Turbulence hits the skies, but hotels still staying stable in June-OxBig News Network

May 2025 saw India’s top hotels perform strongly compared to the same period last year, with average room rates holding firm between ₹7,300 and ₹7,500. Despite disruptions due to the Pahalgam terror attack in April, rates remained resilient, even as occupancy declined 1-3% year-on-year and 7-9% from April, according to hospitality consultancy HVS Anarock.

Radisson Hotel Group’s India portfolio also delivered a strong performance in April-June 2025, said the company. “Despite geopolitical challenges and uncertainties, this quarter (April-June) has reflected growth and resilience for us. We saw a 2% increase in occupancy and a 6% rise in average daily rate (ADR) compared to the same period last year,” Nikhil Sharma, managing director and COO, South Asia, Radisson Hotel Group, toldMint.

This could be the result of sustained hotel room prices, which have grown. “There is a structural shift in room pricing strategy, with hotel operators showing greater rate discipline. They are no longer resorting to deep price cuts in response to short-term demand dips, making business more sustainable in the longer run,” Mandeep S. Lamba, president and CEO (South Asia), HVS Anarock, toldMint.

The slow months

Vikramjit Singh, founder of Ananta Capital backed Alivaa Hotels, which has 11 operational hotels and another four under development, said, May is traditionally a slower month than April. “There was a slight drop in occupancy over May 2024 because the hotels in North India were impacted for about 15 days due to the terror attack,” Singh said.

“This was a temporary blip, the business bounced back soon after. June, typically a slower month for the hospitality sector, is currently trending at par—if not slightly ahead—of the same period last year. Moreover, with the holiday season kicking off, resorts across the country are witnessing unprecedented demand,” he added.

HVS Anarock said average hotel rates in May 2025 rose sharply from last year, with cities like Mumbai and New Delhi posting double-digit gains and maintaining premium rates of over ₹10,000 and ₹8,500, respectively. Interestingly, cities like Jaipur and Hyderabad saw tremendous year-on-year growth. These two cities grew the highest for May, with rates increasing between 20% and 25%, followed by Chandigarh and Bengaluru, which grew between 15% and 20%.

In an earnings call on 30 May, Vikramjit Singh Oberoi, MD and CEO, EIH Ltd, said, “In India, we continue to see strong demand this financial year as well. There was some impact because of the conflict between India and Pakistan, but that’s since stabilised. We’ve seen a strong pace returning. And in June, we are seeing a bounce back and positive pace of reservations over the same time last year. So, I think that’s been hopefully addressed and nullified.”

But while hotel prices went up there, Chandigarh reported the sharpest decline in occupancy in the range of 13-15 percentage points, possibly due to the tension between India and Pakistan. Yet, Jaipur recorded the strongest year-on-year occupancy growth.

Bright outlook

FY25 opened on a solid note for hotels. April saw an 11-13% increase in average room rates and a 4-6 percentage point rise in occupancy over last year, even surpassing March levels. This momentum continued into the second quarter despite headwinds, the consultancy said.

The optimism extends to future capacity as well. From January to May 2025, 167 new hotel projects were signed—on par with last year’s 161—but are expected to bring a larger inventory of about 19,000 rooms, compared to 15,000 rooms added in the same period in 2024.

In May, Lemon Tree Hotels’ chairman and managing director, Patanjali G. Keswani, spoke toMintto say that some business demand for hotels and retail demand, too, came down owing to the Pahalgam terror attack as well as the subsequent resurgence of covid. “But despite that, we do see that we will do mid-teens growth in Q1 (FY26) and the full year on a same-store and same-hotel basis. Basis this, the company expects to target a mid-teen revenue growth this fiscal.”

Ratings agency Icra, this month, changed its outlook for the hospitality sector from positive to stable, as it expects more stable growth in FY26 after three strong years of growth. Revenue growth will hover around the 6-8% mark in FY26, owing to a very high base following a sharp post-pandemic recovery, and the performance of hotels is likely to remain steady. Occupancy at premium hotels across the country is projected to stay healthy between 72% and 74%, slightly higher than the 70-72% in FY24 and FY25.

The ratings agency also expects average room rates to inch up to ₹8,200-8,500 in FY26, compared to ₹8,000-8,200 in FY25, as the number of new hotels being added to the country’s inventory is limited and many hotels are seeing renovation and upgradation work.