Hotel tariffs lag the demand boom: Getting clients to pay more a challenge

Occupancy has grown after a long hiatus, yet hoteliers are struggling to raise rates

It’s been the best of times for luxury hotels in 2017-18. After many years, demand has started outpacing supply. Yet, here’s the puzzle: the expected rise in room rates has not kept pace. Hotelier after hotelier confirms that getting clients to pay more is becoming a challenge.  

The numbers highlight the anomaly. In FY18, demand for branded hotel rooms grew an estimated 5 per cent against a 3.2 per cent growth in the supply of rooms. Rising leisure travel and double-digit growth in foreign tourist arrivals (FTAs) are aiding demand. FTAs grew at 15.6 per cent to a record 10.18 million