India’s hotel industry eyes double-digit growth in FY26 despite headwinds-OxBig News Network

This follows a strong FY25 that saw most hotel companies reporting strong revenue and profit gains, driven by rising travel demand from both business and leisure travellers. In the current year, too, the industry sees robust overall demand, with new hotel openings and increased investor interest signalling confidence in the sector’s future.

According to Chander K. Baljee, managing director of Royal Orchid Hotels, Q1 of FY26 saw some challenges in the North and West due to tensions with Pakistan, but overall the impact was limited. “Most of our hotels are managed properties in the south, which were less affected because of geography,” he toldMint.

Baljee said Royal Orchid added 40 hotels in FY25 and plans to open about 30 more this year. Profits from these new hotels and renovations are expected to show up in the second half of FY26. Meanwhile, profitability in existing hotels remained strong, he added.

Patanjali G. Keswani, chairman and managing director of Lemon Tree Hotels, had earlier toldMintthat both business and leisure travel across the industry slowed down after the Pahalgam attack in Kashmir and a brief rise in covid cases. “Despite that, we are still on track to grow in mid-teens for the entire fiscal,” he said.

Keswani said with the country’s economy growing at 6-7% in real terms (after adjusting for inflation) and 10-11% in nominal terms, and with more Indians earning around ₹3 lakh a month, a new group of travellers is entering the market each year. He also pointed out that better transport connections and more people owning SUVs is encouraging drive vacations and hotel stays.

Attracting investments

Keswani added that hotel companies that have recently gone public have attracted serious investors who want clearer and more transparent business information. In FY25, Schloss Bangalore (parent of The Leela), ITC Hotels (post demerger from ITC Ltd), Ventive Hospitality, and Brigade Hotels went public or filed for IPOs. A number of companies are likely to follow this year as well.

Mandeep Lamba, president & CEO (South Asia) at hotel consultancy HVS Anarock, toldMintthat while geopolitical uncertainty may continue to cast a shadow globally, domestic demand remains strong enough to support growth in India’s hotel sector. “I don’t foresee any major pressure on hotel rates. Compared to global benchmarks, pricing of hotel rooms in India is still relatively reasonable,” he said.

While a few overheated markets may see minor corrections in FY26, Lamba pointed to a noticeable shift in industry behaviour post-pandemic, where hotel operators are no longer reacting to short-term demand dips with deep rate cuts.

“There’s a far more mature understanding that the market can sustain higher rates,” Lamba said. “Over the past two to three years, hotel operators have gained the confidence to hold pricing. Any rate corrections or adjustments today are a part of planned revenue strategies, rather than reactive pricing cuts.”

Prashant Biyani market analyst at Elara Capital toldMintthat for FY26, they expect a healthy double-digit growth for the industry driven by both average room rates and occupancy, He also expects more hotel companies to go public and international hotel chains to ramp up their presence in India.

He said the April-June quarter of FY26 will likely do well, though not as well as earlier projected, as tensions between India and Pakistan in end-April and early May marred air travel. That said, the impact may be limited, since many north-western tourist spots enter a lean season in peak summer anyway.

Lamba of HVS further added that supply in most Indian markets continues to lag demand. “India has emerged as one of the top 8-10 global markets in terms of demand, but new supply isn’t keeping pace,” he said. “With infrastructure development progressing rapidly, there’s no real reason for rates to decline—unless triggered by an unforeseen macro disruption.”

Strong FY25

In FY25, most large hotel chains showed strong revenue growth. Indian Hotels Company Limited (IHCL), which runs the Taj brand, saw revenues rising 23% to ₹8,335 crore. ITC Hotels’ revenue jumped 60% to ₹3,559 crore. Other chains like Lemon Tree, Chalet Hotels, Schloss Bangalore (The Leela), and Juniper Hotels grew 15-25%. EIH, which operates Oberoi Hotels, grew its revenues 9%, and Royal Orchid Hotels, 8.7%.

Looking at profits, EIH and ITC Hotels both reported steady profit growth in FY25, with ITC’s net profit rising from ₹424 crore to ₹638 crore. Vikram Oberoi, MD & CEO of EIH Ltd, in the company’s recently concluded earnings call, said the company will have more opportunity to drive average room rate growth within the Oberoi Hotel ecosystem. “With strong demand, with everything that’s happening in India, over the medium to long term, we’ll be able to drive greater premiums in Oberoi,” he said.

Meanwhile, IHCL saw net profit rise 53% to ₹2,038 crore. Lemon Tree’s profit grew by 34%, and Juniper Hotels’ profit nearly tripled. Schloss Bangalore turned a small loss in FY24 into a ₹47.66 crore profit in FY25. Samhi Hotels also moved from an ₹80 crore loss in FY24 to a ₹20 crore profit.

Chalet Hotels, the owner of several Marriott and Taj branded properties in India, saw its profit drop by nearly half, due to a non-cash adjustment but remained Ebitda positive. Its revenue grew 22% on the back of higher average daily room rates being charged and earnings before interest, taxes, depreciation, and amortisation —a measure of operating efficiency—increased 28%, and profit before tax rose 61%. The one-time ₹202 crore non-cash accounting adjustment lowered net profit. Excluding that, profit after tax was up 24%.

Royal Orchid’s revenue from operations increased steadily but profit slipped marginally by ₹3.3 crore. Baljee said profits were slightly lower last year partly because the company bought a partner’s stake in its Bangalore hotel and paid upfront costs for renovating its flagship hotel in Mumbai.

“India’s hotel industry RevPAR grew by 13-15% in FY25, largely due to strong room rate growth of 11-13%,” said Elara’s BIyani, adding that growth could have been even better if not for the dip in travel during the April-June quarter because of the general elections.

RevPAR, or revenue per available room, is a simple way hotels measure how much money they’re making from all their rooms, whether they’re booked or not.