Will weddings and travel drive India’s hotel sector to new heights in the second half of FY26?

ET Intelligence Group: The domestic hotel sector is likely to witness growth driven by average room rate (ARR) in the coming quarters. After a quiet first half of the current fiscal marked by prolonged monsoon and geopolitical jitters, the second half is likely to see a recovery given the recovery in weddings and travel. Revenue per available room (RevPAR) growth is likely to remain in the mid to high single digits this year. Analysts’ top picks include Chalet Hotels, Indian Hotels, Lemon Tree Hotels and Apeejay Surrendra Park Hotels, with an upside of 18-42% from the current market price of these stocks. Geographically, hotels in Bengaluru, New Delhi and Hyderabad continued to outperform their peers, while those in Mumbai lagged due to relatively weaker RevPAR growth in the September 2026 quarter. However, events such as concerts by Linkin Park, John Mayer and DJ Snake, the T20 Cricket World Cup and multiple medical and tech conferences are expected to drive hotel demand in Mumbai in the second half of FY26.

India Ratings and Research estimates that large corporates will take room additions to around 10-12% in FY26, mainly through asset-light models such as management contracts and franchising. It expects occupancy rates to remain flat to marginally higher, supported by limited new supply in central business districts and the return of renovated rooms.

Analysts remain constructive on Chalet Hotels up 18% from Friday’s closing price of ₹871.6 due to its concentration in high-barrier business districts and exposure to demand from premium companies. The company could benefit from a recovery in conference and exhibition activities and limited incremental space supply in key micro markets. Although debt levels have increased due to continued capital expenditure, strong operating cash flows and improving occupancy rates are expected in the medium term.

For Lemon Tree Hotels, analysts expect a 25% upside from the closing price of ₹159.9, supported by aggressive asset-light expansion in Tier II and III cities. It has increased inventory largely through management contracts and licensing agreements, allowing it to scale.

Indian Hotels is likely to gain 20-27% from Friday’s closing price of ₹731.2, driven by strong brands, a diversified portfolio and a growing pipeline.