Will India's hotel industry see a 16-21% earnings growth by FY28?
Synopsis
The Indian hotel industry is poised for remarkable growth, with earnings projected to rise by 16-21% over the next three years. Key factors include increasing room rates, improving occupancy, and contributions from various segments. Discover why industry experts are optimistic about this sector's future.
Key Takeaways
Projected earnings growth: 16-21% through FY28.
Key drivers: Rising room rates and occupancy improvements.
Corporate events: Significant revenue contributor.
EBITDA margins: Expected to expand by 140 basis points.
Valuations: Currently at a 17% discount to the five-year average.
Mumbai, Jan 30 (NationPress) The hotel sector in India is currently in a favorable position and is projected to achieve an earnings growth of approximately 16 to 21 percent over the next three years, fueled by increasing room rates and enhanced occupancy, according to a report released on Friday.
As per the analysis from HSBC Global Investment Research, the overall EBITDA for the industry is anticipated to experience a strong compound annual growth rate of 16 to 21 percent from FY25 to FY28, with average room rates expected to rise by 5 to 7 percent annually.
Additionally, the report highlights that improvements in occupancy levels in major urban and leisure markets, along with an increase in high-margin managed room inventory, will contribute significantly to this growth. Segments such as meetings, incentives, conferences, and exhibitions are projected to play a vital role, generating 30 to 45 percent of sector revenue.
The report indicates that EBITDA margins for the companies analyzed are likely to increase by roughly 140 basis points on average over the next three years. This margin expansion is attributed to enhancements in traffic mix, operational efficiencies, and a transition towards managed room inventory, typically associated with higher margins.
The report states, “The industry is in a favorable position. Demand remains robust, widespread, and sustainable, while the capacity is struggling to keep pace. Room rates have surged for four consecutive years, and occupancy is currently at an unprecedented high.”
Despite strong fundamentals, healthy margins, and robust balance sheets, valuations remain attractive, even as the number of foreign tourists is on the rise and domestic travel is thriving.
While the supply of rooms is having difficulty keeping up with demand, more capacity is being introduced. The CEO of Hilton Hotels remarked that India presents the most significant opportunity in the global hospitality sector over the next 10 to 30 years, as cited in the report.
Valuations are currently around a 17 percent discount compared to the five-year average, with recent weaknesses linked to geopolitical tensions and weather disturbances, thus creating a potential buying opportunity.
Point of View
I see India's hotel sector as a beacon of opportunity and resilience in a fluctuating global market. This growth reflects a broader trend of increasing domestic travel and international interest, positioning India as a key player in the global hospitality landscape.
NationPress
20 Jun 2026
Frequently Asked Questions
What factors are driving the growth of India's hotel industry?
The growth is primarily driven by rising room rates, improving occupancy levels, and the expansion of high-margin managed room inventory. Additionally, segments like meetings and corporate events contribute significantly to revenue.
How much is the EBITDA expected to grow?
The industry's EBITDA is projected to grow at a robust 16 to 21 percent compound annual growth rate over the period from FY25 to FY28.
What role do corporate events play in the hotel industry?
Corporate events, weddings, and other gatherings generate about 30 to 45 percent of the sector's revenue, highlighting their importance to overall growth.
