Cautious optimism in India's hospitality and travel sector amid West Asia crisis

New Delhi: Travel companies and hotel chains in India are cautiously optimistic about performance in the current quarter, with most expecting buoyant domestic travel, the BRICS summit next month and a pickup in conferences and business events to offset the impact of the West Asia conflict.

“July delivered a strong start to the quarter for Radisson Hotel Group’s South Asia portfolio. August is currently tracking broadly in line with last year, while September is showing stronger momentum, with average room rates across our portfolio pacing more than 25% higher year-on-year,” said Nikhil Sharma, managing director and chief operating officer (South Asia) at Radisson Hotel Group.

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With booking windows getting shorter, hoteliers expect demand to continue building through August and accelerate in September.

“This should be supported by corporate travel, MICE (meetings, incentives, conferences and exhibitions), social events, conferences and continued domestic leisure demand. Our presence across business hubs, leisure destinations, pilgrimage centres and emerging tier two and three markets gives us confidence in the outlook for the remainder of the quarter,” he said.

In Delhi, room rates at The Lodhi, Shangri-La and JW Marriott in Delhi are currently around Rs 1.5 lakh, Rs 89,000, and Rs 57,000 per night, respectively, for September 12, the first day of the BRICS Summit, while The Leela Palace, The Oberoi and Taj Palace are fully booked for that date.

Mahesh Iyer, managing director and chief executive at Thomas Cook (India), said short-haul international travel and the domestic segment continue to grow in double digits in the ongoing quarter even though they don’t compensate for the volumes generated in long-haul travel.

“But the growth in these segments is encouraging. We expect this trend to play out for the remainder of the year,” he said. “If we look at forward bookings, corporate confidence for the MICE segment seems to be coming back. A lot of MICE queries in the April to June quarter led to conversions in June.”

Thomas Cook (India) doesn’t expect a full recovery of its Middle East businesses by December 2026. “We expect about 50-60% of that volume to come back by December,” said Iyer.

MakeMyTrip group chief executive Rajesh Magow on Monday said that while there are short-term headwinds due to the West Asia conflict impacting oil prices, the company remains “cautious” about the near-term environment while staying positive about structural drivers for long-term growth in the sector.

“We will continue to navigate the near-term challenging environment by tapping into growth opportunities in our non-air ticketing segments,” said Magow. “We continue to curate pilgrimage plus leisure itineraries, short duration holidays, and drive-down breaks. These formats are increasingly becoming popular for customers looking for convenient, affordable, and experience-led travel closer to home.”

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Ratings agency ICRA on Tuesday projected revenues of the Indian hospitality industry to grow by 7-9% year-on-year in 2026-27, following an estimated 11% expansion in 2025-26 (based on 15 large premium hotel companies, which account for the majority of the sector’s revenues). "Going forward, domestic demand is likely to be supported by steady leisure travel, stable corporate travel and MICE demand. However, downside risks persist from any escalation in geopolitical tensions, which could affect fuel prices, inflation and overall travel sentiment," said Srikumar Krishnamurty, senior vice president and co- group head, Corporate Ratings, ICRA Limited.

"Corporates are increasingly favouring integrated venues that offer accommodation, meeting facilities and ancillary experiences under one roof. Accordingly, MICE and corporate event-led demand is expected to remain stable in the ongoing quarter, particularly across upscale, upper-upscale and luxury hotels," he added.

ICRA anticipates pan-India premium hotel occupancy to remain at 72-74% in 2026-27, similar to 2025-26 levels, while average room rates (ARRs) for premium hotels are projected to increase to Rs 8,600-8,800 in 2026-27 from Rs 8,200-8,500 in 2025-26. The agency’s sample set is likely to report operating margins of 34-36% in 2026-27, broadly similar to the 37% reported in 2025-26.

Sharma said the BRICS Summit in September, together with the broader calendar of conferences and corporate events, should further strengthen demand across city hotels, particularly in Delhi-NCR. “Beyond the immediate commercial impact, such events reinforce India’s positioning as a global MICE destination and generate incremental business for transport providers, restaurants and other allied services,” he said.