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How Much To Spend For A Hotel Room

After what seems a really long time, I went on a long vacation to a quaint sea side town with wife, son and my parents in tow.

While doing the bookings, I always try to scrimp on paying for a hotel room. However, during my last vacation at Goa, I did realize that if chosen well, some hotels / resorts can be worth the money they charge. Location, space, good upkeep of the property and quality of ancillary services (like F&B service) can justify the asking price of some properties.

But still, how much should you be paying for your stay, say on per day basis for a room? We all know that the range is vast, and we need to cap it, as the higher we go, our net worth is getting the hit, while the pleasure derived from the stay experience may not be as high as the price.

The rule of thumb I have devised to decide my daily room rent budget when travelling is linked to my primary residence market value, or an amount designated for buying my primary home as I do not own any residential property as of now. Why benchmark hotel room cost to your home value? One’s home determines the level of comfort / luxury / amenities required from one’s abode.  I am simply extending this to short term “hotel room” stays. I cannot think of any better way to decide on hotel room rent budget.   

Say I have designated INR 1 Crore corpus for my primary home.

-          Primary residence market value: INR 1,00,00,000/-, subject to this being not more than 25% of your total net worth. This ensures I am not "house poor" and can “afford” the holiday from my other liquid assets

-          I would like to keep annual spend of room rent under 1% of my primary residence value. In this case, it comes to INR 1,00,000/-. I would also like to knock of at least 25% of this which will take care of other expenses such as food, recreation etc. Now we have annual hotel room budget of INR 75,000/- per annum. Good enough, I would say.

-          Next comes number of days of vacations I need to take. Say 7 days every quarter. That makes it 28 days a year. We get a daily room rent budget of approximately INR 2700/-. That’s a bit on the lower side, though one may still get a decent room at this cost, but one will have to compromise on location and amenities

-          But I do remember I have never taken 28 days of “hotel room” holidays. 7 to 15 days is more like it. For 7 days annual holiday, I can pay upto INR 10,715/- per day for a room. That’s a sizeable amount and will most likely get me a room in good many 5 star luxury properties in India. For 15 days holiday a year, I can spend upto INR 5000/- per day for a hotel room. Again, a tidy sum

-          My hotel room budget range: INR 2700/- to INR 10,715/- per night. Quite a range. But so is the number of days of “hotel room” holidays expected.

Reality check – during our recent 7 day holiday, our hotel rooms cost averaged INR 4730/- per day, with good breakfast. Pretty much within the budget established as per above thumbrule!!! And this FY, this was the only “hotel room” holiday we have had. We still have nearly INR 41,900/- worth of allocated capital left till March 2023. Let’s see if we are able to utilize it!!!      

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