As India enters the festive and winter travel season, the hospitality industry is experiencing a temporary slowdown after two years of rapid recovery. According to JM Financial, the hotel sector is expected to witness a softer second quarter in FY26 due to a combination of extended monsoons, a high base from the previous year, and normal seasonal trends impacting both leisure and MICE demand. Despite this moderation, the sector remains structurally strong, with core revenue growth projected at 13% year-on-year, led by Ventive, Chalet, and the Indian Hotels Company Limited (IHCL).
The softer performance follows an exceptionally strong Q2FY25, which benefited from an unusually high number of auspicious wedding dates and elevated leisure travel. This year, heavy rains in northern and western India disrupted travel patterns, slightly reducing occupancy levels even as average room rates remained firm. Data from HVS Anarock indicates that pan-India RevPAR rose 6% year-on-year in August 2025, supported by a 7% growth in ARR, although July and September showed slower recovery.
Individually, IHCL is expected to post revenues of INR 2,086 crore, up 14% year-on-year, though occupancy is likely to ease to 73%, with northern properties most affected by monsoon disruptions. Chalet Hotels anticipates a 17% rise in revenue to INR 877 crore, benefiting from new inventory additions such as Westin Rishikesh and extra rooms at Bengaluru Marriott. Ventive Hospitality is leading growth with 25% revenue expansion, aided by the ramp-up of Raaya by Atmosphere in the Maldives, while The Leela continues to see robust demand in leisure destinations like Jaipur and Udaipur. Lemon Tree Hotels is expected to post modest growth, with margins slightly compressed due to wage inflation and weather disruptions, and ITC Hotels is projected to deliver steady but unspectacular results with around 7% revenue growth.
The industry is also witnessing a structural shift in supply, with over 100,000 rooms under development—a 58% increase over FY25. This growth is being driven by non-metro destinations such as Navi Mumbai, Noida, Dehradun, Lucknow, and Udaipur, indicating the next phase of expansion for India’s hospitality sector. While seasonal softness may temper short-term growth, JM Financial emphasizes that the fundamentals remain strong, with rising domestic travel, disciplined pricing, and strategic brand pipelines providing confidence in the sector’s long-term resilience.
