Indian Hospitality Q1 Results Preview — 'Buy' Lemon Tree, 'Reduce' EIH Lists Yes Securities Among Others

NDTV Profit’s special research section collates quality and in-depth equity and economy research reports from across India’s top brokerages, asset managers and research agencies. These reports offer NDTV Profit’s subscribers an opportunity to expand their understanding of companies, sectors and the economy.

Yes Securities Report

Indian Hospitality sector witnessed impact of challenging macro environment due to heightened geopolitical tensions in May (Indo-Pak) and June (Iran-Israel). Despite headwinds, industry is likely to register sustained growth for Q1 FY26. This will be driven by sustained average room rate growth despite pressure on occupancy in May, robust rooms addition and benefit of lower base last year.

At an industry level, April witnessed strong momentum with 11-13% ARR growth YoY and 4-6% increase in occupancy, resulting in revenue per available room growth of 20-22% across the industry. May revealed a noticeable dip in occupancy YoY, reflecting seasonal softening combined with geopolitical tensions dampening travel demand.

As a result, occupancy declined by 1-3pp YoY, however, ARR sustained with 6-8% growth YoY. ARR for May reported MoM decline of 10-12%, exacerbated by heightened geopolitical tensions. Our industry checks suggest mixed trends for Jun’25, as demand was impacted in the first half of the month, primarily on account of free trade agreements.

This was partially offset by sharp spike in demand in the last week of June, suggesting gradual return to normalcy.

We believe FTAs have taken the major brunt of the overall demand slowdown in May and June. Hence, key metro cities / tier-1 markets will see sluggish demand trends in Q1 due to loss of business for 20-30 days from foreign guests and MICE/Weddings activities.

Further, upscale and above segments are likely to be most affected due to higher share of FTAs and MICE events. While players with diversified presence across segments and geographies are expected to report better RevPAR growth.

Thus, we expect EIH Ltd., Indian Hotels Company Ltd. and Chalet Hotels Ltd. to report RevPAR growth of 5-8% YoY, while Lemon Tree is expected to report ~11% RevPAR growth. Going forward, we expect revival in occupancies along with sustained ARRs, supported by higher MICE activity, spike in domestic leisure travel and rebound in FTAs.

We maintain our positive view on the Indian Hospitality industry and remain constructive on the sustainable industry upcycle as demand-supply scenario is likely to remain favorable till FY29.

Click on the attachment to read the full report:

DISCLAIMER

This report is authored by an external party. NDTV Profit does not vouch for the accuracy of its contents nor is responsible for them in any way. The contents of this section do not constitute investment advice. For that you must always consult an expert based on your individual needs. The views expressed in the report are that of the author entity and do not represent the views of NDTV Profit.

Users have no license to copy, modify, or distribute the content without permission of the Original Owner.