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India's Hotel Boom: Rates Soar, Demand Surges
16 Dec
Summary
- Hotel room rates and revenue per available room are increasing significantly.
- Strong demand stems from corporate travel, MICE, weddings, and leisure.
- Growth is expanding beyond metros into smaller cities and tier-2 markets.
The Indian hospitality sector is poised for significant growth, as industry leaders predict sustained price increases and market expansion. Experts from Radisson Hotel Group and Royal Orchid Hotels highlight a shift in consumer behavior, driving demand despite potential disruptions. Current growth is primarily rate-led, with average daily rates (ADRs) increasing by 10-12% in peak periods, leading to low-teen growth in revenue per available room (RevPAR).
This expansion is propelled by robust demand from corporate travel, meetings, incentives, conferences, and exhibitions (MICE), alongside weddings and "festive leisure." A key trend is the broadening of demand into smaller cities, with Radisson Hotels noting that 70% of newly signed hotel keys are outside of metro areas. Bengaluru, for instance, has seen a 20-23% rate increase, with projections for micro-markets to grow by 6-7%.
An emerging "aspirational class" of travelers, including Gen Z, are willing to pay more for enhanced experiences, supported by improved connectivity and social media influence. This fundamental shift in the country's spending psychology, coupled with a post-pandemic "live for the day" mentality, underpins the optimistic outlook for the mid-scale, upscale, and upper-upscale hotel segments. Future growth is expected to continue in non-metro areas, catering to a new wave of domestic travelers.
