Sustained demand coupled with enhanced pricing to support revenue growth for premium hotel segment in H2 FY2025. Business travel, however, may see some circumspection in the months especially in sectors vulnerable to the higher US tariffs. 

GST reduction from 12% with input tax credit (ITC) to 5% without ITC for hotels with rooms rates less than Rs. 7,500 is expected to boost occupancy for budget hotels. However, the inability to claim ITC is not expected to have a margin impact, given benefits of lower GST on input materials and services.

Exhibit: Indian Premium Hotel Market – Long-term Trend in Operating Metrics

Source: ICRA Research; ICRA considers Luxury, Upscale and Upper-Upscale as the premium segment (4-Star and above)