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.

• ICRA estimates room occupancy and average room rates (ARRs) of 65-67% and Rs. 7,800-7,900, respectively, in H1 FY2026, over 67-69% and Rs. 7,600-7,700, respectively, in H1 FY2025. Room occupancies were firm in Q2 FY2026, driven by business travel, meetings, incentives, conferences and exhibitions (MICE) activity, and leisure travel supported by some long weekends. While heavy rains in certain parts of India impacted travel temporarily, the impact was localised and occupancy recovered quickly. Sentiments have recovered from the temporary travel disruptions due to the terror attacks and geopolitical developments in the last quarter.
• ICRA expects the Indian hospitality industry’s revenues to grow by 6-8% YoY in FY2026, over the high base of FY2025. The growth is likely to be driven by domestic leisure travel, demand from MICE, including weddings, and business travel. ICRA expects pan-India premium hotel occupancy to hold at 72-74% in FY2026, largely similar to 70-72% in FY2024 and FY2025. The ARRs for premium hotels are projected to rise to Rs. 8,200-8,500 in FY2026, after a healthy Rs. 8,000-8,200 in FY2025.