Have you ever wondered which bed truly earns the most, one in a luxury hotel overlooking a city skyline, or over a round, busy hospital bed? In this article, we dive deep into a revealing comparison between hotel and hospital beds to uncover which one generates more revenue and why.
By looking at real-world numbers and industry insights, we’ll explore the business logic behind both beds, examining occupancy rates, pricing models, and the unique ways hotels and hospitals make money.
Hotels and Hospitals
Hotels embody the spirit of hospitality, welcoming guests with warmth, comfort, and personalised service to make every stay memorable. They open their arms to personnel seeking comfort, fun, and a bit of luxury, greeting you with utmost warmth and attention.
The global hospitality industry was valued at approximately USD 4.4 trillion in 2025, and it is projected to grow at a compound annual growth rate (CAGR) of around 5-6% and reach an estimated valuation of over USD 6 trillion by 2030.
The industry’s growth is driven by a surge in air travel, expanding tourism, traveller preferences, an expanding global middle class with increasing disposable income, and evolving lifestyles that prioritize travel and unique experiences.
Hospitals, on the other hand, represent the essence of care, where skilled professionals provide healing, support, and compassion around the clock for those who need it most. Two very different places, yet both are here for one purpose: helping you rest, recover, and feel safe.
The global hospital and healthcare sector was valued at approximately USD 12 trillion in 2025. This sector is expected to grow at a steady CAGR of around 6-7% over the next five years, reaching an estimated valuation of about USD 17 trillion by 2030.
The growth is driven by ageing populations, changing lifestyles, increasing prevalence of chronic diseases, technological advancements, expanding healthcare infrastructure in emerging markets, and rising healthcare spending worldwide.
While a single hospital bed may not look luxurious, it’s often a revenue powerhouse. In developed markets, especially for premium, multi-speciality hospitals, a single bed can drive annual revenues far outpacing even five-star hotel rooms. So let’s dig further and see what unveils supporting the matter.
Revenue Drivers
Hotels and hospitality businesses make money primarily through room bookings, food and beverage services, events, and additional guest services. Revenue generation depends on many interrelated factors, like the occupancy rate, average daily rate (ADR), operational efficiency, seasonality, demand, location, and more.
In FY25, the Indian hotel and hospitality sector achieved strong performance metrics reflecting its robust recovery and growth, with the Revenue Per Available Room (RevPAR) for hotels in India averaging around Rs. 5,200, the Average Daily Rate (ADR) ranged from Rs. 7,800 to Rs. 12,000 or more, and occupancy rates of 68 percent, with some major cities like Mumbai, Bengaluru, and Delhi gaining upto 81 percent, depending on location & positioning, hotel class, amenities, brand, and more.
Whereas hospitals generate revenue through a combination of patient care services, specialized treatments, and ancillary services. Here, revenue is generated and considered on the basis of patient volume and bed occupancy, average revenue per occupied bed, treatment complexity, payer mix, and more.
In FY25, India’s healthcare sector showed robust performance, with key metrics reflecting growth and operational efficiency, with Average Revenue per Occupied Bed of well-known entities like Apollo Hospitals, Fortis Healthcare, Max Healthcare, and others ranging from Rs. 30,000 to 78,000, with an occupancy rate of 60 to 78 percent, and some ranging around 30 to 50 based on the scale of services offered involving personnel of multiple specialties, technology, brand value, location, reach, and more.
On average, EBITDA margins and net profit margins generated by well-established hotels were ~ ~20-40% and 10-20%, and hospitals range from ~15-25% and 8-20%, respectively, supported by strong occupancy and revenue growth, operational efficiencies, increasing demand driven by lifestyle diseases and medical tourism, and growing insurance penetration.
Cost of Setup and Pricing Model
As per sources such as Hotelivate, a specialist hospitality consulting firm, in India, the average development cost for hotels stands at roughly Rs. 1.03 crore per key, with economy/budget hotels costing around Rs. 36 lakh per key and luxury properties upwards of Rs. 2.36 crore per key, which includes construction, interiors, furniture, fixtures, equipment, and pre-operational expenses.
Hotels in India primarily use dynamic pricing models. Room rates are adjusted in real time based on factors including current demand, seasonality, local events, competitor pricing, and booking patterns. High-demand periods, such as festivals or conferences, see price surges, while off-peak times may have discounts to boost occupancy. Pricing also depends on hotel category, luxury, midscale, budget, and the target market segment.
Following this, setting up a multi-specialty hospital in India generally costs ~Rs. 20-30 Crores, with a range of up to or more than Rs. 100 Crores as well, based on the number of beds, location, and level of specialization. This includes land acquisition, construction, medical equipment, IT infrastructure, and pre-operational expenses.
Hospitals set their room and treatment prices based on various factors, such as the complexity of medical care, the hospital’s location and infrastructure, and the availability of specialist doctors and advanced technology. Rates vary significantly between major metropolitan centres and smaller cities and depend on the type of room (general ward, private, deluxe, or ICU). The price is also influenced by whether a patient pays out of pocket, is covered under private insurance, or comes under a government healthcare scheme.
Conclusion
Future growth in both sectors is driven by improving demand dynamics, lifestyle-related diseases, medical tourism, and insurance penetration boosting hospitals, while expanding domestic and international tourism, population growth, rising middle-income levels, and enhanced connectivity fuel hotels. Capital investments continue, with hospitals significantly expanding bed capacity and hotels upgrading facilities to meet evolving consumer expectations.
Hotels and hospitals both show strong growth and revenue potential, but they serve different needs and face unique risks. That said, revenue alone doesn’t guarantee business success; cost, occupancy, risk, capital intensity, and market segment matter very much.
For hotels to “catch up,” they’d need ultra-premium positioning, consistent high occupancy, and strong ancillary services. For hospitals to sustain revenue, they must maintain high occupancy and a high-value case mix and manage cost/quality.
| Metric | Hotels | Hospitals |
| Revenue per room/bed | Rs. 7,800–12,000 ADR, Rs. 5,200 RevPAR | Rs. 30,000–78,000 per bed/occupied day |
| Occupancy Rate | 68–81% | 60–78% (can dip lower for certain services) |
| Ebitda Margins | 20-40% | 15-25% |
| NPM | 10-20% | 8-20% |
| Setup Cost per key/bed | Rs. 36 lakh–2.36 crore per key | Rs. 20–100+ crore total (30-80 lakh/bed) |
| Operational Complexity | High during the season, lower for budget stays | High, with 24×7 critical service requirements and stringent compliance needs |
| Risk Factor | Demand fluctuation, seasonality, pandemic and more | Regulatory hurdles, medical error, litigation and more |
If you measure purely by per-day revenue of the bed/unit, the hospital bed outperforms. However, if you measure by operational ease, scalability, and diversification of services, the hotel room remains a strong player. For the growth-minded investor or operator, beds in both sectors merit serious attention, just with different risk-return profiles.
Written by: Bharath K.S
