The ongoing conflict in West Asia and associated airspace disruptions, high travel costs and subdued foreign tourist arrivals have weighed on inbound travel as well as on select corporate and MICE segments. However, the impact on the Indian hospitality sector has been largely contained, given the sector’s predominantly domestic demand base. The YoY performance of the sector has also benefited from the favourable base of H1 FY2026, when demand was affected by the Pahalgam attack, subsequent cross-border tensions and flight disruptions.

• ICRA estimates premium hotel occupancy and average room rates (ARR) at 67-69% and Rs. 8,000-8,200, respectively, in H1 FY2027, against 65-67% and Rs. 7,700-7,900, respectively, in H1 FY2026. The YoY improvement was supported by resilient domestic leisure demand and a favourable base, as travel sentiment in the previous year was affected by the Pahalgam attack, the subsequent India-Pakistan tensions and flight disruptions.
• ICRA projects the Indian hospitality industry’s revenues to grow by 7-9% YoY in FY2027 following growth of 11% in FY2026, supported by domestic leisure travel, demand from MICE, weddings and business travel. ICRA anticipates the pan-India premium hotel occupancy rate to remain at 72-74% in FY2027