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Hotel Industry – Q2 remain resilient; uptick in business momentum expected in H2FY27

ICICIdirect Research 28 Aug 2026 DISCLAIMER

Domestic hotel companies (largely catering to leisure travel) registered decent performance in Q1FY27 by delivering high single digit to low double digit RevPar growth. It was largely driven by mid-to-high single digit average room rental growth. EBIDTA margins for most hotels under our coverage (except for Lemon Tree Hotels) stood stable in Q1FY27.
Q2 is seasonally weak quarter for hotel industry in India. However upcoming BRIC summit (12-13th Sept,2026) and steady leisure demand will help RevPar growth to remain in high single digit during the quarter.
H2FY27 will be driven by festive season followed by strong wedding season. Foreign tourist arrival, which was affected by West Asia war in H1FY27, is expected to come back in H2FY27 driven by various international events and leisure travel. This will continue to support the room occupancies and will help room rentals to remain high in the coming years.
View:  Overall hotel industry is expected to post 7-9% RevPar growth on like-for-like basis. Further room addition will add to the overall revenue growth in the coming years. Around 18,000-20,000 branded rooms will be added over the next two to three years, which will further add to the revenues of the hotel companies. Amongst our coverage, Indian Hotels Company Ltd. (Reco-Buy; PT- Rs865) and ITC Hotels (Reco – Buy; PT- Rs220) remain our picks in the hotel space.

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