- India hospitality revenue expected to grow 7 to 9 percent.
- Premium hotel room rates expected to rise in FY27.
- West Asia conflict remains a key risk.
Premium hotel occupancy in India is expected to remain stable at 72 to 74 percent in fiscal year 2027, similar to fiscal year 2026 levels. Average room rates are expected to increase to $90.47- $92.57 in fiscal year 2027 from $82.26 - $89.4 in fiscal year 2026. Operating margins are projected at 34 to 36 percent, slightly lower than the 37 percent reported in fiscal year 2026 due to inflation and operating costs.
Foreign tourist arrivals, which have supported hotel demand, have declined due to geopolitical issues and security concerns. Arrivals fell 7.9 percent in 2025 and declined further in March and April, leading to a 9.1 percent year-over-year drop during the two-month period. In the first four months of 2026, arrivals were down 2.4 percent year over year.
"The West Asia conflict resulted in airspace closures and some moderation in discretionary travel, weighing on FTAs to India,” said Srikumar Krishnamurthy, ICRA’s senior vice president and cogroup head of corporate ratings. “However, the impact on the Indian hospitality industry remained contained as demand is largely driven by domestic travellers. First quarter is generally a lean season for the sector, which limited the effect of decline in FTAs despite some cancellations and deferrals in MICE activities.”
The impact on India’s hospitality sector remained limited as domestic travelers continue to drive demand. However, outbound travel from India was affected, falling 29 percent year over year in March and 22 percent in April. West Asia accounts for nearly half of India’s outbound travel. Overall, outbound travel grew to 32.9 million in 2025 from 26.9 million in 2019, supported by higher incomes and easier visa access.
A recent ICRA report raised its loss forecast for India’s aviation sector to $3.81 billion to $4.02 billion for fiscal year 2027.
