Travel & Tourism Faces Geo-Headwinds, But Pricing Power Holds: PL Capital
- 10th July 2025
- 12:00:00 AM
- 3 min read
Mumbai | July 10 – India’s travel and tourism sector is heading into a bumpy Q1FY26 earnings season, with geopolitical disruptions hitting footfalls across hotels and aviation. Yet, pricing power and cleaner balance sheets keep the sector investable, says PL Capital in its latest preview.
“Occupancies took a hit post the Pahalgam terror attack and Operation Sindoor, but the ability to hold room rates reflects inherent sector strength,” notes Jinesh Joshi, Research Analyst, PL Capital.
Hotels: ARR Strength vs. Occupancy Weakness
Pan-India Average Room Rates (ARRs) held steady at ₹7,300–₹7,500 in May even as occupancies slipped to 58–60%.
- Chalet Hotels: Expected ARR of ₹11,470 (+9.8% YoY), occupancy at 65.4%, revenue up 19.8% YoY.
- Lemon Tree Hotels: ARR of ₹6,152 (+8.2% YoY), occupancy at 71.5%, revenue up 16.6% YoY.
- Samhi Hotels: ARR of ₹6,689 (+18% YoY), occupancy at 72%, revenue up 10.7% YoY despite MICE cancellations.
Aviation: Demand Weakness, Pricing Slips
Aviation saw May passenger growth slow to 1.9% YoY, with Indigo’s yields expected to decline 3.6% YoY to ₹5.05, though revenue may rise 7.4% YoY to ₹21,000 crore on capacity additions.
“Load factors remain resilient at 85.6%, but PRASK moderation is visible amid geopolitical disruptions,” adds Dhvanit Shah, Research Analyst, PL Capital.
IRCTC: Steady Growth Continues
IRCTC is projected to report a 10.8% YoY revenue increase to ₹1,240 crore, driven by 127 million online ticket volumes, 10% growth in catering, and 15% growth in tourism.
Luggage: Margins Hold Amid Competition
VIP Industries may see revenues down 1% YoY to ₹632 crore with GM at 47.3%, while Safari Industries may post 13% YoY growth to ₹509 crore with GM at 46.5%.
Financial Snapshot
| Company | Revenue (₹ Cr) | YoY Growth | EBITDA Margin | Occupancy/Yield |
| Chalet Hotels | 432 | 19.80% | 39.30% | 65.4% occupancy |
| Lemon Tree Hotels | 312 | 16.60% | 43.20% | 71.5% occupancy |
| Samhi Hotels | 277 | 10.70% | 34.70% | 72% occupancy |
| Indigo | 21,000 | 7.40% | 28.60% | Yield ₹5.05 |
| IRCTC | 1,240 | 10.80% | 34.50% | 127mn tickets |
| Safari Industries | 509 | 13.00% | 14.40% | – |
| VIP Industries | 632 | -1.00% | 9.80% | – |
PL Capital’s Picks in Travel & Tourism
Samhi Hotels (BUY, TP ₹308) – Post-GIC fund infusion and deleveraging, Samhi offers attractive valuations with improving balance sheet.
Indigo (BUY, TP ₹6,691) – Strong capacity additions and leadership in Indian aviation.
Chalet Hotels (BUY, TP ₹1,130) – Leverage on steady annuity income and pricing power.
IRCTC (BUY, TP ₹864) – Consistent growth from digital ticketing and catering.
Lemon Tree Hotels (BUY, TP ₹175) – High margins with stable ARR and occupancy.
The Bottom Line
Despite near-term turbulence, India’s travel and tourism sector retains pricing resilience and structural tailwinds, offering opportunities for patient investors.
“We believe investors should use sector volatility to gradually accumulate quality travel and tourism plays aligned with India’s long-term consumption story,” concludes Jinesh Joshi, Research Analyst, PL Capital.
Read the full PL Capital Travel & Tourism Q1FY26 Preview here for actionable insights and stock-specific analysis.
PL Capital
Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. It is based on several secondary sources on the internet and is subject to changes. Please consult an expert before making related decisions.
