Global brokerage Goldman Sachs has shared its latest view on India’s hotel sector. It maintained a ‘BUY’ rating on IHCL (Indian Hotels Company Limited), while keeping a ‘Neutral’ rating on ITC Hotels, citing a mixed near-term outlook but stable long-term prospects. Here’s why.
According to the global brokerage report, India’s hotel sector, IHCL and ITC hotels, is facing near-term demand headwinds. This is because of weaker foreign tourist arrivals (FTA) and rising domestic airfares, which are making travel more expensive and slightly reducing demand. These factors are expected to impact hotel occupancy and pricing in the short term.
Nevertheless, Goldman Sachs also believes that there are supporting factors that can balance this weakness. Among the supporting factors, one major trend is the shift of MICE (Meetings, Incentives, Conferences, and Exhibitions) events to India, which is expected to boost demand, especially for luxury and upscale hotels.
In addition to this, Indian travellers choosing domestic destinations over international trips could help offset the slowdown in foreign tourist inflows.
Moreover, the brokerage also highlighted that the period from April to September is seasonally weak for foreign arrivals every year. Because of this, the downside risk is somewhat limited, as expectations are already moderate during this phase.
Talking about the hotel’s financial side, Goldman Sachs has slightly reduced its RevPAR (Revenue Per Available Room) growth estimates for the fourth quarter of FY26 and the first half of FY27. This adjustment reflects the short-term demand pressures currently visible in the market.
Going further, the brokerage expects demand and pricing to gradually improve, with a more meaningful recovery likely in the second half of FY27. As a result, the overall long-term outlook for the sector remains intact.
(Disclaimer: The above article is meant for informational purposes only, and should not be considered as any investment advice. ET NOW DIGITAL suggests its readers/audience to consult their financial advisors before making any money related decisions.)
