Rating agency ICRA has said that India's hospitality industry is projected to record 7 to 9 per cent year-on-year revenue growth in the current financial year (FY27), following an estimated 11 per cent expansion in FY26. The projection is based on ICRA's analysis of 15 large premium hotel companies, which account for a majority of the sector's revenues.
According to ICRA, pan-India premium hotel occupancy is likely to remain at 72-74 per cent in FY27, in line with FY26 levels, while Average Room Rates (ARRs) for premium hotels are projected to increase to Rs 8,600-8,800 in FY27 from Rs 8,200-8,500 in FY26. ICRA's sample set is likely to report operating margins of 34-36 per cent in FY27, broadly similar to the 37 per cent reported in FY26.
However, inflationary or operational pressure arising from the West Asia conflict, along with a potential weakening in travel sentiment if the situation persists, remain key downside risks. Foreign Tourist Arrivals (FTAs), comprising foreign nationals visiting India and excluding Non-Resident Indians (NRIs), have historically supported travel demand for the Indian hospitality industry.
Besides, Srikumar Krishnamurthy, Senior Vice President and Co-Group Head - Corporate Ratings, ICRA, said ‘The West Asia conflict resulted in airspace closures and some moderation in discretionary travel, weighing on FTAs to India. FTAs contracted by 9.1 per cent YoY during March-April 2026 and by 2.4 per cent YoY in 4 months of CY2026 (January-April). However, the impact on the Indian hospitality industry remained contained as demand is largely driven by domestic travellers’.
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