India Hotel RevPAR Gains Expected in Second Half of FY27

India’s hotel industry is set to accelerate its expansion in the second half of fiscal year 2027, driven by strong domestic leisure travel, a heavier wedding calendar, and recovering international demand, according to research from PhillipCapital [1]. With new supply remaining constrained across major markets, operators maintain room pricing power despite geopolitical headwinds and corporate budget reductions [1].

What is driving hotel demand across India in fiscal 2027?

Hotel demand across India is gaining strength from domestic leisure trips, an active wedding schedule, improving MICE business, and a seasonal uptick in inbound foreign arrivals starting in October [1]. According to reporting by Asian Hospitality, Singapore-based brokerage PhillipCapital predicts this combination will lift hotel operational momentum through the second half of fiscal year 2027 [1].

Asian Hospitality noted that corporate travel initially faced pullbacks due to tighter company budgets and geopolitical instability, while inbound travel experienced drops tied to conflicts in West Asia [1]. However, air traffic figures point toward stabilization: domestic passenger numbers grew 1.2 percent year over year to reach 86.3 million during the first quarter of fiscal 2027, whereas international traffic fell 10.2 percent to 17.9 million [1]. The drop in foreign passenger traffic narrowed sharply from 18.3 percent in February to 4.7 percent by June [1].

Why are leisure destinations outperforming business hotel markets?

Leisure destinations outpaced commercial hubs during the first quarter of fiscal 2027 because domestic vacationers sustained high travel volumes while corporate accounts restrained bookings [1]. Indian Hotels Co. Ltd. (IHCL) registered RevPAR gains in the high-20 percent range across resort locations in Rajasthan and Goa [1].

This performance gap between resort and business properties extended across multiple major hotel operators [1]. As detailed in Asian Hospitality's coverage of the PhillipCapital study, resort RevPAR outstripped city properties across all reported portfolios [1]:

How did leading Indian hotel operators perform in Q1 FY27?

Major operators posted revenue and operating profit growth in the first quarter of fiscal year 2027, supported by steady room pricing even where local occupancy numbers dipped [1]. According to data published by Asian Hospitality, Leela Palaces, Hotels and Resorts led top-line expansion with a 28 percent revenue increase and a 41 percent surge in EBITDA [1].

Indian Hotels Co. Ltd. generated a 15 percent rise in revenue alongside an 18 percent increase in EBITDA for the same quarter [1]. Meanwhile, ITC Hotels recorded an 8 percent RevPAR expansion, and Lemon Tree Hotels grew its portfolio occupancy by 314 basis points [1].

How will hotel supply constraints impact room rates?

Limited construction of new hotel properties across target Indian markets will maintain operator pricing power and support RevPAR over the coming quarters [1]. PhillipCapital's report emphasized that restrained room supply allows hoteliers to protect average daily rates regardless of short-term occupancy swings [1].

The brokerage expects overall lodging demand to stay positive through the second quarter before accelerating into the back half of the fiscal year [1]. Broader international policy efforts are also developing in tandem; on August 21, tourism ministers from BRICS member states adopted the Jaipur Declaration [1]. The agreement establishes multilateral cooperation across sustainable tourism initiatives, artificial intelligence integration, workforce skills, data exchange, investment, and cross-border travel facilitation [1].