With occupancy rising, luxury hotel room rates are back at 2019 levels

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26 Aug, 2025 12:21

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The urge to break the monotony and take a leisurely break has not only lifted occupancy levels but also pushed the cost of rooms in luxury hotels back to pre-pandemic (2019) levels.

Luxury and upscale-upper midscale properties outpaced all other segments in growth in daily RevPAR (revenue per available room) till July 31, 2021, according to a study by STR Global, a market research company. Luxury properties are traditionally the last to come out of a downcycle given their premium price positioning, but that was not the case this time.

“While all-India RevPAR for July 21 came in at just over Rs 2,000, the RevPAR index for luxury hotels touched 2019 levels on 17^th July and continues to be robust for the remainder of the month. Unsurprisingly, Goa and Udaipur continue to be the ADR market leaders, with some metros such as New Delhi, Gurgaon and Mumbai also gaining momentum on the rates front,” STR noted in the report.

Occupancy up

From around 25-30 percent levels a few months ago, occupancy has risen to 55-60 percent across destinations. In some cases, these levels have even breached the 85 percent mark. Higher occupancies are followed by gradual a pick-up in RevPAR.

“In June, we were nearly at the 2019 level. In the months to come many of our hotels will outperform the 2019 number. As far as city hotels are concerned, we have started to see some green shoots and we have also talked to our corporate clients. Many are thinking of going back to office. We should be able to see occupancy at our city hotels starting to pick up,” Vikram Oberoi, Managing Director and CEO, EIH, told analysts.

Holidayers are preferring to personally drive to destinations (for example: Delhi to Shimla or Mumbai to Goa) rather than taking shared transport, and market experts say this is prompting them to book longer stays than they would have otherwise.

“Nobody's going to stay for two nights and drive for two days; one day to go one day to come back. So, obviously, the stay has become longer. People are combining business and leisure — I don’t know whether you call it bleisure or biz-cation. Digital meetings are happening more than the pre-Covid level,” said Puneet Chhatwal, Managing Director and CEO, Indian Hotels Company.

Incentives galore

Following the easing of lockdowns by States in June, hotel chains rolled out a red-carpet welcome for guests in a desperate attempt to shore up occupancy levels. Leisure destination properties offered a variety of incentives such as free nights, free buffet breakfast, lunch and dinner, early check-in and late checkout, 25 percent discount on food and beverages, free WiFi, and free airport transfers.

“The length of stay has increased. Also, some of the demand in domestic leisure, especially in the high-paying segment, is being driven by the 25 million people who used to travel outside India and recently started travelling again...,” Chhatwal added.