Hotel boom tale of two halves: luxury rises, budget struggles

India's hotel industry is booming—but not evenly.

- Varuni Khosla

Luxury hotels in major metros are raising rates and revenues sharply, while midmarket and budget hotels, especially outside big cities, are seeing slower growth as new supply keeps pace with demand.

A recent government move may help midmarket travellers: rooms priced below ₹7,500 now attract just 5% goods and services tax (GST), down from 12%. Still, the impact on occupancy and investor returns is expected to be modest. Rooms above that threshold remain in the 18% bracket, meaning most expensive hotels could still be out of reach for many.

“On a blended nationwide basis, there isn't much of a correlation between the GST regime change and expected performance of hotels," Achin Khanna, managing partner and strategic advisor at Hotelivate told Mint.