New Delhi: India's listed hotel companies shrugged off a year marked by military conflict, airline disruptions and geopolitical tensions to post robust earnings in FY26, even as investors soured on the sector and hotel stocks corrected sharply.
The year saw multiple shocks to travel demand—from Operation Sindoor and and flight disruptions at IndiGo during the peak tourist season to the West Asia war—but leading hotel operators including Indian Hotels Co. Ltd (IHCL), EIH, ITC Hotels, Lemon Tree Hotels and The Leela Palaces, Hotels and Resorts reported higher revenues and profitability as room rates remained firm and fresh supply was absorbed across markets.
IHCL, India's largest hotel company by room inventory, reported consolidated revenue from operations of ₹9,689 crore,up 16% and a record profit after tax (PAT) of ₹2,247 crore, up 10.2%.
Lemon Tree Hotels reported 13% revenue growth and a 19% increase in profit. ITC Hotels saw a 29% jump in PAT.
Profit growth varied significantly depending on asset maturity, financing costs, expansion strategies and in some cases labour code changes.
Leela was among the standout performers, with profit after tax surging more than eightfold to ₹406 crore from ₹47 crore, aided by stronger pricing and debt reduction. Chief executive officer Anuraag Bhatnagar recently told Mint that same-store RevPAR grew 14% in FY26, significantly ahead of the broader luxury segment.
Industry fundamentals remained supportive through FY26 despite periodic disruptions to travel demand. According to a Kotak Institutional Equities report on hotels and restaurants, RevPAR—a key measure of hotel performance that combines occupancy and room rates—rose an avearge 7.4% acroos the industry during the year to about ₹5,700, driven largely by a similar increase in average room rates, while occupancy remained healthy at around 65%.
“For hotel companies, net profit margins of 18-22% are very good…Investors are also now focusing on earnings quality, balance-sheet strength, cash generation and the visibility of future growth," said Rattan Keswani, an industry veteran who formerly served as the deputy managing director of Lemon Tree Hotels and president of Trident Hotels (The Oberoi Group).
Some companies are still absorbing newer assets, while others have reached a more mature operating run rate, he added. Occupancy levels, average room rates, and RevPAR continued to grow in the fiscal year, Keswani added.
EIH, which operates the Oberoi and Trident brands, posted an Ebitda of 3% while revenue per available room (RevPAR) across its flagship Oberoi portfolio rose 10.4%, despite a 14%decline in reported profit.
EIH managing director and chief executive officer Vikram Oberoi acknowledged the disruptions but said industry fundamentals remained intact. "Our Ebitda performance has been the highest in our history… Our hope is that things stabilize soon,” he added.
Stock performance
Despite strong operating performance, hotel stocks corrected during the year, particularly after the outbreak of conflict in West Asia. Shares across the sector declined between 15% and 35% as earnings growth fell short of elevated investor expectations and valuation multiples compressed.
Collectively, the leading listed hotel companies command a market capitalization of roughly ₹1.5 trillion,with IHCL accounting for the largest share.
The sector's earnings remained healthy but fell short of the lofty expectations investors had built into valuations at the start of FY26, said Prashant Biyani, vice president (Institutional Equity) at Elara Capital. “Combined with a growing number of hospitality companies tapping capital markets and a broader loss of momentum in hotel stocks, valuation multiples have compressed across the sector,” he added.
However, Akash Datta, managing director (South Asia) at hospitality consultancy HVS Anarock said the recent moderation in hotel stock prices should not be misconstrued as a weakening of underlying sector fundamentals. He said investors are becoming more selective as the sector transitions from an extraordinary post-pandemic recovery phase to a more normalised growth cycle.
