Opinion | No Room At The Top

When a hotel room costs more than a small car, hospitality inflation becomes an infrastructure warning

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I am not among those who believe luxury should apologise for being expensive. A five-star hotel is not an essential commodity, nor should the government decide what the presidential suite at a premium hotel must cost.

Hotels have shareholders, wage bills, and land costs, and the same right as airlines to price according to demand. Rising room rates are, in one sense, a sign of India’s economic success: Indians are travelling more, global businesses are coming here, weddings have become destination economies, and our cities are hosting events of genuine international consequence.

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I say this not as a distant observer of the hospitality industry. Having resided in five-star properties for 365 days a year, I have a sound understanding of how hotels and the hospitality industry function and operate. I have seen at close quarters the economics they contend with, the standards they are expected to maintain, and the delicate balance between occupancy, pricing, and service.

Yet there is a difference between a healthy premium and a scarcity premium. India is beginning to encounter the latter with uncomfortable frequency.

The price of scarcity

ICRA expects premium hotel occupancy in India to remain at 72–74% in FY2027, with average room rates rising to ₹8,600–8,800. More tellingly, it estimates that premium-room supply across 12 key cities will grow only 5-6% annually between FY2025 and FY2028, while demand grows 8-10%. That gap may sound modest on paper. But in a city hosting a major conference, concert, wedding weekend, or cricket match, it can become explosive.

We have already seen the consequences. During the India AI Impact Summit in Delhi in February 2026, the influx of delegates pushed luxury-hotel prices sharply upwards. Media........

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