After witnessing healthy occupancies last year, budget and mid-segment hotels believe the market is ready to absorb price hikes.

“Budget hotels can hike room rates by at least 4 per cent, both in the metros and tier 1 cities. We have decided not to hold on to the rates, as the market is growing given the demand from corporates, small and medium enterprises and even domestic tourists,” said P. K. Mohankumar, Chief Executive Officer of Roots Corporation, which operates Ginger Hotels.

Ginger Hotels, whose average room rate was around Rs 2,000, has revised rates across its properties this year. A single occupancy, standard room rate in Andheri East, in Mumbai, now costs Rs 4,999.

“With sustained demand we have been able to correct prices,” added Mohankumar.

“There was a time when Ginger Hotels had rooms for Rs 999, but the rates have steadily moved up to above Rs 2,000,” observed Anil Madhok, Managing Director, Sarovar Hotels, which has hotels across the budget, business and luxury segments.

“If the economy gets on track, the room rates in the budget segment could increase by at least 10 per cent during the year,” he added.

Sanjay Sethi, CEO, Berggruen Hotels, noted that there was a huge gap between demand and supply last year. “The surge in supply of rooms will now come down. We hope to increase our room rates by 8-10 per cent,” he said. Berggruen operates mid-segment business hotels.

The fact that budget hotels mostly cater to domestic tourists has also worked in its favour.

“Compared to the luxury segment, the budget segment was not punished last year. Such hotels should be able to stretch room rates by 7-8 per cent, and this year should prove to be even better than last year,” said Achin Khanna, Managing Director, HVS, a hospitality consulting firm.