Top hotel chains are discovering a profitable middle ground between opulent palaces and budget stays, where rising consumer spend meets higher room rates. The strategy is taking shape across the industry as listed chains add hotels in the upscale and upper-upscale categories, with companies like Oberoi parent EIH Ltd and Lemon Tree Hotels stating that Trident and Aurika brands in these categories are doing the heavy lifting during leaner periods.
In October last year, ITC Hotels launched its upscale Epiq Collection of hotels as part of a premiumization strategy. Indian Hotels Co. Ltd (IHCL) on the other hand, has said it is expanding its portfolio across categories, while IHG Hotels & Resorts and Wyndham Hotels & Resorts, too, are also expanding in this segment. While luxury is at top end, upper-upscale sits below luxury and includes brands such as Trident, Hyatt and Marriott. Upscale is generally a full-service hotel and is positioned above midscale or mid market and economy hotels.
Vikramjit Singh Oberoi, managing director and chief executive of EIH said in the June quarter earnings call that its Trident brand outpaced both industry peers as well as its own luxury brand Oberoi in terms of revenue per available room or RevPAR. While Trident grew 13.8% in RevPAR, the industry average in the broader upper-upscale segment was 9.2%, while Oberoi luxury brand, which is more reliant on international travellers, grew at a lower 8.2%.
For hotel companies, the appeal of upscale hotels is partly economic too. Ashish Jakhanwala, chief executive officer of Samhi Hotels, said that upscale properties can command higher room rates than midscale hotels because they offer a “fuller product”, including larger rooms, restaurants, bars, gyms and pools. At the same time, their operating costs are generally lower than those of luxury hotels.
“An upscale hotel can, therefore, raise rates substantially when demand in a city is strong,” Jakhanwala said. It is also better suited for domestic demand. In April 2026, Samhi announced an agreement with Ikea’s Ingka Centres to develop a 162-room upscale hotel in Noida’s Sector 51. About 45% of its revenue currently comes from upscale properties, with the remaining 55% from midscale hotels, Jakhanwala said. As new properties open, the company expects the revenue mix to move to about 60-65% upscale and 40-35% midscale.
Building a fuller portfolio
The expansion is not simply a move upmarket. Hotel companies are also trying to build portfolios covering multiple price points, allowing them to operate different brands in the same market and enter locations where a luxury or midscale proposition may not work.
Prashant Biyani, analyst at Elara Capital, said large hotel companies such as IHCL and Marriott were filling white spaces across different segments by expanding into tier-II, tier-III and tier-IV towns and using acquisitions, management contracts and franchise arrangements. “Broadening of portfolio is happening at various levels in the Indian hotel space currently. The strategy is to capture a larger share of the industry rather than focus only on the premium end,” Biyani added.
Industry data also shows the scale of development across segments. In 2025, midscale hotels accounted for 42% of hotel keys signed, while upscale and upper-upscale properties together accounted for another 42%, according to hotel consultancy HVS Anarock. The remaining 16% was across luxury and economy hotels. The data indicates that while midscale remains a major source of new supply, higher-priced segments are attracting a comparable share of new signed inventory.
The portfolio approach can also allow companies to balance different parts of the cycle. Midscale hotels typically have lower operating costs and can remain more resilient when room rates weaken, while upscale hotels offer greater pricing potential when demand is strong, Jakhanwala said.
Lemon Tree’s move into higher-priced hotels illustrates the economics behind the strategy. In a May 2019 earnings call, the company said customers paying ₹3,000-4,000 at its hotels were willing to spend around ₹8,000 on leisure stays, which prompted the development of its upper-upscale Aurika brand.
By August 2025, Lemon Tree said the pool of unbranded upscale and upper-upscale hotels available for conversion was shrinking, making new development more attractive. In February 2026, it said future supply was being planned under Aurika. In May 2026, it said Fleur would target upscale and upper-upscale hotels in cities and leisure markets.
IHG has also added to its upscale portfolio. Its Vignette Collection entered the country with The Aarlis Hotel Panchkula, a 145-room property. The company has set a five-year target of reaching 400 hotels in its India pipeline, including brands such as Crowne Plaza and voco.
Wyndham Hotels & Resorts is also expecting upscale hotels to account for a larger part of its India expansion, alongside its existing midscale portfolio.
Some asset owners are also entering the branded upscale segment. Chalet Hotels has launched the Athiva brand and has a pipeline for the format across cities and destinations, Biyani said. The Leela Palaces, Hotels and Resorts is an exception, with its strategy focused on luxury hotels, he added, as it sees sufficient growth opportunities within the segment.