The Indian hospitality industry continues its strong run amid the persistent demand-supply imbalances. The premium room inventory (covering 12 key cities of the country) is projected to grow at 5-6% CAGR during FY2025-FY2028, based on ongoing executions and announcements by hoteliers. The pace of supply growth continues to lag demand, which is supported by favourable sentiments across segments. This imbalance is likely to continue over the next 2-3 years, based on the pipeline.

ICRA estimates room occupancy and average room rates (ARRs) of 68-70% and Rs. 8,000-8,100, respectively, in 8M FY2026, over 68-70% and Rs. 7,700-7,800, respectively, in 8M FY2025. Room occupancies were healthy in November 2025, driven by business travel, which picked up after the festive and wedding season, and meetings, incentives, conferences and exhibitions (MICE) events. Sentiments have recovered from the temporary travel disruptions caused by the terror attacks and geopolitical developments in the first quarter of the year.

ICRA expects the Indian hospitality industry’s revenues to continue to grow in FY2026, despite the high base of FY2025. The growth is likely to be supported by domestic leisure travel, demand from MICE, weddings and business travel. ICRA expects the pan-India premium hotel occupancy rate 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.