Indian Hotel Industry Shifts Gears: Growth Normalizes After Post-Covid Surge

The boom in the Indian hotel industry is now over, changing into a more normalized growth. This is an indicator of a maturing hospitality sector in the country as it signals the end of abnormal travel trends.
After a post-Covid boom, the Indian hotel industry's growth is now set to normalize, according to credit ratings agency ICRA. The agency has revised the outlook for the sector from 'positive' to 'stable,' and expects a revenue growth of 6-8% for the current financial year.
For the past three fiscal years, the industry has been clocking double digit revenue growth.
ICRA also expects the hospitality sector across India to maintain an occupancy rate of 72-74%. This projection is slightly higher than the 70-72% occupancy rate maintained in the past two financial years.
It added that the demand has been driven by domestic leisure travel, demand from MICE (meetings, incentives, conferences and exhibitions) and weddings.
According to financial services company Jeffries, the sector will continue to witness a sustained growth due to favorable demand-supply dynamics, growing domestic travel, and robust pricing power.
Both ICRA and Jeffries have addressed the recent geopolitical issues between India and Pakistan, with both stating that while the tensions disrupted travel in May, the impact was short-lived.
'While the terror attacks in April 2025 and consequent heightened uncertainties in North and West India in May 2025 had led to a surge in cancellation of travel and MICE, the impact has been largely temporary and localised. In recent weeks, there has

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