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The Indian hospitality industry witnessed a volatile 4QFY26, with strong momentum in January–February offset by business impact in March due to geopolitical tensions. Key takeaways below highlight the current scenario and outlook.

4QFY26 is shaping up as a mixed quarter for the hospitality sector, with strong momentum in January–February offset by a business impact in March due to geopolitical tensions, causing elevated airfares and significant flight disruptions. These disruptions have led to widespread cancellations, particularly impacting inbound travel and resulting in flat-to-mild negative occupancy and mid-single-digit RevPAR growth YoY, majorly led by ARR growth. Overall, the quarter is expected to remain muted due to external headwinds.

As the Gulf route accounts for ~30% of India’s international flows, airspace disruption amid conflict has restricted inbound travel in India through these routes. However, the recently declared two-week ceasefire, coupled with ongoing peace talks, is expected to end the economic and travel disruptions, paving the way for a recovery in the Hotel industry. 1QFY27 is anticipated to be a healthy quarter, both on a sequential and YoY basis, driven by a recovery in occupancy ratio, passenger traffic, and low base.

According to our channel checks, the greater business impact has been in the form of occupancy declines, driven by higher cancellations at CHALET, VENTIVE, LEELA, ITCHOTELS (more than 30% FTA dependence), and IH (FTA dependence of 25-30%). However, hotels with higher domestic exposure, such as LEMONTRE and PARK, are likely to see a lower impact.

IH is expected to witness ~6% RevPAR growth, largely supported by ARR. However, revenue growth (+11% YoY) is projected to be higher, led by recent room additions, higher management fees, and brand integrations. Despite short-term disruptions, the medium-to-long-term outlook remains strong, driven by an expanding pipeline, favorable demand-supply dynamics, rising MICE activity, and brand expansion, supporting healthy earnings growth.

During the same period, LEMONTRE remained resilient due to its domestic focus, benefiting from steady demand and a shift toward domestic travel, with ~6% RevPAR growth largely driven by ARR. Going ahead, growth will be supported by its expanding pipeline, completion of renovations, rebranding of existing hotels, and expansion of the Aurika portfolio.

VENTIVE’s India business is expected to remain soft due to high FTA dependence, with modest ~5% RevPAR growth and declining occupancy, while strong Maldives performance—driven by demand momentum and USD appreciation—should deliver ~18% TrevPAR growth, offsetting domestic weakness. Medium-term growth will be driven by aggressive expansion across key markets, scale-up in Pune, and diversification into membership-led hospitality, supporting strong earnings growth.

IndiGo faced significant headwinds from this disruption in Mar’26, with elevated ATF costs and INR depreciation driving higher expenses, alongside a pause in international operations. However, the medium-to-long-term outlook remains strong, supported by its dominant domestic franchise (63.1% market share), rising air domestic travel demand, and aggressive international expansion (double of wide-body aircraft orders and destinations), which provides a natural hedge to USD-linked costs and supports margin recovery.

We remain positive on the Indian hotel sector over the medium term, led by strong structural tailwinds, favorable demand-supply dynamics, and rising domestic travel—fueled by a healthy pipeline of MICE, weddings, cultural events, and corporate travel. We reiterate our BUY rating on IH (TP INR800), LEMONTRE (TP: INR160), VENTIVE (TP: INR730), and INDIGO (TP: INR5500).

Strong start in 4QFY26 derailed by March disruptions

The hospitality sector’s 4QFY26 performance has been a quarter of two halves, with strong momentum in January–February offset by West Asia conflict-led business impact in March.

Over 23,000 flights have been cancelled across the Gulf region, airfares on key European routes to India have nearly doubled, and travel expenses may increase by 20–30% in the near term. Hotels in major cities have witnessed a surge in room cancellations as international travel slows. The Gulf serves as the world's most critical aviation transit hub, and any disruption there has far-reaching effects across all international travel corridors connecting to India.

IndiGo cancelled over 1k international flights in Mar’26, with seven Middle East destinations suspended until at least Mar’28, including Doha, Kuwait, Bahrain, Dammam, Fujairah, RAK, and Sharjah.

According to our channel checks, the greater impact on business has been in the form of occupancy decline due to higher cancellations in CHALET, VENTIVE, LEELA, ITCHOTELS (more than 30% FTA dependence), and IH (FTA dependence of 25-30%). However, hotels with higher domestic exposure, such as LEMONTRE and PARK, are projected to see a lower impact.

This has resulted in flat-to-mildly negative occupancy (OR) and mid-single-digit RevPAR growth, majorly led by ARR.

Overall, 4QFY26 is expected to be muted, with strong Jan–Feb offset by a weak March, driven by flight cancellations and geopolitical issues.

Near-term outlook appears healthy, led by a low base and market recovery

As the Gulf route accounts for ~30% of India’s international flows, airspace disruption amid conflict has restricted inbound travel in India through these routes.

However, the recently declared two-week ceasefire, along with ongoing peace talks, is expected to end the economic and travel disruptions over the preceding six weeks, leading to a recovery in the Hotel industry.

This ceasefire is expected to restore airspace operations from Dubai, Abu Dhabi, and Doha, which serve as key transit gateways for European and American tourists. According to an Industry report published by Rubix, the FTAs are projected to account for ~30% share in total hospitality revenue in FY26. FTAs, who typically have higher spending power and a preference for luxury services, are vital contributors to demand for premium rooms. Hence, a recovery in FTAs should translate into better yields for hotel companies.

1QFY27 has a low base due to tragic incidents like the Pahalgam attack (April’25), Operation Sindoor (May’25), and the Ahmedabad plane crash (June’25), which occurred in 1QFY26. These incidents affected overall traveler sentiment, ultimately impacting the Hospitality industry. At least 25 airports in Northern and Western India were shut down for ~4 days during May’25 (IH’s growth for 1QFY26 was impacted by ~2-2.5% due to these tragic incidents).

Moreover, according to our channel checks, Apr’26 performance is anticipated to be slightly better than Mar’26. Additionally, the recently announced ceasefire will temporarily boost hotel and travel demand in Apr’26.

IH: Geopolitical headwinds weigh on demand and margins despite steady RevPAR growth

As one of the largest Hotel players in India (~373 operational hotels and 255 hotels in pipeline) with ~25-30% of its clientele comprising international inbound tourists, IH is likely to see some impact from the ongoing West Asia conflict, which could hinder inbound tourism to India.

We expect the company to deliver ~6% RevPAR growth in 4Q, largely driven by ARR growth, while occupancy is expected to remain flattish amid cancellations in Mar’26.

The company added new rooms in the last few months, including two hotels in Ekta Nagar in 3QFY26 and one new hotel in Banaras in mid-Feb’26. Moreover, the integration of brands such as Clarks and Atmantan, coupled with increased management hotel signings and openings over the last few months, is expected to result in YoY growth in revenue.

Marquee greenfield projects such as Taj Bandstand, Taj Lakshadweep, Taj Shiroda, Taj Ranchi, Gateway Aguada Plateau, Ginger Goa MOPA, and Taj Pushpabanta Palace are expected to strengthen IH’s presence in the luxury, lifestyle, and leisure segments. Based on our ARR and occupancy estimates at peak operations, these properties are expected to contribute 13% of FY28 consolidated revenue and 16% of consolidated EBITDA.

Following the re-imagination of the Ginger brand in FY18-19, Roots reported a revenue CAGR of ~18% over FY20-25, along with a significant jump in margins from ~22.9% in FY20 to ~43% in FY25. Ginger is expected to solidify its market leadership in the mid-scale segment, led by strategic additions of new locations and the rebranding of ANK and Pride Hotels into the Ginger brand.

Baring the short-term disruption expected in 4QFY26 with some spillover in 1QFY27 (however, we expect 1Q to deliver healthy growth on a low base), we expect the medium-to-long term momentum to remain healthy, led by: 1) a strong room addition pipeline in owned/management hotels (5,940/24,630 rooms), 2) continued favorable demand-supply dynamics, 3) increasing MICE activities in India, and 4) integration of newly acquired brands (Clarks, Brij, and Atmantan), with a continued focus on further additions to its brandscape.

We expect IH to post a CAGR of 13%/18%/19% in revenue/EBITDA/adj. PAT over FY26-28. The company is currently trading at 22x on FY27 EBITDA, i.e. 30% discount to its EV/EBITDA multiple (~31x) at peak market price of INR895 (30 Dec’24). Further, the company is trading at a discount of 9% to its 10-year average EV/EBITDA multiple (24x).

LEMONTRE: Domestic focus drives resilience

LEMONTRE is expected to see the least impact among peers, supported by its limited exposure to expatriate guests and steady domestic bookings compared to peers that have a higher dependence on expatriate demand.

Overall, we expect the company to witness mid-single-digit RevPar growth YoY (~6%), largely led by ARR growth. On margins, there can be some pressure as a result of increased input costs.

With minimal direct impact of this conflict, LEMONTRE is expected to maintain a healthy growth momentum going forward, led by: 1) the improving ARR of Aurika Mumbai, 2) accelerated growth in management contracts (pipeline of ~9,364 rooms), 3) the timely completion of the portfolio’s renovation (by mid of FY27) and major technological upgrade, leading to an improved OR, ARR, and EBITDA margin for the company, 4) rebranding of existing hotels, and 5) expansion of the Aurika portfolio.

We expect LEMONTRE to post a CAGR of 11%/14%/23% in revenue/EBITDA/adj. PAT over FY26-28, with RoCE improving to ~18.7% by FY28 from ~11.7% in FY25.

LEMONTRE has seen significant corrections (~25%) post the restructuring announcement on 9th Jan’26 and ongoing West Asia conflict taking its valuation down to 13x EV/EBIDTA on FY27 (i.e. 33% discount to EV/EBITDA multiple (20x) at peak market price of INR180 (8 Sept’25). Further, the company is trading at a discount of 38% to its 10-year average EV/EBITDA multiple (21x).

VENTIVE: India’s weakness offset by Maldives’ strength; F&B stable

VENTIVE’s India business is likely to deliver a softer performance compared to earlier expectations, largely due to its substantial reliance on FTAs. Consequently, company occupancy in the India business is expected to decrease YoY. As such, we expect RevPAR growth of 5% in 4QFY26 in the India business.

However, VENTIVE’s international business (Maldives) is expected to deliver a strong performance in 4QFY26, supported by robust TrevPAR growth (~18%) and depreciation of the INR vs USD. This is likely to offset the softer performance in the India business.

Further, the company has a higher combination of PNG and induction, resulting in no impact on the F&B segment due to LPG shortage.

In the medium-term, VENTIVE’s growth is expected to be driven by: 1) aggressive expansion across high-potential domestic markets, excluding Bengaluru and Pune (to rise from 142 keys in FY26 to 1178 by FY30E), thereby reducing dependence on Pune (from 53% in FY25 to 43% in FY28), and 2) benefits from infrastructure tailwinds and limited room supply in the city. The company is additionally diversifying into membership-led hospitality (acquired Soho Mumbai).

Thus, according to proforma financials, we expect VENTIVE to expand at a CAGR of 21%/20%/42% over FY26-28. The company currently trades at EV/EBITDA of 12x on FY27 EBITDA, i.e. 26% discount to its EV/EBITDA multiple (~17x) at the peak market price of INR840 (13th May’25).

INDIGO: Recovery in passenger traffic to boost demand

Escalating geopolitical tensions have significantly disrupted IndiGo’s international operations, impacting revenues through flight cancellations on routes that contributed ~18–20% of its FY25 revenue, along with weaker forward bookings amid uncertainty despite resilient underlying demand.

The situation is further aggravated by a sharp rise in crude prices (driving ATF costs higher) and INR depreciation (60-65% of the cost is USD linked), materially pressuring margins, with only partial offset from fuel surcharges.

Following the recent announcement of a two-week ceasefire, amid expectations of de-escalation in the West Asia conflict, crude prices have eased. Moreover, the resumption of ME airspace is expected to support a strong recovery in international passenger traffic and reduce operating costs. Higher international flights (high-paying customers) will act as a natural hedge for IndiGo against its significant USD exposure.

With these combined headwinds, we expect 94% YoY decline in 4QFY26 EBITDAR.

However, we remain confident in the company’s medium-to-long-term growth strategy as its domestic network remains the backbone of its operations (63.1% domestic market share), supporting India’s travel and tourism evolution (led by rising disposable incomes and higher travel spending). Meanwhile, the expansion of international connectivity (IndiGo has also doubled its A350 widebody order to 60 aircraft vs its earlier 30 aircraft order, and has doubled its international destinations to 43) provides a natural hedge while also supporting margin expansion.

We expect IndiGo to post a CAGR of 11%/11%/5% in revenue/EBITDA/adj. PAT over FY25-28, with RoCE improving to ~25.6% by FY28 from ~22.5% in FY25

Valuation and view

Our medium-term outlook for the Indian hospitality sector remains positive, underpinned by sustained occupancy at elevated levels and healthy ARR growth. Strong structural tailwinds, favorable demand-supply dynamics, and rising domestic travel, led by a higher MICE activity, are expected to drive momentum.Overall, hotel companies under our coverage are trading at a 26–33% discount to peak valuations.

 We reiterate our BUY rating on IH (TP: INR800), LEMONTRE (TP: INR160), VENTIVE (TP: INR730), and INDIGO (TP: INR5500).

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