Hotel stocks demonstrated strong performance on Monday, June 22, with several companies posting significant gains as the sector extended its previous week rally. According to market data, Lemon Tree Hotels, Samhi Hotels, ITC Hotels and Chalet Hotels gained in the range of 3% to 5% on the BSE in intra-day deals. As reported by Business Standard, these gains came as the sector outperformed the broader market, with the BSE Sensex up only 0.65% at 77,302 at 11:33 AM. The hotel stocks have outperformed the market by surging between 5% and 11% in the past one week, significantly outpacing the benchmark index's near 1% rise. However, over the past year, hotels stocks have tanked up to 17%, compared to a 5.6% decline in the BSE Sensex, highlighting the sector's recent volatility.
According to Morgan Stanley analysts, the Indian hotel sector demonstrated robust performance in May 2026, with revenue per available room (RevPAR) expanding 23.3% year-on-year. The growth was supported by a softer base from the prior-year North India conflict and stronger-than-expected underlying market demand. As reported by Morgan Stanley, the RevPAR improvement was fueled by a 9.6% YoY increase in average room rates and a 12.4% rise in occupancy rates. In specific markets, Mumbai witnessed a 13.5% YoY increase in RevPAR, while Delhi saw a 24.9% advance from the previous year's levels. According to ICRA, industry revenues are projected to grow by 7-9% year-on-year in FY2026-27, with occupancy and average room rate (ARR) continuing to improve.
The hospitality sector is expected to remain stable in FY27, supported by domestic leisure travel and MICE sector demand, with room rates likely to remain firm, according to Indian Hotels Company. As reported by ICRA, the travel and tourism sector's long-term outlook continues to be strong, driven by India maintaining its status as the fastest growing large economy, an undersupplied industry, rising disposable incomes and sustained development of the country's travel infrastructure. Near-term performance may be affected by geopolitical developments in West Asia and related aviation disruptions, which could temporarily impact select international and corporate travel corridors. However, over the medium to long term, structural drivers including rising discretionary spending, an expanding middle class and continued business travel are expected to support industry growth.
Despite the strong intraday gains, several hotel stocks showed mixed year-to-date performance. According to NSE data, Leela Palaces maintained positive YTD returns at 14%, while Asian Hotels (West) delivered exceptional 317% YTD gains. However, other major players showed varied performance, with ITC Hotels down 15% YTD, Juniper Hotels declining 18.5%, and Taj GVK Hotels falling 20% for the year. The sector's performance reflects both the current strong demand environment and the varying investment trajectories across different hotel companies, with the recent rally showing renewed investor confidence in the hospitality sector's prospects.
