ITC Hotels, Leela Palaces, other hotel stocks gain up to 8.5% despite weak market; analysts predict tailwinds ahead

Companies like ITC Hotels, Leela Palaces, Asian Hotels (West) and Juniper Hotels were among several other hotel stocks which surged during the trading session on Friday, June 19, as investors focused on the sectoral demand tailwind amid an overall weak equity market.

With a key focus on domestic demand for travel in the market, investors are likely witnessing an opportunity within hotel stocks as the broader market suffers from IT sector concerns post Accenture’s conservative outlook, rebounding oil prices, and from a greater impact of the 60-day final peace deal negotiating period between the US and Iran.

Harshal Dasani, the Business Head of INVAsset PMS, attributed the rise in hotel stocks to the earnings-cycle trade as the hotels benefit from a cleaner demand-supply equation at a time when the broader market remains weak due to the export-linked and valuation-heavy pockets witnessing investor pressure.

Is hotels sector witnessing demand tailwinds?

Analysts from the leading US-based investment firm, Morgan Stanley, said that the hotels sector witnessed healthy growth in May 2026, further supported by a softer base from the prior-year North India conflict.

In May 2026, the Indian hotel sector’s revenue per available room (RevPAR) expanded 23.3% year-on-year (YoY), and 4% on a sequential basis from April 2026, according to the data shared by the analysts.

The experts also attributed the growth of the hotel sector to the stronger-than-expected underlying market demand.

“The demand trend remains constructive, especially in premium hotels, leisure travel, weddings, MICE and domestic business travel,” said Harshal Dasani, Business Head, INVAsset PMS. “Room demand is still running ahead of fresh supply, and that gives the sector pricing power,” he said.

Investors are also focusing on the higher spending in travel within India as the cost of overseas travel rises amid a weaker Indian rupee rate in the current market.

The key factor for the hotel sector is tied to the availability of rooms in popular cities amid the push for domestic travel in the country.

“The key point is that this cycle is not being driven only by revenge travel anymore; it is now supported by corporate events, domestic tourism, aviation connectivity and limited room addition in key cities,” said Dasani.

On the revenue front, Morgan Stanley analysts said that the RevPAR improvement was fueled by a 9.6% YoY increase in average room rates and a 12.4% rise in occupancy rates in the sector.

In Mumbai, the experts said that the revenue per available room witnessed a 13.5% YoY increase, while in Delhi, the same metric advanced 24.9% from the previous year's levels.

This increase in income and occupancy shows that the sector is witnessing healthy tailwinds from the customer demand in the market.

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*Note: Details regarding the CMP, intraday gains, and YTD returns have been collected from the NSE website.