India Hotel Rates to Cross ₹10,000 in 2026 Amid Strong Demand: HVS ANAROCK

New Delhi, April 2026: India’s hotel industry is expected to see average room rates exceed ₹10,000 in 2026, supported by sustained demand growth, improved pricing power, and record development activity, according to the HVS ANAROCK India Hospitality Industry Overview 2025.

The report indicates that the sector has moved beyond post-pandemic recovery into a structurally stronger growth phase, driven by diversified demand streams including business travel, weddings, religious tourism, leisure, and large-scale events. This shift is enabling hotels to improve profitability through higher pricing rather than relying solely on occupancy growth.

Strong Pricing Growth Drives Revenue Performance

India’s hotel market closed 2025 with nationwide occupancy levels between 63 and 65 per cent, reflecting a marginal increase of 1 to 2 percentage points year-on-year. However, the more significant shift came from pricing.

Average Room Rate (ARR) rose to between ₹8,500 and ₹8,700, marking an annual increase of 8 to 10 per cent. Revenue per available room (RevPAR) reached ₹5,400 to ₹5,600, reflecting growth of 10 to 12 per cent.

Compared to pre-pandemic levels in 2019, ARR has increased by 43 to 45 per cent, while RevPAR has grown by 38 to 40 per cent. This trend highlights stronger pricing discipline and reduced dependence on discounting, signalling a more mature and stable market environment.

The report identifies pricing power as a key indicator of sector health, suggesting that hotels are able to increase rates without significantly impacting occupancy levels.

Domestic Travel Remains Core Demand Driver

India’s domestic travel market continues to underpin the hospitality sector’s growth. Domestic Tourist Visits (DTVs) were estimated at 4,548 million in 2025, with over 3.03 billion visits recorded by August alone.

If historical growth trends continue, DTVs are projected to reach 9,542 million by 2030, reinforcing India’s position as one of the largest domestic tourism markets globally.

This extensive domestic base supports year-round occupancy and reduces vulnerability to external factors such as geopolitical uncertainties or fluctuations in international travel demand.

Travel demand is being driven by a mix of family travel, short leisure breaks, corporate movement, religious tourism, and weddings, contributing to sustained hotel performance across regions.

Inbound Travel Shows Selective Growth Trends

Foreign Tourist Arrivals (FTAs) in 2025 were estimated at 9.02 million, reflecting a decline of 9 per cent due to geopolitical challenges, particularly involving Bangladesh, a key source market.

Excluding this impact, inbound tourism demand showed underlying growth of approximately 5 per cent. Leisure travel remained the dominant segment, accounting for 39 per cent of arrivals.

High-value markets such as the United States, United Kingdom, Australia, and Canada contributed 43.8 per cent of total FTAs, highlighting the importance of long-haul travellers who typically generate higher spending across accommodation and experiences.

Weddings, Faith Tourism and Events Boost Demand

The report highlights the increasing role of non-traditional demand segments in driving hotel revenues. Religious tourism has emerged as a significant contributor, with the Maha Kumbh in Prayagraj attracting over 663 million visitors within 45 days and generating an estimated economic impact exceeding ₹2 trillion.

Destinations such as Ayodhya, Varanasi, Prayagraj, and Uttarakhand are seeing increased investment and hospitality development, supported by infrastructure upgrades and organised travel circuits.

Weddings remain a major revenue stream, with India hosting 8 to 10 million weddings annually. The November to mid-December 2025 wedding season alone generated over ₹6.5 lakh crore across approximately 46 lakh weddings.

More than 60 per cent of weddings with budgets above ₹1 crore are now destination-based, with average spending in this segment reaching around ₹58 lakh. Hotels benefit from extended stays, banquet bookings, and ancillary services associated with such events.

Concert tourism is also gaining traction, with over 5.6 lakh intercity travellers attending concerts in 2025. Large-scale events are contributing significantly to local economies and hotel demand.

Record Hotel Development Reflects Investor Confidence

Hotel development activity reached record levels in 2025, with 64,118 keys signed across 586 properties. This represents a 36 per cent increase in keys and nearly 21 per cent growth in the number of properties compared to the previous year.

New hotel openings totalled 14,199 rooms across 176 properties, reflecting strong pipeline execution and sustained investor interest in the sector.

Tier III and Tier IV cities accounted for 44 per cent of keys signed and 55 per cent of properties, indicating a shift in growth towards smaller and emerging markets. Tier I cities contributed 32 per cent of keys, while Tier II cities accounted for 24 per cent.

By state, Maharashtra led with 9,293 keys, followed by Uttar Pradesh (7,124 keys), Rajasthan (6,436 keys), Karnataka (6,112 keys), and Gujarat (4,805 keys). Bengaluru topped city-level signings with 4,510 keys, closely followed by Mumbai at 4,499 keys.

Rising Asset Values and Long-Term Outlook

India’s Hotel Valuation Index has reached 2.15 times its FY14 base, reflecting an approximate 8 per cent compound annual growth rate over the period. Mumbai remains the most valuable market at 2.55 times its FY14 base.

The report projects continued growth in hotel asset values, with an estimated 7.4 per cent CAGR between FY2026 and FY2030, indicating sustained investor confidence.

With strong domestic demand, diversified revenue streams, and expanding branded supply, the Indian hospitality sector is increasingly being viewed as a long-term growth market rather than a cyclical recovery story.

The anticipated rise in room rates beyond ₹10,000 in 2026 reflects this shift, supported by consistent demand, pricing discipline, and ongoing development across both metro and emerging markets.