The Indian hotel sector delivered robust performance in Q1 FY27, with industry same-store revenue per available room (RevPAR) growing by approximately 11-13% year-on-year, according to INVAsset PMS Business Head Harshal Dasani. Listed operators broadly reported positive RevPAR and revenue growth, though performance varied across portfolios and markets. As per HVS Anarock data, hotel occupancy reached 63-65% in May, up 6-8 percentage points from a year earlier, and 64-66% in June, up 3-5 percentage points year-on-year. RevPAR rose 22-24% year-on-year in May, to ₹4,977-5,265, and 17-19% in June, to ₹5,056-5,346.
The quarter marked a significant shift in how hotel companies drove revenue growth, as operators leaned more heavily on domestic corporate travel and MICE (meetings, incentives, conferences and exhibitions) to keep rooms filled. According to Elara Capital's Prashant Biyani, unlike the previous year when RevPAR expansion was led largely by higher average room rates, most operators this quarter focused on boosting occupancy as geopolitical tensions and international travel disruption impacted high-paying foreign guest arrivals. Biyani expects the first half of FY27 to remain occupancy-led, with room rates likely to recover in the second half as international travel normalizes during peak season. As noted by INVAsset PMS Harshal Dasani, the important change versus earlier cycles is that growth is not dependent only on higher room rates, with better occupancy, domestic travel and portfolio expansion contributing more meaningfully to earnings.
The resilience in operating performance coincided with significant expansion efforts across the sector. According to HVS Anarock data, 179 properties comprising about 20,000 rooms were signed between January and May, underscoring the pace of expansion. Indian Hotels Co. Ltd (IHCL) expanded its pipeline to 255 properties, while several operators acquired existing hotels and expanded through new brand tie-ups. Notable transactions included ITC Hotels acquiring the 130-room Welcomhotel Ahmedabad for ₹155 crore, SAMHI Hotels purchasing the ₹12 crore Itmenaan Estate, and Chalet Hotels completing the ₹171 crore acquisition of Seasons Hotels.
Indian Hotels Co. Ltd delivered strong performance with RevPAR of ₹8,400 (+14% YoY) and net profit of ₹358 crore (+21% YoY) on revenue of ₹2,419 crore (+15% YoY). ITC Hotels reported RevPAR of ₹8,380 (+8% YoY) with net profit of ₹180 crore (+35% YoY) on revenue of ₹936 crore (+15% YoY). EIH showed mixed results with Oberio achieving RevPAR of ₹16,090 (+8.2% YoY) and Trident at ₹10,490 (+13.8% YoY), while consolidated net profit rose to approximately ₹117 crore (+139% YoY). Chalet Hotels maintained resilient performance with hotel revenue rising 8.6% year-on-year to ₹418.5 crore, while Leela Palaces reported a nearly five-fold increase in net profit to ₹48.8 crore in Q1FY27. As per ratings agency Icra Ltd, the hospitality industry is expected to post revenue growth of 7-9% in FY27 after an estimated 11% expansion in FY26.
The demand outlook remains constructive with industry revenue growth estimated in the 7-9% range for FY27, according to INVAsset PMS Harshal Dasani. While domestic demand has become the dominant engine of the industry, inbound international tourists are showing steady recovery, with some major hotel groups seeing margin expansion as traffic shifts to their own digital platforms. The revenge travel phenomenon that started post-COVID has matured into a structural shift in consumer behavior, with Gen Z prioritizing experiences in travel and tourism sectors. However, the principal risk remains prolonged geopolitical disruption, particularly extended tensions in West Asia that could keep international arrivals subdued and constrain aviation capacity. As noted by INVAsset PMS, the key test will be whether operators can sustain RevPAR growth as capacity additions increase, with execution and pricing discipline mattering more than simply participating in the sector upcycle.
