Indian Hotels Company Q2 FY26 Results: Moderate Growth, Strong H2 Outlook Amid Robust Demand

Market Performance

Indian Hotels Company Ltd (IHCL) witnessed moderate growth in Q2 FY26, reflecting short-term challenges in the hospitality sector. Despite this, overall demand remains strong, and the company’s strategies indicate a robust outlook for the second half of FY26.

• Q2 FY26 revenue growth was 12% year-on-year (YoY).
• Hotel segment revenue rose 7% YoY to Rs 1,839 crore.
• Air catering under Taj SATS grew 13% YoY to Rs 287 crore.

While growth was slightly muted due to adverse weather, ongoing renovations, and a high base from Q2 FY25, momentum remains healthy as IHCL strengthens its operational and strategic capabilities.

Q2 FY26 Financial Highlights

Hotel Business:

• Revenue per available room (RevPAR) increased in mid-single digits YoY.
• EBITDA margins expanded marginally by 50 basis points YoY to 28.9%.

Air Catering Business:

• EBITDA margin slightly declined by 30 bps YoY to 23.1%, impacted by changes in airport levy methods.

Profitability:

• Profit before tax, excluding exceptional items, grew 17% YoY.
• Reported earnings declined YoY, reflecting exceptional gains in Q2 FY25.

Strong Demand Momentum

IHCL reported strong bookings in October 2025 and anticipates continued high occupancy and demand through H2 FY26. Key drivers include:

• High-profile MICE (meetings, incentives, conferences, exhibitions) events.
• Wedding season and social events driving hotel bookings.
• Completion of major renovations, boosting property appeal and revenue potential.

The company maintains double-digit growth guidance for FY26 despite a challenging Q2 and high base from last year.

Expansion and Pipeline

IHCL continues to invest in expanding its footprint and enhancing its portfolio.

• Current operational inventory: 28,273 keys.
• Planned additions: 22,000 keys over the coming years.
  • Ownership route: 4,000 keys.
  • Asset-light management contracts: 18,000 keys.
• Expansion across multiple sub-brands signals a comprehensive growth strategy.

New business segments are scaling rapidly:

• Reimagined Ginger brand: 75 operational hotels, 33 in pipeline.
• Q-Min food business introduced in all Ginger properties.
• Ama Bungalow and Tree of Life resorts: 157/18 operational properties, 174/5 in pipeline.

Industry Outlook

The post-pandemic hotel industry up-cycle continues to sustain strong demand. Key dynamics include:

• Double-digit demand growth expected.
• Supply growth projected at a slower 7.7% over FY25-30.
• Key business and leisure destinations are seeing slower supply growth, 4.6% and 6.2% respectively.

This favorable demand-supply scenario supports sustained pricing power and industry growth.

Strategic Investments & Tie-Ups

IHCL’s strong balance sheet, with Rs 2,850 crore in cash reserves, enables strategic expansion. Recent developments include:

• Acquisition of 51% stake in ANK Hotels and Pride Hospitality for Rs 204 crore.
  • Combined portfolio: 135 midscale hotels to be rebranded under Ginger.
• Multi-asset distribution and management tie-ups:
  • Brij: 20 boutique hotels managed by IHCL.
  • Ambuja Neotia: 15 hotels under Taj SeleQtions and Tree of Life Brands.
  • Madison: 10 hotels managed under Ginger brand via revenue-sharing leases.