ICRA Projects Hospitality Occupancy at 72-74% for FY27, Cites Geopolitical Risks

New Delhi: Investment information and credit ratings agency ICRA estimates hospitality industry occupancy at 66-68% in the first two months of financial year 2027 and expects it to remain at 72-74% in financial year 2027 as per estimates shared with ET. However, if the West Asia conflict prolongs and leads to second-order effects on domestic demand, it could exert pressure on ICRA's current estimates, the agency said.

Sruthi Thomas, vice-president and sector head for corporate ratings at ICRA, said the April-to-June quarter in the last fiscal had witnessed moderation owing to the cross-border escalations.

"The year-on-year impact remains limited so far. However, the evolving geopolitical situation remains a key monitorable, with respect to its potential implications on business travel expenditure," said Thomas, adding that the disruptions arising from LPG shortages have been largely contained, aided by the availability of piped gas infrastructure and adoption of alternative cooking solutions.

As per Thomas, a potential shift from international travel could lead to increased spending on domestic travel in the near term.

ET reported last week that despite geopolitical developments and high fuel costs impacting travel sentiments in the ongoing quarter, hotel chains are seeing a double-digit revenue growth over the corresponding period of the previous fiscal year. IHCL said it is on course to maintain a topline growth of 12-14% over last year in line with its guidance.

Marriott International said it saw double-digit revenue per available room in growth and June is tracking in a similar fashion. Radisson Hotel Group is seeing a growth of 18% over last year in the ongoing quarter.

ICRA estimates that 26-28% of leisure-bound tourists from India travelled to West Asia in recent years, accounting for approximately 3.7 million travellers.