Hospitality demand to rebound as West Asia crisis fades, 16% EBITDA CAGR in FY26-28: Kotak Securities

India's hotel industry is expected to recover its momentum as the West Asia conflict impact normalises and foreign travel returns to pre-war levels, Kotak Securities said in a report.

With occupancy likely inching toward 72 per cent and Annual Recurring Revenue compounding at 6.4 per cent Compounded Annual Growth Rate, the brokerage projects 16 per cent EBITDA CAGR for its coverage universe over FY2026-28E.

Stock performance will hinge on how quickly the crisis resolves and whether ARR growth beats Street expectations.

India's hospitality sector delivered modest results in 4QFY26 as geopolitical tensions weighed on demand. RevPAR grew 5.3 per cent YoY to ₹6,868/day, supported by 6.3 per cent YoY ARR growth to ₹10,100/day but offset by a 67 bps YoY drop in occupancy to 68 per cent.

The weakness was driven by lower foreign travel in March 2026 due to the West Asia war. According to the Kotak Securities report, for FY2026, RevPAR rose 7.4 per cent YoY to ₹5.7k/day on 7.4 per cent YoY ARR growth to ₹8.8k/day and healthy 65 per cent occupancy.