India’s Hotel Sector: Analyzed
Key Points
- Strong growth expected in India’s hotel sector FY26-27.
- Increased MICE activity and airport opening drive demand.
- Luxury segment growth: 11.5% CAGR expected in Mumbai.
- Hotel companies to maintain strong average room rates.
- Established players benefit: Chalet, IHCL, Lemon Tree, SAMHI.
- Overall sector outlook remains favorable for growth.
India’s hotel industry is predicted to perform very strongly during the second half of Financial Year 2026. This positive outlook is based on several key factors, including a busy calendar of events, a surge in Meetings, Incentives, Conferences, and Exhibitions (MICE) activities, and the opening of the new Navi Mumbai International Airport (NMIA). Motilal Oswal, a leading brokerage firm, highlighted these points in a recent analysis.
The brokerage anticipates that demand will rise significantly. This growth is fueled by the opening of NMIA on December 25, 2025. The airport, a joint project by the Adani Group and CIDCO, will initially handle 20 million passengers and 23 daily departures, with full 24/7 operations planned for February 2026.
Currently, there are only about 1,539 branded hotel rooms in Navi Mumbai. With the new airport, a large amount of hotels, including 700 planned keys from SAMHI, and 350 from Radisson, are being built in the area. Hotels like IHCL, Lemon Tree, and Chalet Hotels are already positioned to benefit from this increased demand.
Beyond the airport, Mumbai’s hotel market is also poised for growth. Factors contributing to this include a large number of auspicious wedding dates, a lot of concerts, and the Cricket World Cup. The Jio World Convention Centre continues to draw many business and leisure travelers to the BKC-Kurla area, and there is limited supply there.
The overall outlook for the Indian hotel industry remains excellent. Mumbai accounts for nearly 15% of India’s hotel revenue and dominates the luxury segment. The supply of luxury rooms is expected to grow at a slower pace than demand, allowing hotel companies to maintain higher prices. Major hotel developments, such as Leela entering BKC and IHCL redeveloping Taj Bandstand, are designed to take advantage of this.
Even with disruptions caused by airline issues, the hotel industry has been able to maintain its performance. Because of this, Motilal Oswal recommends buying Indian Hotels and Lemon Tree Hotels.
“Ultimately, the hotel sector’s strength reflects India’s growing economy and travel trends.”
