Indian Hotels, Lemon Tree, ITDC gain up to 4% on strong business outlook

The industry witnessed 18-20 per cent growth in the first half of Fy26 and is expected to clock mid to high teens growth in the second half as well

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Shares of hotel companies, including Indian Hotels Company Limited (IHCL), Lemon Tree Hotels, India Tourism Development Corporation (ITDC), and Chalet Hotels rallied up to 4 per cent on the BSE in Thursday's intraday trade on expectation of strong earnings in the second half of fiscal 2025-26 (H2FY26).

 

Among individual stocks, ITDC share price gained 4 per cent to ₹641.65, while Lemon Tree Hotels share price (₹167.85) and Chalet Hotels share price (₹961) rose 3 per cent each. Indian Hotels share price added 1 per cent at ₹737.50 on the BSE. In comparison, the BSE Sensex was up 0.5 per cent at 82,996 at 09:34 AM.

Hospitality sector outlook India 2025-26

 

According to Patanjali Keswani, CMD of Lemon Tree Hotels, the hospitality industry is expected to witness a strong growth in the October to March (H2FY26) period. The industry, he said, witnessed 18-20 per cent growth in the first half (H1FY26) and is expected to clock mid to high teens growth in the second half as well. 

 

While the GST rate cut would help in adding fuel to the growing demand, Keswani said the changes would also mean the company is set to lose the input tax credit which may hit the margins slightly to the tune of 2 per cent.

 

"The loss of input tax credit is expected to be offset by the strong demand in the upcoming quarters," he said.

 

Separately, the management of Indian Hotels Company said IHC continued its accelerated growth momentum in H1FY26 with 46 signings and 26 new openings which included 14 additions through the marketing and distribution partnership with Brij Hospitality and Clarks Group of Hotels. With this, the company has reached the milestone of over 250 operating hotels with 25,500 rooms.

 

In another development, Chalet Hotels has launched ATHIVA– a new-age premium lifestyle hospitality brand debuting with more than 900 keys across 6 hotels. The brand makes its debut with 'The Dukes Retreat Resort' (having 147 rooms and 11 elegant suites) to ATHIVA Resort & Spa, Khandala.   ALSO READ | Oberoi Realty shares soar 6% as Q2 profit jumps 30% YoY; details here

Brokerages on hotel sector

 

Analysts expect Q2FY26 to be a mixed bag for the Indian hospitality sector as travel disruptions caused by heavy monsoons amid a seasonally weak quarter may have led to a marginal occupancy dip at the industry level. 

 

"However, sustained average daily rate (ADR) growth and a sequential recovery from demand disruption seen in May-June'25 has been a silver lining. MICE (Meetings, Incentives, Conferences, and Exhibitions) demand has shown signs of recovery with robust corporate travel in Q2, which sets the stage for a strong H2FY26," according to analysts at YES Securities.

 

Going forward, the brokerage firm expects revival in occupancies, along with sustained ARRs, higher MICE activity, spike in domestic leisure travel, and a rebound in FTAs. 

 

Lower festive days in Q3, marked by preponed Diwali aeason should support domestic travel. Analysts maintain positive view on the Indian hospitality industry and remain constructive on the sustainable industry upcycle with favorable demand-supply scenario till FY29.

 

"The outlook for the second half remains strong with higher wedding days and holiday season expected to drive demand. The GST rate cut is positive for Lemon Tree as its majority of the portfolio is benefitted due to the revamp. Further, with 11000+ operational inventory and 19400+ total inventory, Lemon Tree Hotels is fast approaching its target of 20,000 rooms in FY26," ICICI Securities said in a note.

 

According to industry data, luxury segment demand-supply gap in the most of the key cities/towns is around 400-600bps over FY25-28E. Most of the hotel companies are looking to tap this opportunity by adding room and rebranding their existing hotels to premium brands. Chalet's Athiva brand will play a key role this segment. It will help realisation of the re-branded properties to increase in the coming years. Better mix will add on the margins in the near to medium term, the brokerage firm said.