The holiday season is fast approaching and what’s the outlook for the hospitality sector? According to JM Financial, India’s hotel industry is poised for a slower second quarter in FY26. The brokerage pointed to a familiar trio of high base from the previous year, extended monsoon and normal seasonal weighing on demand for rooms and events.
“Industry performance in Q2FY26 is likely to moderate,” the report stated, citing “extended/excess monsoon rains affecting travel and MICE demand and seasonal softening.” Across JM Financial’s coverage universe, the brokerage house expects core revenues to increase by roughly 13% year-on-year (YoY), with Ventive, Chalet and IHCL set to deliver the strongest top-line gains.
Industry backdrop: Weather, weddings and tough comparison
The immediate cause of the slowdown, as per the brokerage, was that the comparable quarter a year ago benefited from an unusually large number of auspicious wedding dates and strong leisure demand. That makes growth appear muted even when business is positive.
JM Financial noted Hospitality Valuation Services (HVS) Anarock data showing pan-India Revenue Per Available Room (RevPAR) surging 6% year-on-year in August 2025, helped by roughly 7% Annual Recurring Revenue (ARR) growth, but July was flat and late and heavy rains in large parts of northern and western India offset September’s recovery.
Tracking performance
Performance of various hotels show different trends. Those that expanded inventory or opened new assets have held growth, while others show slower but steady progress.
Here are JM Financial’s estimates of the various parameters-
JM Financial on Indian Hotels Company
IHCL is expected to post total revenues of Rs 2,086.3 crore and earnings before interested, taxes, depreciation, and amortization (EBITDA) of Rs 578.9 crore in 2QFY26, representing about 14% and 15.5% growth respectively. Average room rates are forecast at Rs 15,980, up 11.6% year-on-year, and RevPAR at Rs 11,665, up 4.5%. Occupancy is seen easing to 73% from 78%, with northern properties particularly affected by monsoon disruptions. IHCL’s roughly 10% increase in room inventory over the past year should provide some revenue support
JM Financial on Chalet Hotels
Chalet is projected to report total revenues of Rs 876.9 crore and EBITDA of Rs 349.0 crore rises of about 17% and 24% year-on-year. The firm points to additions such as the Westin Rishikesh and extra rooms at the Bengaluru Marriott. Occupancy is expected to fall to 68.5% from 74%, hurt by weak Mumbai RevPAR and monsoon effects in Rishikesh. Chalet’s hospitality and office portfolios show mixed strength; residential sales remain volatile.
JM Financial on Ventive Hospitality
Ventive leads the pack in JM Financial’s preview. The brokerage expects total revenues of Rs 512.4 crore and EBITDA of Rs 194.7 crore growth of about 25% and 33% respectively. The ramp-up of Raaya by Atmosphere (Maldives), commissioned in July 2024, supports a jump in occupancy to 62% (from 59% in 1QFY26) and healthier margins, EBITDA margin projected at 38%, up from 35.6% last year.
JM Financial on The Leela Hotels
The Leela is expected to outperform peers on a same-store basis, with total revenues of Rs 319.8 crore and EBITDA of Rs 138.5 crore roughly 11–12% revenue growth and double-digit RevPAR gains led by Jaipur and Udaipur. RevPAR is forecast at Rs 13,583, a meaningful increase and a sign that leisure destinations are still drawing robust demand.
Jm Financial on Lemon Tree Hotels
Lemon Tree’s quarter looks modest. Total revenues of Rs 308.7 crore and EBITDA of Rs 139.2 crore, up about 9% and 6.5% respectively. Occupancy is expected to edge up to 69.5%, but margins will likely compress to about 45% from 46%, pressured by wage inflation and the monsoon’s impact on northern markets.
JM Financial on ITC Hotels
ITC’s numbers are steady but nothing spectacular. JM Financial projects total revenues of Rs 835.1 crore and EBITDA of Rs 227.6 crore about 7% growth for both. Occupancy should be around 72% with ARR up modestly. Under JM Financial’s revised rating scale, ITC has moved to REDUCE, reflecting limited valuation upside.
JM Financial on Juniper Hotels
Juniper is recovering from the prior year’s renovation and temporary shutdowns, this quarter should show that improvement. Revenues are forecast at Rs 227.2 crore and EBITDA at Rs 77.3 crore, with margins rising to 34% from 30% as base effects normalise, the report added.
Margins and costs
Margins across the sector are expected to be broadly stable year-on-year. JM Financial stated, “Hotels are unlikely to benefit from any operating leverage this quarter,” though many cost lines save employee costs for which annual increases and bonuses are due remain benign. Ventive and Juniper are the two names expected to register notable margin expansion this quarter, helped by base effects and recent openings.
Supply dynamics: expansion beyond metros
A structural theme endures, supply is catching up. Hotelivate figures cited in the note show proposed supply surpassing 1,00,000 rooms, a 58% rise over FY25, implying a 7.8% compound annual growth rate (CAGR) through FY30 (assuming a 78% active development rate). Almost 50% of planned supply sits in mid- to upper-midmarket segments, luxury comprises roughly 4.8%. Only 24% of the pipeline is for Tier-1 cities; growth is led by Navi Mumbai and Noida, while smaller cities and leisure destinations Udaipur, Dehradun, Lucknow are seeing accelerated additions. That matters, the next phase of revenue expansion will come from non-metro pockets as demand geographically broadens, as per the report.
Valuation stance and risks
JM Financial expects hotel room rates to keep rising steadily around 7–8% every year, and occupancy levels to inch up a little each year till FY28. Put together, that means the listed hotel companies it tracks could see their revenues grow about 13% annually and profits before interest and tax rise roughly 15% a year over the next three years.
Among the firms it follows, the brokerage sees the Leela, Ventive, and Juniper as the best positioned to benefit from this growth cycle. Indian Hotels, Lemon Tree, and Chalet are rated ‘ADD’, which signals moderate upside, while ITC Hotels is rated ‘REDUCE’, suggesting limited potential at current valuations.
The report also cautioned that the easy gains may be over. Room rates across India are already around 40% higher than before the pandemic, so there’s not much room left for another big jump. If the broader economy slows or business travel weakens again, that could hurt hotel revenues more than a seasonal dip. And as more hotels are built, especially in the mid-range segment, competition will increase, which could also pressure future prices and occupancy levels.
Why this quarter matters
This quarter is not a turning point so much as a recalibration. After two years of rapid recovery and pricing rebounds, the industry is experiencing a normal seasonal trough complicated by weather and a tough comparison base. The earnings print that follows will matter to investors not because it breaks the recovery, but because it will show whether margins and pricing have the resilience to withstand slower demand. JM Financial’s note made clear that the sector is healthier than years past, but growth from here will be steadier, not spectacular.