Domestic tourism, corporate travel may push room rates up in 2026

India's hospitality sector is set for steady growth in 2026, with hotel room rates rising as domestic tourism, corporate travel and MICE demand continue to outpace new supply across major markets

hospitality, hotels — In 2026, midscale and upper-midscale hotels will constitute the largest share of the proposed supply.

4 min read Last Updated : Dec 26 2025 | 11:43 PM IST

Hotel room rates are expected to rise up to six per cent to be in the range of ₹9,400 to ₹9,700 in 2026, driven by continued growth in domestic tourism, corporate travel, and due to the demand continuing to outstrip supply across most markets in the country.

In 2025, hotel room rates rose by seven per cent against 2024, according to Hotelivate, a hotel consulting firm.

While December was expected to carry this momentum forward, operational disruptions at IndiGo are likely to temper performance in the final month. Consequently, the industry is now projected to close the calendar year 2025 with occupancy levels in the range of 65 to 67 per cent, and average room rates (ARRs) between ₹8,800 and ₹9,200, according to data shared by HVS Anarock.

Hotel room rates had hit record highs in 2024, and 2025 saw several events affecting the growth, from geopolitical issues to aeroplane crash, extended rains and flight disruptions.

However, the hospitality industry’s room rate growth is now expected to moderate over time or enter a phase of stabilisation marked by measured and sustainable growth across key operating metrics, according to industry experts.

“As per HVS ANAROCK, ARR are forecast to increase to ₹9,400 to ₹9,700, with occupancies of around 67 to 70 per cent, resulting in a projected RevPAR of approximately ₹6,300 to ₹6,800,” said Mandeep S Lamba, president and chief executive officer CEO (South Asia), HVS ANAROCK.

“This growth will be driven by sustained domestic travel demand, growing corporate travel supported by office space absorption in key metros, improving international arrivals, and a still-disciplined supply pipeline that continues to support pricing power. The stabilisation of marquee convention centres such as the Jio World Convention Centre, Yashobhoomi Convention Centre, and Bharat Mandapam is also helping draw incremental MICE demand, complemented by the growing scale of sports and live entertainment-led travel,” Lamba said.

Manav Thadani agreed. The founder and chairman of Hotelivate said that while growth rate is expected to moderate over time, it is likely to remain steady.

“In rupee terms, room rates for branded hotels are at an all-time high. However, it is important to recognise that, when viewed in USD terms, current rates remain below the peaks achieved in 2007 and 2008,” said Thadani, adding that the growing footprint in religious and spiritual centres in the country is another factor which will help boost the average room rates in the range of five to six per cent.

In 2026, midscale and upper-midscale hotels will constitute the largest share of the proposed supply, accounting for over 50 per cent of the total pipeline, Thadani highlighted. Additionally, 2026 will see an unusually high number of long weekends, which is likely to encourage incremental short-haul leisure travel, especially to destinations close to major cities.

As a result, Royal Orchid Hotels anticipates maintaining its double-digit revenue growth next year.

“The primary driver will be our entry into the upscale lifestyle segment with the launch of our new brand, ICONIQA. Our flagship property at Mumbai T2, which is already ranking among the top hotels in the city, is expected to command ADRs (average daily rate) in the range of ₹12,000 to ₹16,000, significantly lifting the group’s overall RevPAR,” said Arjun Baljee, founder of ICONIQA Hotel and president, Royal Orchid Hotels.

“We are also integrating AI-driven dynamic pricing to optimise yields in real-time, ensuring we capture the maximum premium during high-demand periods like the wedding and convention seasons,” he said.

Baljee emphasised that the company might not see a widespread decline in room rate, but room rates are likely to normalise in select Tier-I markets and saturated leisure spots where competition has intensified and the base effect is high.

“On the supply side, the sector has seen a record level of signings, with over 47,000 keys signed as of November 2025, reflecting a 31 per cent increase over the same period last year. With demand continuing to broaden across geographies and travel purposes, the sector is steadily building scale, and the fundamentals for long-term growth remain firmly in place,” Lamba said.