Hotels are luring the uber-rich by monetising India’s rarest commodity – privacy

In the world’s most populous country, privacy is the ultimate luxury. The hotel industry, which has always known this, is now undergoing a radical makeover to cater to India’s ultra-rich – and charging a pretty penny for unprecedented privacy.

Earlier this month, a collection of high-end villas – called Arq by The Leela – opened along Lake Pichola in Udaipur. These ultra-luxurious villas, spread across 4,000 to 9,000 square feet, are designed as self-contained retreats with high-end comforts. A night’s stay in one of these can cost upward of ₹6 lakh – a year’s salary for many Indians.

They’ve had no trouble finding takers.

Guests arrive by private boat to a quiet, custom welcome that sets the tone for the extravagant stay. Perks include personal chefs, floating breakfasts, evening cocktails, and exclusive excursions for a taste of Udaipur’s heritage.

The goal is to have a “palace within a palace”, said Shweta Jain, the company’s chief sales and marketing officer. “These suites were earlier a spa area that has been reimagined. They offer a different value proposition from the Maharaja suite at our hotel. We will continue to create such luxury propositions,” she said.

Chalet Hotels Limited, which recently expanded its leisure portfolio to include The Courtyard by Marriott Aravali, a resort in Faridabad, The Dukes Retreat in Khandala, and The Resort in Madh, is also planning future additions of a similar sort. In Goa, it recently acquired an 11-acre plot near Varca beach. It plans to build 170 rooms there, 8% of which will be suites, but it may add another 10 or so duplex suites as the hotel is built.

Putting the ‘treat’ in ‘retreat’

While such villas and suites make up a tiny portion of all hotel rooms available, there has been a general increase in luxury travel in recent years.

Also read: This holiday season, hotels, tour operators are not banking on foreign tourists

Hotelivate’s ‘Trends & Opportunities’ report, released in October, said branded hotel inventory across India surpassed 1,80,000 rooms in FY24, with upscale-to-luxury hotels and resorts contributing about 70,000 or 39% of all operating rooms. The report said the luxury leisure space grew the most in West India, especially in wildlife locations such as Pench, Bandhavgarh and Kanha, increasing growth in revenue per available room (RevPAR) in FY24. RevPAR measures a hotel’s revenue efficiency by dividing total room revenue by the number of rooms available.

Spending on luxury travel in India fell from $8 billion in 2019 to $4 billion in 2020 owing to the pandemic but has recovered strongly ever since. It rose to $10 billion by 2022 and is expected to hit $11 billion this year, data from Statista showed.

Economics of luxury

Sanjay Sethi, managing director & CEO of Chalet Hotels, explained the economics of luxury suites in brief. “When occupancies rise, hotels don’t commit their suites for free room upgrades but sell them instead to get a better yield. Higher-category rooms are always a hot product to sell. Increasing these types of rooms is a conscious effort as they add tremendous value and improve returns.”

He added, “The domestic travel surge has led people to spend more on better experiences. Hotels tend to drive higher average daily rates when suites are occupied and so in some of our upcoming or redevelopment properties, there will be a higher proportion of suites and villas. At The Dukes Retreat, Khandala, we are renovating and the property will have 146 rooms by March next year. Of those, roughly 12% will be a mix of family rooms, suites and villas.”

Also read: Luxury and leisure travel brought us out of the pandemic: David S. Marriott

In October, Ananda in the Himalayas, a wellness retreat in Rishikesh, turned six of its regular rooms into three suites. Aashica Khanna, its owner and director, told Mint the company crunched some numbers and realised it was making a mistake. Demand for its suites was higher than it anticipated, and as a result it was turning away many potential customers.

“When we compared suite occupancy with the occupancy of regular rooms, [we realised] it just made more sense to do that. It was in response to a growing number of guests looking for more spacious accommodations,” she said. Prices at the hotel are available only on request, but Khanna said a suite typically costs 40-50% more than a regular room.

A chance to diversify

For traditional business hotels, expanding into the luxury segment offers the additional benefit of diversification. Jaideep Dang, managing director, hotels & hospitality group at JLL, said, “Companies such as Chalet Hotels and Juniper Hotels have large business hotels. They are looking at diversification. The entry barrier for resorts could also be lower. Companies can still go to an upcountry location where land is cheaper and build that experience, since the cost to build is the same. The critical reason to look at resorts is that the yields per room are much higher.” He said 23% or nearly a fourth of all hotel projects signed in the first half of the year were in the luxury space.

Also read: Hotels are bustling despite absurd prices. But for how long?

Khanna of Ananda said, “Earlier, when people had expendable income, they would go out of the country. That changed during the pandemic. India has world-class hotel products. We have reimagined our guest rooms as three luxurious suites – two spacious two-bay deluxe suites and a new garden suite. We’ve also renovated some suites.”

Large chains are also realising the potential on offer. Radisson Hotel Group plans to open four or five resorts in 2024 in places such as Jawai in Rajasthan and Nainital in Uttarakhand as such resorts command higher prices.

“India’s average daily rate for organised hotels is about ₹7,000. Exclusive resorts are able to command upwards of ₹10,000 a night,” Nikhil Sharma, managing director and area senior vice president of Radisson, told Mint last month.

Demand outstrips supply

In mid-October, Mint reported that the country’s top resorts are seeing unprecedented demand for Christmas and New Year, and that rooms are vanishing quickly even though 2025 is still months away. For those still available, expect to pay a steep premium—as much as ₹1.75 lakh a night. That’s what it costs to book a stay for Christmas Eve at The Oberoi Amarvilas in Agra, up 40% from ₹1.25 lakh at the start of the year. For the days until New Year, rates vary from ₹1-2 lakh.

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S.D. Nandakumar, president and country head of holidays and corporate tours at SOTC Travel Ltd, said domestic tourism has seen a significant revival since the pandemic, but what’s especially noteworthy is the interest in the premium luxury segment.

“Room tariffs being upward of ₹1.5 lakh to ₹5 lakh a night is clearly not proving to be a deterrent. And it is not merely branded global chains, but equally our uber-luxe India brands and properties that are seeing an uptick in demand. What is particularly encouraging is that this demand is not restricted to just metro consumers but is also being driven by markets like Nagpur, Chandigarh, Surat, and Madurai,” Nandakumar said.