong travel demand are key drivers of this trend.
Major hotel groups are optimistic about 2025. A prominent global hotel chain expects a 10% increase in room rates, attributing it to robust demand across all segments. Meanwhile, a hospitality firm managing multiple brands across luxury, upscale, and budget categories anticipates a 15% rise in rates, with certain locations projecting occupancy growth of 18-20% due to demand from corporate travel and events.
Several factors are contributing to this upward trajectory. The Meetings, Incentives, Conferences, and Exhibitions (MICE) segment, along with an uptick in corporate travel, is fueling demand. Additionally, events such as concerts, sports, and entertainment are drawing travelers to key destinations, pushing room rates higher.
Domestic travel remains the primary driver across all segments. Travelers are increasingly seeking immersive destination experiences, exploring local and hyperlocal offerings in both metropolitan and Tier II-III cities. This shift in preference is evident in the popularity of boutique and heritage properties in locations such as Dharamshala, Goa, Mussoorie, and Pahalgam, which continue to register high domestic traffic.
Heritage and luxury segments are also poised for significant growth in 2025-26. Recent high-end launches in these categories are redefining premium hospitality experiences and contributing to the upward trend in room rates.
Boutique hotel chains are similarly optimistic. With a rise in travel demand and inflationary pressures, these properties anticipate steady to modest rate increases in 2025. Emerging leisure destinations, particularly those with limited premium accommodations, are seeing consistent full occupancies during weekends and peak seasons. This demand-supply gap underscores the need for expanded offerings and sustainable rate adjustments.
As India’s tourism industry is projected to grow at 24% over the next five years, the hospitality sector is well-positioned for continued growth. The combination of rising demand, evolving traveler preferences, and limited new supply suggests that the trend of increasing room rates is set to persist in 2025 and beyond.
Tags: Domestic travel, India’s tourism industry, Hotel room rates
