The hotel industry in India had a breakthrough year in FY25, but some players were more significant than others. In a rate-driven recovery that increased revenues overall while rewarding strategic operators even more, Chalet Hotels, Juniper Hotels, and Lemon Tree Hotels stood out according to analysis by India Ratings & Research (Ind-Ra).
It isnt that legacy operators have left behind as Indian Hotels Company Ltd. (IHCL) and ITC Hotels managed to maintain their position among the legacy by relying on scale, prestigious locations, new openings and premium pricing across luxury destinations.
Chalet, Juniper Ride Rate Power to Outperformance
According to recent data from India Ratings and Research (Ind-Ra), the industry saw double-digit increases in revenue per available room (RevPAR) at the end of FY25, mostly due to higher average room rates (ARR). Chalet Hotels maintained its position as the year’s top performer by posting a remarkable 21% year-over-year increase in ARR for the March quarter, which was the highest among peers. This increase was matched by a 21% increase in RevPAR. High-end business properties that command premium pricing in busy urban corridors, such as the JW Marriott Bengaluru and the Lakeside Marriott in Mumbai, drove its performance.
Not far behind, with 12% ARR growth and 14% RevPAR expansion, was Juniper Hotels, which uses a joint venture structure to run Hyatt-branded properties in India. Particularly in metropolitan areas, corporate travel and MICE-driven demand continued to support its main assets, such as the Grand Hyatt Mumbai and Hyatt Ahmedabad.
Lemon Tree Intensifies Domestic Sales
In the meantime, Lemon Tree Hotels increased its presence in Tier 2 and Tier 3 cities, resulting in a 6% year-over-year increase in occupancy, the strongest volume growth among peers. By adding hotels in Chandigarh, Bhubaneswar, and Aurangabad, the brand improved its mid-market standing. It was also able to capitalise on aspirational leisure travel with its high-end offering, Aurika Udaipur. Even though ARR growth was slow, it was a success story driven by volume because of its capacity to meet strong domestic demand.
“Lemon Tree’s strategy shows that growth doesn’t always need to come from rates — in a price-sensitive market, occupancy-led gains can be just as effective,” said Mahaveer Shankarlal Jain, Director, Corporate Ratings, Ind-Ra.
Legacy Giants Lean on Brand and Breadth
Industry analysts add that legacy players like Taj & ITC have benefited from having a diverse brand portfolio among legacy players. Despite more muted ARR gains, IHCL was able to hold onto its top spot in the luxury market thanks to its emphasis on high-end leisure and worldwide appeal.
Known for its “Responsible Luxury” ethos, ITC Hotels maintained its momentum with flagship establishments like ITC Gardenia Bengaluru, ITC Grand Chola Chennai, and ITC Maurya New Delhi. Performance remained consistent due to a robust F&B ecosystem and sustainability-driven brand recall. Its expansion into India’s rapidly expanding upscale leisure destinations was also made possible by its Welcomhotel and Storii sub-brands.
As Occupancy Plateaus, RevPAR Approaches a Peak
RevPAR increased 16% in Q4 and 12% in FY25 for the peer group, primarily due to rising ARRs rather than new occupancy gains. A slight 2 percentage point increase in occupancy among rated players to 75.5% indicates that volume has little headroom, particularly in the premium category.
Analysts predict that this dynamic may make it more difficult for players to duplicate FY25’s performance in FY26.
“FY25 was a high-quality year in terms of pricing power, but the real outperformance came from those who aligned their strategies with market realities — premium players capitalising on limited supply and mid-market brands going deeper into domestic growth pockets,” Jain noted.
FY26 Prospects: Adaptability Will Characterise the Upcoming Leaders
The hotel industry’s FY26 trajectory is probably going to depend more on adaptive strategy than price increases, as RevPAR approaches a cyclical high and occupancy growth flattens. Although it is anticipated that Tier 1 hotel operators will increase supply at a 10–12% CAGR, they will encounter challenges from tepid international arrivals, high base effects, and macroeconomic volatility.
The best performers in FY26, according to analysts, might not be those who raise rates further but rather those who maintain their agility, whether through asset-light models, location-specific pricing, or unique mid-market offerings.
With pricing power in business-oriented metro areas, operators like Chalet and Juniper will need to maintain share while safeguarding margins. With a sizable domestic following, Lemon Tree needs to contend with growing competition in India’s thriving mid-market segment.
“FY25 rewarded rate leadership and smart positioning,” Jain said. “FY26 will reward flexibility — those who pivot quickly to what the market wants will stay ahead.”
