06 - 05 - 2026

Indian hotels sector faces muted March as geopolitical tensions weigh

By Our Bureau
Mumbai, May 6, 2026

India’s hotel industry witnessed a muted performance in March as geopolitical tensions curtailed foreign inbound travel, though domestic demand remained resilient, ICICI Securities said in a sector update.

The sector’s Revenue Per Available Room (RevPAR) grew 3–5% on a year-on-year basis in March, aided by a 5-7% rise in average room rates (ARR), while occupancies dipped marginally.

The industry’s outlook remains cautious in the near term, with forward bookings for April–May showing a YoY decline as higher airfares and event postponements dampened momentum, the brokerage said in the report.

“Geopolitical tensions since March have temporarily disrupted foreign inbound travel,” ICICI Securities said, adding that luxury hotels, which derive up to half their guests from overseas and rely significantly on food, beverage and Meetings, Incentives, Conferences and Exhibitions (MICE) revenues, were most affected. Domestic leisure, weddings and business travel helped cushion the blow, it said.

For the medium term, the brokerage retained a high single-digit ARR compound annual growth forecast of 6–8% over FY26–28, expecting the sector to show resilience barring any prolonged geopolitical disruption. The brokerage projected an EBITDA growth of 15–20% for hotel companies over FY25–28, supported by new asset additions and healthy balance sheets.

ICICI Securities reiterated buy ratings on Indian Hotels Company Ltd, ITC Hotels, Leela Palaces Hotels & Resorts, Chalet Hotels, Lemon Tree Hotels, and Brigade Hotel Ventures, citing their scope for growth amid steady domestic demand.

Management contracts are expected to remain the dominant model for expansion, over 80% of incremental room additions through FY25–29, while asset-heavy operators may pursue acquisitions or develop existing land banks, the report said.