IGI Logo

India's hospitality sector is exiting 2QFY27 on a healthy footing, with demand gaining momentum through the quarter across corporate travel, MICE (Meetings, Incentives, Conferences & Exhibitions), and large-format events. The resilient September exit and healthy booking trends for October reinforce the sector's favorable demand-supply dynamics. We believe the positive momentum should sustain into 2HFY27, supported by a robust events calendar, healthy wedding season and continued pricing power. Across the sector, the following key trends emerged.

* We expect 10–12% RevPAR growth in 2QFY27, led by the Delhi-NCR outperformance, resilient demand across cities, healthy corporate/MICE demand, and sustained pricing power. Healthy October bookings, a stronger wedding calendar, and rising events/conferences provide favorable visibility into 2HFY27.

* Growth momentum witnessed in FY27 is likely to sustain into FY28, supported by a stronger wedding calendar (~95 auspicious wedding dates in FY28 vs ~69 in FY27), continued large-format events, and an estimated ~18% CAGR in the Indian MICE market through CY33. We expect healthy demand to support occupancy and ARR growth, driving sustained RevPAR expansion accross sector, while improving ancillary revenues which further support overall revenue growth.

* Northeast India is emerging as a new hospitality demand hotspot, with branded hotel supply set to expand at a ~20% CAGR over CY25-30 from a highly underpenetrated base. Improving connectivity, government-led infrastructure, and diversified tourism are expected to drive sustained occupancy and pricing growth. Underserved destinations such as Kaziranga, Cherrapunji, Dirang, and Tura offer significant headroom for organized hotel expansion.

* We remain positive on the Indian hospitality and tourism sector over the near-tomedium term, led by healthy structural tailwinds, favorable demand-supply dynamics, and rising domestic travel fueled by increasing MICE activity, weddings, cultural events, and leisure and corporate travel. We reiterate our BUY rating on IH (TP: INR870), LEMONTRE (TP: INR140), and VENTIVE (TP:750)

Industry exits 2QFY27 on a healthy note; 3Q likely to be positive

* According to our channel checks, 2QFY27 is expected to witness healthy 10– 12% RevPAR growth, supported by sustained corporate travel, MICE activity, social events, and a healthy September demand environment, with ARR growth remaining healthy and occupancy continuing to improve.

* Delhi-NCR is likely to be the key growth driver during the quarter, benefiting from the BRICS Summit-led demand surge, while Mumbai witnessed strong traction from corporate and event-led demand.

* Industry fundamentals remain favorable entering 2HFY27, with companies reporting healthy bookings for October, supported by structural supply constraints, a strong wedding season, rising MICE activity, and an expanding pipeline of international events. These factors should underpin continued double-digit RevPAR growth across the sector.

Valuation and view

* FY26 witnessed healthy aggregate YoY growth of 19%/14% in revenue/EBITDA (refer to Exhibits 23 and 24), driven by ARR growth and improving occupancy across key markets and players. Demand trends remain healthy across India in 2QFY27 and into October, supporting RevPAR growth (in the range of 10-12% for 2QFY27). We anticipate hotel companies to deliver healthy growth in FY27-28E, supported by higher ARR and resilient occupancy, led by diversified demand drivers.

* Our medium-term (2 to 3 years) outlook for the Indian hospitality sector remains positive, underpinned by sustained occupancy at elevated levels and healthy ARR growth. Favorable demand-supply dynamics and rising domestic travel, led by a healthy MICE activity and destination weddings, are expected to drive momentum.

* We reiterate our BUY rating on IH (TP: INR870), LEMONTRE (TP: INR140), and VENTIVE (TP:750).

For More Research Reports : Click Here 

For More Motilal Oswal Securities Ltd Disclaimer
http://www.motilaloswal.com/MOSLdisclaimer/disclaimer.html
SEBI Registration number is INH000000412