High Demand Making India’s Hotels More Expensive

As I note in The World’s Cheapest Destinations, if you are going first class all the way, you don’t get much benefit from going to a cheap country. At the five-star hotel level, it’s going to cost you a bundle whether you are going to Italy or India. And in the latter, it’s costing more than it used to.

A report in the Wall Street Journal yesterday noted that occupancy rates at India’s luxury hotels is at 74%, which is more than respectable. In places like Bangalore and Hyderabad, demand outstrips supply and you can have trouble just getting a reservation. This trend is likely to continue until at least 2008, when more rooms will come on the market. “India has 25,900 rooms in its 12 largest cities, which was barely enough to cover demand in May,” a local expert says.

So, room rates have gone up by 20%. Average rates in Bangalore are US$250 per night and are expected to rise to $300 in the next year or two. Tourism to India was up 11% in June from last year and a rise of 10% a year will be normal they predict.

Average room rates overall rose 36% from a year ago. Time will tell if this trickles down to the budget end of the spectrum, but you can be sure it’s going to trickle down to the middle range hotels.

On the plus side, at least you get good service for your money. Luxury hotels in India are truly luxury hotels. There’s a staff-to-guest ratio that’s unbelievable. One guy will just polish the brass in the elevators. A woman stands around the pool just waiting for a twitch of your eyebrow so she can come see what it is you need. Drop your towel and someone scampers over to pick it up. They definitely make you feel like a maharaja.

Meanwhile, if you’re looking for luxury for less, step away from the tide a little instead of fighting it. Next door Nepal is calming down now and it’s where Indian people go when they want to save money.

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