 "Hotel rates hit all-time high in 2024, driven by domestic tourism, weddings")
Hotel room rates in India have been trending at an all-time high and are expected to close the year at a peak, driven by a boom in domestic tourism, a record number of weddings in November and December, and a surge in short weekend vacations.
As a result, India’s hospitality industry has seen its average daily rate (ADR) reach its highest level in 2024. Last December recorded the highest ADR of the year, and Hotelivate, a hospitality consulting firm, expects this to be the case again in 2024.
Manav Thadani, founder and chairman of Hotelivate, told Business Standard that hotel room rates this year have trended upward due to demand-supply dynamics. With no appreciable growth in supply this year, hotels have continued to improve their ADR.
“Understandably, the growth in ADR this year is moderate compared to the strong growth last year, driven by major events,” Thadani said.
This follows a sizeable boost in hotel room rates in 2023 due to events such as the Group of Twenty Summit and India hosting the ICC Men’s Cricket World Cup. However, by the end of this year, hotel rates have also been influenced by music concerts and the high-profile Anant Ambani wedding.
“In January, rates increased by 7-10 per cent compared to the previous year, driven by economic growth and heightened domestic travel,” said Nishant Pitti, chief executive officer and co-founder of EaseMyTrip, an online travel company. “By December, rates reached record highs in popular destinations like Goa, Delhi, Jaipur, and Udaipur.”
According to data shared by EaseMyTrip with Business Standard, luxury accommodations during peak festival periods charged up to Rs 7 lakh per night. Overall, the average premium hotel room rate was around Rs 7,200 to Rs 7,400 per night.
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While India’s hotel room rates are competitively priced compared to other major countries, the country’s affordability, combined with diverse travel experiences, makes it an attractive destination for both domestic and international travellers.
For instance, the US saw rates between $150 and $200 (about Rs 12,500 to Rs 16,700), while the average rate in the UK was £100 to £150 (approximately Rs 10,300 to Rs 15,500). Japan’s rates of 15,000 yen to 20,000 yen (about Rs 8,600 to Rs 11,500) are slightly higher, while Australia’s rates of AUD 150 to AUD 200 (about Rs 8,000 to Rs 10,700) align closely, according to EaseMyTrip.
For Radisson Hotels, November stood out as the strongest month for room rates, driven by a demand upswing from social and corporate group segments.
“On average, we observed an increase in room rates of 15 per cent between January and December,” said Nikhil Sharma, managing director and area senior vice-president, South Asia, Radisson Hotel Group. The international hotel brand has a portfolio of nine brands in India.
The Park Hotels, a chain of contemporary luxury five-star boutique hotels under the Apeejay Surrendra Group, also saw room rates reach record highs.
“November and December 2024 have been standout months for peak pricing,” said Yazad Marfatia, corporate director and head of sales and marketing at Apeejay Surrendra Park Hotels. “This performance can be attributed to multiple factors, including a major rise in corporate travel, a surge in MICE (meetings, incentives, conferences, and exhibitions) activities across key destinations, the onset of the wedding season, and increased air traffic, all of which have bolstered hotel occupancies and rates.”
Similarly, Vishal Kamat, executive director of Kamat Hotels, noted a rise in rates of between 4 per cent and 10 per cent, varying across different properties in the portfolio.
“Crimson Hotels observed a 10 per cent increase in rates alongside a 16 per cent rise in year-to-date occupancy at Bhilwara (Rajasthan),” said Sandeep Maitraya, founder and director of Crimson Hotels. The company is set to launch Bhilwara’s first five-star deluxe resort and one of the country’s largest convention centres.
Ventive Hospitality, which offers premium luxury experiences in India and the Maldives through a joint venture between Pune’s Panchshil Realty and Blackstone, raised its rates by 40 per cent for its Pune hotel assets after the pandemic.
“In India, during a hotel’s life cycle, you typically have two chances to increase room rates: when the hotel opens or after a long shutdown for renovation or a crisis like the pandemic,” said Mustafa Hussain, president of finance and strategy at Panchshil Realty.
Overall, India’s metro cities remain the strongest hotel markets, with last year’s growth largely driven by these regions.
“The highest growth in the short to medium term will continue to be in our metro cities,” Thadani added.
Price spiral
> Average premium room rate in India is around Rs 7,200 to Rs 7,400 per night
> During peak festival periods, luxury accommodations charged up to Rs 7 lakh per night
> By December, rates reached record highs in popular destinations like Goa, Delhi, Jaipur, and Udaipur
> Radisson Hotels saw November as its strongest month with a 15% increase in room rates
> November and December have been the standout months for peak pricing for The Park Hotels
> Ventive Hospitality increased its rates by 40% from pre-Covid year till now