India’s hospitality industry is expected to record 7 to 9 percent revenue growth in FY27, after an estimated 11 percent expansion in FY26, rating agency ICRA said.The projection is based on 15 large premium hotel companies that account for most of the sector’s revenue. Growth is driven by strong domestic travel demand, ICRA said.Premium hotel occupancy is expected to stay at 72 to 74 percent in FY27, similar to last year. Average room rates should rise to Rs 8,600-8,800 from Rs 8,200-8,500.

Operating margins are projected at 34 to 36 percent, near last year’s 37 percent.Foreign tourist arrivals fell 7.9 percent in 2025 and dropped 5 percent and 14 percent year-on-year in March and April 2026. ICRA said the West Asia conflict and airspace closures weighed on inbound travel.The agency flagged inflation and prolonged geopolitical tension as key risks to travel sentiment. Limited new room supply in key markets should keep pricing power with operators if demand holds through the peak October-March season.