Home / Business and Economy / Indian Hotels: Domestic Travel Drives Q2 Growth
Indian Hotels: Domestic Travel Drives Q2 Growth
11 Aug
Summary
- Domestic leisure travel and conferences fueled hotel industry growth.
- Foreign tourist arrivals significantly decreased from January to April 2026.
- Mid-cap hotel stocks trade at a discount to the industry leader.
The Indian hospitality sector saw a robust performance in the June 2026 quarter, largely propelled by domestic leisure travel and a rise in MICE (Meetings, Incentives, Conferences, and Exhibitions) events. This domestic surge effectively counteracted a sharp decline in foreign tourist arrivals, which fell from approximately 1 million in January 2026 to 534,000 by April 2026, a downturn attributed to international air travel disruptions stemming from the Middle East crisis.
Mid-cap hotel chains, including Chalet Hotels, The Leela Palaces, Ventive Hospitality, and Lemon Tree, demonstrated notable operational improvements. Chalet Hotels increased average daily rates by 8.5%, while The Leela Palaces saw a 459.8% net profit surge, boosted by rebranding and MICE business. Ventive Hospitality reported a 13.8% RevPAR increase, and Lemon Tree capitalized on value-for-money travel, achieving a 19% net profit rise.
These mid-cap companies are currently trading at a valuation discount of 28% to 46% compared to the industry leader, The Indian Hotels Company Ltd. Despite facing geopolitical uncertainties and potential economic slowdowns, the hotel industry is poised for significant expansion, with substantial room additions planned over the next few years, projecting the broader travel market to reach $523 billion by 2034.
