Research Report

The ongoing West Asia conflict has had a limited impact on the Indian hospitality industry thus far, given the sector's predominantly domestic demand base. In September 2026, industry performance was supported by strong demand arising from leisure, MICE and corporate travel. BRICS Summit resulted in a sharp increase in room rates and occupancies across Delhi-NCR hotels. The robust performance highlights the industry's favourable demand-supply dynamics and the benefits of large-scale international events.

ICRA estimates industry occupancies to witness an uptick to 71-72% in September 2026, while average room rates (ARR) improved to Rs. 8,300-8,500 compared with Rs. 8,200-8,400 in September 2025, despite the inflationary concerns.

Demand remained supported by resilient domestic leisure travel and the recovery in business and MICE activities. In H1 FY2027, occupancies and ARRs are estimated to have improved to 67-69% and Rs. 8,000-8,200, respectively, from 66-68% and Rs. 7,700-7,900 in H1 FY2026. The YoY growth was supported to some extent by the base effect but was largely driven by stable domestic demand.