India's Domestic Travel Boom Drives Growth in Hospitality Industry

India’ s hospitality industry has been progressing at a steady pace. .India’s hotels just posted their third straight month of accelerating growth – Revenue per room is now up 18% YoY in July, the fastest pace this fiscal year. This is despite a sluggish trend globally. What’s the real driver? Well, it is the quiet domestic travel boom nobody’s talking about. From pilgrimage circuits, drive-to weekend escapes, and “alternative stays” are doing the heavy lifting this time on. And there is more brewing in terms of key geopolitical events being hosted in India. The upcoming BRICS September summit will put the spotlight on every luxury hotel near Bharat Mandapam in the national capital. . But here is where it gets interesting for investors – the same boom is playing out very differently on the stock charts. Indian Hotels Company (IHCL) just clocked its 17th consecutive record quarter, revenue up nearly 15%, margins expanding and its stock is riding near 52-week highs. ITC Hotels , the newly independent spin-off, posted a 36% profit jump but the stock still slipped on a seasonal sequential dip. And then there is ITC, the Rs 3.3-lakh-crore parent, still holding a chunk of the hotel through its stake in ITC Hotels. The stock has fallen nearly 34% over the past year. This was weighed down by its cigarette business even as hotels and FMCG quietly outperform underneath. Let’s take a look at which stock is winning this boom, which one is lagging, and which stock actually offers better value at the current juncture? Indian Hotels Company , the parent of Taj Hotels , reported a 20.7% year-on-year rise in consolidated net profit to Rs 357.9 crore in Q1FY27, compared with Rs 296.3 crore in the same quarter last year. Revenue from operations also moved higher, rising 14.6% to Rs 2,339 crore from Rs 2,041 crore. The company’s operating performance remained firm, with EBITDA increasing 18% to Rs 753 crore. Its EBITDA margin stood at 31.1% during the quarter. ITC Hotels also reported growth in Q1FY27. Consolidated net profit attributable to owners rose 35% year-on-year to Rs 180.25 crore, compared with Rs 133.10 crore a year earlier. Revenue from operations increased 14.8% to Rs 936 crore, from Rs 815.54 crore in the year-ago quarter. EBITDA climbed 19.5% to Rs 292 crore, compared with Rs 245 crore previously, while the EBITDA margin improved to 31.2% from 30%. Other income also increased to Rs 58.5 crore from Rs 44.2 crore. IHCL shares have gained around 8% in the last six months, although the stock is down about 8% over the past year. So far in 2026, the stock has slipped marginally by around 1%. Its price-to-earnings (P/E) ratio stands at 48.25. Its 52-week high stands at Rs 811.9 and low at Rs 565. Meanwhile, ITC Hotels has faced a sharper correction across different time periods. The share price of ITC Hotels has fallen nearly 9% in the last six months and is down around 34% over the past year. So far in 2026, the decline has been steeper, with the stock plunging around 26%. ITC Hotels trades at a P/E ratio of 17.07. Its 52-week high stands at Rs 427, while the 52-week low is Rs 265. The global brokerage house Jefferies , in its report, noted, “We remain constructive on the hotel sector, with robust demand momentum continuing.” Jefferies has maintained its pecking order as IHCL > ITC Hotels > Chalet. Domestic travel continues to support the sector even as air traffic growth remains muted. According to the brokerage report, “Strong domestic travel demand continued to offset the impact of weaker foreign tourist arrivals.” Leisure markets are also gaining momentum. Goa and Rajasthan recorded RevPAR growth of around 23-29% YoY in July. Metro markets were more mixed, with Mumbai recording the weakest growth among major cities. Which hotel stocks does Jefferies prefer? IHCL stays ahead of ITC Hotels. Jefferies continues to favour Indian Hotels Company, followed by ITC Hotels and Chalet Hotels. The brokerage expects the hotel coverage universe to deliver around 12-15% EBITDA compound annual growth rate (CAGR) between FY26-FY29. The upcoming BRICS Summit in New Delhi on September 12-13 could provide another near-term boost to premium hotels, including IHCL and ITC Hotels, through higher room bookings, extended stays and food and beverage demand. According to Jefferies, “Luxury hotels driving RevPAR performance,” with premium players continuing to lead the sector. Though both the hotel companies are not strictly comparable in terms of size and scale, here is a look at the key business parameters. IHCL ended FY26 with consolidated revenue of Rs 9,971 crore, up 16% year-on-year. The company has 255 hotels in its pipeline, taking its total portfolio to 630 properties. It added 250 new hotels and opened more than 130 properties during FY26. ITC Hotels reported consolidated revenue of Rs 4,139 crore in FY26, also growing 16% year-on-year. During FY26, it signed 33 hotels with more than 3,300 rooms and is targeting a portfolio of 250 hotels and over 22,000 rooms by 2031. IHCL currently has a market capitalisation of around Rs 1.04 lakh crore. ITC Hotels has a market capitalisation of around Rs 3.38 lakh crore. Overall if we compare ITC Hotel and the Tata Group’s IHCL, domestic boom is seen as a key driver of demand.