From 1-Star to 5-Star: Hotel Rating System and What It Costs, 37 Points

🏨 Star Ratings of Hotels: Financial Impact, Who Decides & Global Rankings (2025)

Understand how hotels get 3, 5, or 7-star ratings, what they cost, who certifies them in India and abroad, and which cities lead globally in luxury stays.

1. What Are Hotel Star Ratings?

1. Star ratings classify hotels by luxury, service, and amenities.

2. Common scale: 1-star (basic) to 5-star (luxury).

3. 7-star hotels are not officially recognized—used only for marketing appeal.

   • E.g., Burj Al Arab (Dubai) is often called 7-star but officially rated 5-star.

   • Milan’s Seven Stars Galleria got its 7-star status from a private certifier (SGS), not a government.

2. Who Gives Star Ratings?

A. In India

4. Ratings are assigned by the Ministry of Tourism through HRACC (Hotel & Restaurant Approval & Classification Committee).

5. Classification is voluntary but helps hotels qualify for incentives, promotions, and business advantages.

6. Recently, India proposed allowing third-party agencies to assess and certify hotels.

B. In Other Countries

7. Europe: Uses a common framework by the Hotelstars Union (mandatory & optional criteria).

8. UK: Bodies like AA, VisitEngland certify hotels.

9. South Africa: Handled by Tourism Grading Council of South Africa (TGCSA).

10. Global systems vary — no universal standard.

3. Star Rating Types in India vs Abroad

11. India’s official star types:

    • 1-star to 5-star

    • 5-Star Deluxe (highest formal category)

    • Separate rating for Heritage Hotels (Basic, Classic, Grand)

12. Other countries:

    • Use 1 to 5-star scales (some add “Superior” or “Deluxe”).

    • Some ratings are mandatory, others voluntary.

13. 7-Star label is unofficial globally, used by some luxury hotels for branding.

4. How Do Hotels Get a Star Rating?

A. In India

14. Hotels apply via NIDHI+ portal.

15. HRACC conducts physical inspections covering ~108 sub-criteria.

16. Criteria include room size, facilities, safety, service, environmental practices.

17. Ratings must be displayed at reception and online.

B. Other Countries

18. Use points systems, mandatory checklists, and audits by certified bodies.

5. What Do Hotels Need for 5-Star or Deluxe Rating in India?

19. Staff qualifications and multilingual service also mandatory.

6. 🔝 Cities with the Most 5-Star Hotels (2025)

Clarified: These are cities, not countries, with the highest number of 5-star hotels worldwide.

7. Is 7-Star a Real Category?

20. No official 7-star rating exists under any global or Indian government classification.

21. “7-star” is a marketing term, used to signify ultra-luxury (e.g., Burj Al Arab).

22. Only one hotel (Seven Stars Galleria, Milan) claims formal 7-star certification, by private firm SGS.

8. Financial Impact of Higher Star Ratings

A. Costs Involved

23. CapEx (Capital Expenditure):

• Bigger rooms, elevators, design, eco systems

• Can range from ₹5 Cr to ₹500+ Cr depending on scale

24. OpEx (Operating Costs):

• Staff-to-room ratios, energy, pool/gym upkeep, guest services

• Can be ₹10–50 lakh+ monthly

B. Revenue Upside

25. Higher ADR (Average Daily Rate):

• 5-star hotels charge 2x to 5x more than 3-star

• Luxury hotels can charge ₹10,000–₹1,00,000/night in metros

26. Occupancy Dependency:

• High fixed costs → needs 60–80% occupancy to stay profitable

27. Incentives:

• Some states/countries offer subsidies, tax incentives for high-end, eco-compliant hotels

9. Key Differences & Challenges in Ratings

28. No global standard:

• Criteria vary across countries

• “5-star” in one country may equal “4-star” in another

29. India: Classification is voluntary, many hotels operate unclassified

30. Legal limitations: Liquor laws, land laws, building norms vary state to state

31. 7-star misuse: Used loosely for branding, misleads customers sometimes

10. Summary – Key Takeaways

32. In India, 5-star Deluxe is the highest official rating.

33. HRACC under Ministry of Tourism certifies hotel stars.

34. A hotel must meet strict criteria in room size, safety, service, facilities.

35. 7-star is not officially recognized anywhere in the world.

36. Cities like Istanbul, Shanghai, Bangkok, London, Dubai top global charts in 5-star hotels.

37. Financially, higher rating = higher investment but also higher revenue potential.

⚠️ Disclaimer – The Profit India

This article is for informational purposes only. Readers are advised to verify with official sources before making any business, legal, or financial decisions.