 "Hotel room rates set to rise in 2025, driven by strong demand growth")
After hotel room rates hit record highs in 2024, they are set to rise further in 2025 driven by a surge in demand of 7-8 per cent across segments.
Hotels are going fully booked at the end of the year despite foreign tourist arrivals still remaining below pre-Covid levels.
“With most markets continuing to record strong occupancies and amid average daily rate (ADR) growth, we do not expect too much pressure to be exerted by new supply,” said Manav Thadani, founder and chairman, Hotelivate, a hotel consulting firm.
He added, “As a result, hotels should be expected to continue their strong performance and record ADR growth of over 7-8 per cent in 2025.”
Corroborating Thadani’s estimates, Nishant Pitti, chief executive officer (CEO) and co-founder, EaseMyTrip, said he expects India’s hotel room rates to continue their upward trajectory in 2025. It would be driven by the dynamic interplay of rising demand across luxury, midscale, and budget segments.
“The luxury segment, particularly in iconic destinations like Goa, Jaipur, and Udaipur, will likely maintain high average room rates as affluent domestic and international travellers seek premium experiences,” Pitti added.
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Simultaneously, the midscale and budget categories are poised for robust growth, fuelled by the expansion of travel infrastructure in Tier II and III cities.
With increasing disposable incomes and evolving traveller preferences, this broader accessibility is projected to support strong occupancy rates and price growth across the industry, Pitti said.
Nandivardhan Jain, CEO, Noesis Capital Advisors, a hotel transaction advisory and consulting firm, said that hotel room rates in India are projected to increase by 8-10 per cent in 2025, driven by strong travel demand, limited new supply, and inflationary pressures.
He said that while luxury and upper-upscale properties may see up to 10 per cent hike, midscale and budget hotels are expected to witness more moderate increases of 6-8 per cent.
Radisson Hotel Group, which will close this year with 130 operating hotels, expects the growth in room rates to be fuelled by strong demand across all segments in 2025.
“We remain optimistic about 2025, anticipating at least a 10 per cent increase in room rates,” said Nikhil Sharma, managing director (MD) and area senior vice-president, South Asia, Radisson Hotel Group.
Sandeep Maitraya, founder and director, Crimson Hotels, which has five hotel brands in luxury, upscale, midscale, lower midscale and budget segments, is expecting a 15 per cent increase in room rates. It is eying an 18-20 per cent increase in occupancy at its Bhilwara location.
“The main factors for this increase at Bhilwara are the demand from MICE (meetings, incentives, conferences and exhibitions) and an increase in corporate travel with a major glass industry giant making its plant operational in the coming year and expansion of textile units,” Maitraya added.
However, ITC hotels, which has a portfolio of brands like Mementos, Welcomhotels, Storii, Fortune and Welcomheritage across various price points, is expecting average lead rate growth to rise in key locations as there is no addition of hotels.
Another key reason which will drive higher room rates is the trend of events in key locations.
“We have observed this (trend) pan Indian, be it through concerts, sports or entertainment,” said an ITC Hotels spokesperson.
He added, “Brand Storii, for instance, is doing very well in Dharamshala, Goa, Kolkata and Solan. Welcomhotels in Chail, Mussoorie, and Pahalgam continue to register high domestic traffic. Travellers now seek ‘destination’ experiences — be it in metros or Tier II-III cities. They are keen to explore not just local but hyperlocal as these make for memorable immersive experiences.”
The spokesperson further said that the luxury and super upscale brands are driving higher growth due to increased demand in wedding and MICE segments. The primary demand driver is the domestic market across all segments.
On the other hand, The Park Hotels, a chain of contemporary luxury five-star boutique hotels under the Apeejay Surrendra Group, is expecting a strong growth trajectory in 2025-26. Room rates are expected to rise in the higher teens, around 15 per cent.
“We anticipate that the luxury and heritage segments are poised to be key drivers of this growth,” said Yazad Marfatia, corporate director and head of sales and marketing at Apeejay Surrendra Park Hotels.
He added, “Our recent launches in these categories — THE Lotus Palace Chettinad, offering rates above Rs 15,000, and Ran Baas The Palace Patiala, with rates ranging from Rs 45,000 to Rs 50,000 — are set to redefine premium hospitality experiences and contribute significantly to this upward trend.”
Echor Hotels, a boutique hotel chain with 18 properties across India, anticipates room rates to remain steady with a slight upward trend in 2025.
“This projection is driven by a significant rise in travel demand over recent years, coupled with inflationary pressures,” said Rahul Uppal, director, Echor Hotels.
Uppal also said that India's tourism industry is expected to grow at a robust 24 per cent over the next five years. It will lead to a notable demand-supply gap, particularly in offbeat destinations where premium accommodation is scarce.
Many emerging leisure destinations are consistently reporting full occupancies during weekends and the peak season, further signalling the need for premium offerings. This evolving landscape is likely to drive modest yet sustainable rate increases.
- Hotelivate expects ADR growth of 7–8 per cent in 2025, driven by strong performance.
- Radisson Hotels Group expects at least a 10 per cent increase in room rates
- Crimson Hotels is expecting a 15 per cent increase in room rates and 18 to 20 per cent increase in occupancy at its Bhilwara location.
- ITC Hotels foresees average rate growth due to limited supply in key locations with more dominance of the events segment.
- The Park Hotels anticipates a 15 per cent rise in room rates during 2025–26, led by growth in the luxury and heritage segments.