NEW DELHI, Oct. 3 -- India's hotel industry is booming-but not evenly. Luxury hotels in major metros are raising rates and revenues sharply, while midmarket and budget hotels, especially outside big cities, are seeing slower growth as new supply keeps pace with demand. A recent government move may help midmarket travellers: rooms priced below Rs.7,500 now attract just 5% goods and services tax (GST), down from 12%. Still, impact on hotel occupancy and investor returns is expected to be modest. Rooms above that threshold remain in the 18% bracket. "On a blended nationwide basis, there isn't much of a correlation between the GST regime change and expected performance of hotels," Achin Khanna, managing partner and strategic advisor at Hotelivate told Mint. "While consumers will be pleased, this won't translate into higher occupancies. It's one of those 'good-to-have' benefits for the guests. Hotel owners and investors are not happy because of the input tax credit being taken away for rooms at the 5% GST category. The industry had sought a 12% flat rate (with input credit provisions) and not a 5% and 18% structure," Khanna said. A night in a five-star deluxe averaged at Rs.16,797 as of March 2025, up almost Rs.1,200 from the previous year, while a budget room cost about Rs.3,581, roughly 4% more than a year ago. Luxury rooms now cost nearly five times as much as budget stays, though midmarket hotels may see some relief thanks to the GST cut, according to Hotelivate's Trends & Opportunities 2025 report, accessed exclusively by Mint. Luxury hotels in Mumbai, Delhi, Bengaluru, and Hyderabad-together holding 28% of India's branded supply-saw rates climb 8.3% in 2024-25. By contrast, midscale hotels in smaller towns recorded just 3% growth, as new openings almost matched bookings, leaving little room for rate hikes, according to the report....