Hotel Industry Growth May Cool Down in Q3 as Base Normalises
Jefferies reports that India's hotel industry growth may slow in Q3 as the base normalises, though a strong 2027 wedding calendar offers a bright future.
The Indian hospitality sector, which has been riding a wave of strong momentum, may see a moderation in its growth rates during the third quarter. According to a recent report by brokerage Jefferies, the growth in revenue per available room (RevPAR) is expected to ease as the comparison base from the previous year normalises.
September Momentum Remains Robust
Despite the predicted slowdown for the coming quarter, the industry showed significant strength in September. The brokerage highlighted that momentum remained high, fueled by a combination of resilient domestic travel demand, higher room rates, and a surge in meetings, incentives, conferences, and exhibitions (MICE) activity.
The data reveals a steady climb in performance over the recent quarters:
- September 2026: RevPAR increased by 19 per cent year-on-year.
- Q2 FY27: Growth stood at 18 per cent.
- Q1 FY27: Growth was recorded at 16 per cent.
- Q4 FY26: Growth was between 7-8 per cent.
This September surge was primarily driven by a 13 per cent year-on-year rise in average daily room rates and an approximate 6 per cent increase in occupancy levels. The recovery of foreign tourist arrivals also played a supporting role in these figures.
Major Events and City-Wise Performance
High-profile events played a pivotal role in boosting hotel occupancy and pricing, particularly in major metropolitan hubs. The report noted that a busy calendar featuring Semicon India, the Global Fintech Fest, and BRICS significantly ramped up MICE activity, benefiting hotels in Delhi and Mumbai.
The growth was not uniform across the country, with some regions far outperforming others:
- Delhi: Led the charge with a massive 37 per cent year-on-year RevPAR growth.
- Rajasthan: Followed closely with a 33 per cent increase.
- Mumbai and Hyderabad: Both recorded growth in the range of 19-20 per cent.
- Bengaluru: Saw a growth of 14 per cent.
- Goa: Experienced a slowdown, with growth dipping to 3 per cent following a strong period between May and August.
The Road Ahead: Weddings and FY28 Outlook
While the third quarter may see a dip in the pace of growth due to less favourable year-on-year comparisons, Jefferies remains constructive on the sector's long-term prospects. The brokerage pointed toward a specific catalyst for future stability: the wedding calendar.
“As the base normalizes in 3Q, growth may ease from current highs, though a strong CY27 wedding calendar should support FY28 trends,” Jefferies stated.
The outlook for the 2028 financial year will largely depend on whether the sustained demand for travel and the anticipated wedding boom in 2027 can offset the impact of a higher comparison base. For now, the industry remains in a healthy position, though the upcoming quarter will be a critical period to monitor for signs of normalisation.