India hotel rates haven't peaked, operators say. Not everyone agrees

ITC Hotels reported that average daily rates (ADRs) for rooms continued to rise despite a volatile operating environment. External factors "created temporary fluctuations in demand, which briefly affected occupancy levels; however, ADRs witnessed a year-on-year growth, supported by smart revenue management and value-based offers," the company said in its FY26 annual report. ADRs rose 6% during the year, while occupancy expanded by 229 basis points, resulting in a 10% increase in revenue per available room (RevPAR). ITC Hotels also maintained a RevPAR premium of 37% over the industry average.

Nikhil Sharma, managing director and COO, South Asia, Radisson Hotel Group, said the industry had entered a more mature phase where pricing was increasingly driven by the quality of experiences. "Demand remains robust across both business and leisure destinations," he said, adding that occupancy across Radisson's India portfolio increased by around 5% this summer compared with a year earlier. "Sustainable growth will be driven by differentiated experiences that guests genuinely value and are willing to pay for, rather than by occupancy or room rates alone."

Hospitality consultant Vijay Thacker, managing director of Horwath HTL, said recent softness in rates in some markets on account of geopolitical reasons should not be interpreted as a sign that luxury pricing has peaked. "We cannot look at a short window of time for the luxury sector. You need to take a medium- to long-term perspective. For the quality of the product and service that India offers, we are underpriced," he said. While some luxury hotels may eventually reach optimal occupancy levels, pricing will increasingly become the primary lever for growth. "Once occupancy reaches a certain level, then it's a rate game," Thacker added. Branded hotel supply is expected to rise to about 300,000 rooms by FY30, up from 196,464 rooms in FY25. Developers are betting heavily on the premium end of the market, with luxury hotels accounting for about 21% of the upcoming branded room pipeline, according to hotel consultancy Hotelivate-Savills.

Not everyone believes that room rates have unlimited room to rise. Kapil Chopra, founder of The Postcard Hotel, argued that only luxury resorts have significant pricing headroom. "I don't think it is appropriate to compare Indian city hotel rates with Europe or North America. Unlike London, Paris and Rome, our cities do not attract comparable volumes of international luxury travellers. When we combine distribution, product quality and service, luxury room rates in our city hotels are approaching their natural ceiling," Chopra said. India's luxury resorts remain undervalued relative to comparable destinations overseas because the country's international leisure tourism ecosystem is still evolving. "I believe resort room rates have considerably greater headroom over the long term," Chopra added.

Despite reporting record ADRs, strong occupancy and robust earnings, shares of most listed hotel companies lagged the broader market in 2026. ITC Hotels has fallen about 5% year-to-date, Chalet Hotels almost 6% and Samhi Hotels less than 2%. EIH is down about 8% year to date. Indian Hotels Co., which runs the Taj group of hotels, is one of the few companies that bucked the trend and is up 1.5%. In this time, the Nifty 50 has fallen 7.6%.