26-05-2025
India's Luxury Hotels Are Underpriced, That Must Change, Says Oberoi CEO
According to Vikram Oberoi, it's time Indian hotels stopped selling themselves short. He's betting that Indian guests are ready to pay more, especially for top-tier stays.
Luxury hotels in India are 'significantly underpriced,' according to Vikram Oberoi, managing director, CEO and executive director of EIH Limited.
Oberoi said he's keen to change that.
'Our objective is to drive our rates higher, and we've done that during the financial year, and we'll continue to do that going forward,' Oberoi said during the company's earnings call on Monday. EIH Limited operates the Oberoi and Trident hotel brands.
Oberoi even suggested the company would rather sacrifice some occupancy if that means stronger pricing. 'If demand continues to be as it is today, our endeavor will be to drive rates up to the largest extent possible, and even if that is at the cost of occupancy. As long as our RevPAR sees strong growth, and I don't see any reason why that will change.'
This marks a shift in focus from just filling rooms to making each room night more valuable.
He argued that room prices in India's top cities, Delhi, Mumbai and Bengaluru, are well below what the quality justifies, especially compared to global peers.
He didn't mince words: 'You can go online and see top hotels around the world in key cities. A good hotel costs $1,000 upwards per night. We are significantly below that threshold. And if I then combine that with the quality of hotels we have in India, in our key cities, I think there's tremendous opportunity for upside in average room rate.'
Financial Performance Highlights
EIH's financial results back Oberoi's confidence. The company delivered its best-ever performance. EIH reported a 13% year-on-year increase in consolidated EBITDA to INR 11.5 billion ($135 million) for fiscal 2025. Net profit rose by 14% to INR 7.7 billion ($90 million). Revenue from operations grew 9% on a standalone basis to INR 25.35 billion ($298 million) and 10% to INR 28.8 billion ($338 million) at the consolidated level.
In the fourth quarter alone, RevPAR (revenue per available room) rose 22% year-on-year across all domestic hotels. Oberoi-owned hotels led the way, with a 24% rise in RevPAR, outpacing the industry average of 16% and even edging out Trident's 22% growth.
Occupancy also climbed from 81% last year to 84%.
While international operations contributed a smaller share, the growth reported was healthy, with a 10% rise in revenue and a similar growth in EBITDA.
Betting on India's Premium Travel Upsurge
Oberoi's bullish outlook is also rooted in structural changes in India's economy. 'There's an opportunity to push rates higher, especially with India's rising affluence and growing demand for quality accommodation,' he said.
Oberoi also cited the 'significant changes' taking place in the Indian economy. With increasing wealth and affluence there's a desire for quality accommodation and quality hotels that provide exceptional services and experiences to guests, he said.
Ultra high-net worth individuals, those with a net worth of $30 million and above, in India grew by 11% last year, according to industry reports cited in the company's presentation. Oberoi sees this as a key demand driver, especially in the luxury leisure segment.
Domestic travel is also on the rise. The fourth quarter saw air traffic grow 9% year-on-year. Inbound tourism is projected to rise by 15% in fiscal 2026, buoyed by India's improving global profile and infrastructure upgrades.
Coming Up: 21 New Hotels
EIH isn't just raising prices, it's also growing its footprint. The company plans to add 21 new properties (roughly 1,500 rooms) over the next 3-4 years. Of these, 12 are in India.
EIH's expansion plan includes nine international projects, including cruise ships. Two luxury boats will debut this year, including a Nile cruiser by 2026, alongside properties in Egypt, Nepal, Bhutan and Saudi Arabia.
Upon completion, 16 hotels (including the boats and cruiser) will operate under the Oberoi brand and 5 hotels under the Trident brand, representing a total inventory of approximately 1473 keys.
In India the openings include Goa, Tirupati, Rishikesh and Bengaluru. This includes both managed and owned assets, with Oberoi stating the company is open to acquisitions and brownfield opportunities to accelerate growth.
The group currently operates 4,200 rooms across 30 hotels. Its domestic portfolio includes 3,700 keys, while international properties make up around 500 rooms.
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