Hotel industry in India likely to grow up to 12% in FY26
- IBEF
- March 5, 2026
India’s hospitality sector is expected to record steady revenue growth in FY26, with the hotel industry projected to expand by 9–12% year-on-year, according to a report by rating agency ICRA. The outlook for the sector remains favourable despite the high FY25 base, supported by sustained demand across multiple segments of the travel and tourism ecosystem. Domestic leisure travel, meetings, incentives, conferences, and exhibitions (MICE) activities, weddings, and stable corporate travel demand are among the key drivers supporting the industry’s growth. These factors have helped strengthen occupancy levels and revenue performance across hotel segments in the country, reflecting the continued recovery and expansion of the hospitality sector.
In addition, premium hotel room inventory across 12 key cities is expected to expand at a compound annual growth rate (CAGR) of 5–6% during FY25–FY26, while demand growth is estimated to remain higher at around 8–9%. This demand–supply gap is likely to persist over the next two to three years, supporting healthy occupancy and pricing levels for premium hotels. The report further highlighted that operating margins for the premium hotel segment are expected to remain strong at 34–36% in FY26, broadly in line with 35.8% in FY25 and significantly higher than the 20–22% levels recorded in the pre-COVID period. Healthy cash accruals over the past two years have strengthened balance sheets, enabled deleveraging, and improved debt coverage metrics across hotel companies.
Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.
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