ICICI Securities, the fourth largest broker in terms of FY26 active clients, in a fresh note on Wednesday retained 'Buy' rating on six hotel stocks namely Indian Hotels Co Ltd, ITC Hotels, Leela Palaces Hotels & Resorts Ltd, Lemon Tree Hotels Ltd, Chalet Hotels and Brigade Hotel Ventures Ltd, citing positive medium-term demand outlook. The domestic brokerage said April and May forward bookings have seen a year-on-year (YoY) dip owing to higher airfares and the postponement of a few MICE events, but maintained a high-single-digit average room rate (ARR) of 6–8 per cent across hotels over FY26–28.

"Barring an extended geopolitical impact on demand, the sector could continue to demonstrate the resilience it showed in H1FY25, with robust balance sheets across our listed coverage universe helping mitigate risks," ICICI Securities said. It did not offer targets for the six mentioned stocks.

The brokerage said March saw resilient domestic demand. That said, geopolitical tensions impacted foreign inbound travel. Typically, luxury hotels have a 30–50 per cent share of foreign inbound guests and higher F&B/MICE revenue compared to upper-upscale/upscale hotels.

Despite this, March ARRs grew 5-7 per cent YoY while occupancies declined marginally YoY, leading to a RevPAR of Rs 5,920, which grew 3-5 per cent YoY.

"Apr–May’26 foreign inbound travel has experienced some cancellations due to the uncertainties around international flights and higher travel costs stemming from elevated crude prices. As per
company commentaries and our channel checks, weddings and domestic business/MICE demand have cushioned the impact to an extent in Apr-May’26," ICICI Securities said. Going ahead, the brokerage said new asset additions remain key for companies to deliver an Ebitda growth of 15–20 per cent, compounded annually, over FY25–28. 

With various estimates pegging industry supply CAGR at 5–6 per cent over FY24–29 and demand CAGR at 10 per cent, ICICI Securities expects a high-single-digit ARR CAGR of 6–8 per cent across hotels over FY25–28E, with occupancies rising 100–200 basis points each in FY26E and FY27E. 

"We expect management contracts to remain the preferred choice of expansion for most hotel companies (over 80 per cent of incremental room additions over FY25–29E), with pure asset owners looking to either acquire operational hotels or utilise existing land banks to drive growth," it said.