Will Weddings and Travel Drive India’s Hotel Sector to New Heights in H2 FY26?
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Indian Hotels is set to gain between 20-27% from Friday’s closing price of ₹731.2, bolstered by strong brands, a diversified portfolio, and an expanding pipeline.
Growth Outlook for India’s Hotel Sector
The domestic hotel sector is poised for substantial growth, primarily driven by the average room rate (ARR) in the upcoming quarters. Following a sluggish first half of the fiscal year, which was impacted by prolonged monsoons and geopolitical tensions, the second half promises a rebound due to an increase in weddings and travel. Here’s what to expect:
– Revenue per Available Room (RevPAR) is anticipated to grow at a mid-to-high single-digit rate for the year.
– Top Stock Picks: Analysts favor Chalet Hotels, Indian Hotels, Lemon Tree Hotels, and Apeejay Surrendra Park Hotels, projecting an upside of 18-42% for these stocks relative to their current market prices.
Geographical Performance: A Mixed Bag
– High Performers: Bengaluru, New Delhi, and Hyderabad continue to outperform the market.
– Challenges for Mumbai: The city faces slower RevPAR growth as of September 2026. However, events such as concerts by Linkin Park, John Mayer, and DJ Snake, along with the T20 Cricket World Cup and several medical and tech conferences, are expected to bolster hotel demand in the latter half of FY26.
Forecast of Room Additions and Occupancies
– Room Additions: India Ratings and Research projects a room growth of 10-12% in FY26, primarily through asset-light models, including management contracts and franchising.
– Occupancy Rates: These are expected to remain flat to slightly increase, supported by a limited influx of new supply in central business districts and the reopening of renovated rooms.
Insights on Key Players
– Chalet Hotels: Analysts are optimistic about Chalet Hotels, anticipating an 18% upside from Friday’s closing price of ₹871.6. The hotel chain’s strategic position in high-demand business districts and its focus on premium corporate clientele will likely enhance revenue, particularly as conferences and exhibitions resume.
– Lemon Tree Hotels: Expected to see a 25% upside from its closing price of ₹159.9, the company is aggressively pursuing asset-light expansion in Tier II and III cities through management contracts and license agreements, fueling its growth trajectory.
Conclusion
As weddings and travel regain momentum, the prospects for India’s hotel sector in H2 FY26 look promising. With robust brands and strategic expansions, companies like Indian Hotels, Chalet Hotels, and Lemon Tree Hotels are set to capitalize on the anticipated surge in demand. The overall outlook remains positive, suggesting a bright horizon for investors and stakeholders in the hospitality industry.