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Indian hospitality sector dips on geopolitical tensions in June quarter

India's hospitality sector experienced a slowdown in the June quarter (Q2 CY2025), a period already known for seasonal weakness. This year's dip, however, was amplified by external shocks including the Pahalgam terror attack and an Air India crash in Ahmedabad, which significantly dented travel sentiment across key markets. 'The dip in Q2 CY2025 (April–June) performance was largely driven by a seasonal slowdown and early monsoon impact, further compounded by external national incidents such as the Indo-Pak tensions and the Air India crash, which curtailed travel demand across key markets,' noted consultancy firm HVS Anarock in its monthly hospitality monitor. Average room rates (ARR) declined sequentially across major cities. Jaipur saw the steepest drop, with rates down 37–39 per cent from the March quarter. New Delhi and Goa followed with ARR dips of 27–29 per cent, while Mumbai and Gurugram saw declines of 20–22 per cent. Occupancy levels also fell across cities, with Jaipur reporting the highest drop of 20–22 per cent, followed by New Delhi at 11–13 per cent. The dip reflects a sharp pullback in travel, particularly in markets that are heavily dependent on tourism and business travel. Domestic air travel also mirrored the softening trend, with passenger traffic falling 2.8 per cent sequentially to 41.9 million. IHCL, ITC Hotels report impact, but signal resilience Indian Hotels Company (IHCL), which operates the Taj chain, reported a 3 per cent top-line impact due to geopolitical tensions in northern India. Despite this, IHCL posted a 32 per cent year-on-year rise in revenue from operations to Rs 2,041.8 crore. Revenue per available room (RevPAR) at domestic properties rose 11 per cent YoY. ITC Hotels also flagged disruptions in May due to geopolitical events but noted a recovery following ceasefire announcements. 'While the geopolitical developments in May had temporarily affected business in certain locations, the hospitality sector bounced back progressively thereafter,' the company said, adding that long-term fundamentals remain strong. Festive and monsoon demand expected to lift Sept quarter Industry insiders remain optimistic about the upcoming quarter. 'We have a slew of festivals in the September quarter and the Independence-Day long weekend, too, is showing good booking trends early on. With monsoon demand also inching up now amid a steady geopolitical environment, the September quarter should be that of recovery,' an executive said. Puneet Chhatwal, managing director and CEO of IHCL, expressed confidence in a strong second half. 'Notwithstanding geopolitical tensions, we are expecting a strong performance in August, followed by an equally strong September,' he told analysts earlier this month. The combination of a favourable demographic profile, rising consumption, and sustained domestic demand is expected to support the hospitality sector's recovery in the quarters ahead.