After three years of double-digit revenue expansion seen by the industry over the financial year 2023 to 2025, the Indian hospitality industry is expected to witness normalised revenue growth of 6 to 8 per cent in the current fiscal year (FY26) on a high base.

Icra has revised the outlook on the industry to stable from positive and has stated in its report that the pan-India premium hotel occupancy is likely to hold at 72 to 74 per cent in FY2026, slightly higher than the 70 to 72 per cent levels witnessed in FY2024 and FY2025.

The average room rates (ARRs) for premium hotels are projected to rise to Rs 8,200 to 8,500 in FY2026, after a healthy Rs 8,000 to 8,200 in FY2025 amid lagging supply additions and several hotels undergoing renovation, refurbishment and upgradation.

“After three years of strong demand, driven by favourable domestic leisure travel, demand from meetings, incentives, conferences and exhibitions (Mice), including weddings, and business travel, the growth in the Indian hospitality sector is forecast to normalise at 6 to 8 per cent YoY in FY2026,” highlighted Jitin Makkar, Senior Vice President and Group Head – Corporate Ratings, Icra.

The report noted that foreign tourist arrivals (FTAs) to India are expected to remain muted in the next few months in the aftermath of the terror attacks, but are estimated to witness a gradual recovery thereafter.