The peak tourism season was underway in the December 2025 quarter along with the shubh (auspicious) season for weddings. As a result, the demand for hotel rooms and allied services was very strong from the top-end of society in Q3FY26.
The above growth in the hospitality sector has come despite considerable uncertainties related to the India-US trade deal (which got subsequently concluded) and the conflict in the Middle East.
Mid-Cap Agility vs. Industry Giants
Investors on Dalal Street are also increasingly looking beyond the well-established hospitality players.
Akin to the small companies in the IT sector, mid-cap hotel chains, which are much smaller than industry leaders like The Indian Hotels Company, are seeing strong investor interest on Dalal Street. That’s because these smaller hotel chains are nimbler, and a smaller revenue base has enabled them to show a strong growth in revenues and net profit in the December 2025 quarter.
It’s no surprise that mid-cap hotel stocks are doing well on the bourses Leela Palaces Hotels & Resorts gained 1% to Rs 446.8 in mid-afternoon Tuesday trade, and not too far from its 52-week high of Rs 475 that was reached on 14 October, 2025.
Similarly, Chalet Hotels gained 1.8% to Rs 883 in mid-afternoon Tuesday trade, and its 52-week high of Rs 1,080 was reached on 1 August, 2025.
Ventive Hospitality fell 1% in mid-afternoon Tuesday trade to Rs 770 and its 52-week high of Rs 844.8 that was reached on 21 July, 2025.
Q3 – Sizzling growth in average daily rates (ADR) and revenues
A key highlight of mid-cap hotel stocks that have declared results is the strong growth in average daily rates (ADR) and it helped these chains to report a strong performance in the December 2025 quarter on a y-o-y basis.
December 2025 quarter – operational performance
| Average daily rates (ADR) in Rs | Occupancy levels (%) | Number of operational properties | Growth in consolidated revenues (%) | |
| Leela Palaces Hotels & Resorts | 30,337 | 71% | 14 | 23.5% |
| Chalet Hotels | 14,970 | 68% | 11 | 23.1% |
| Ventive Hospitality | 24,573 | 64% | 13 | 28.5% |
Leela Palaces: Leveraging luxury and wedding demand
New Delhi-based Leela Palaces Hotels & Resorts grew its consolidated revenue from operations by a healthy 23.5% y-o-y to Rs 457.4 crore in the December 2025 quarter. The company has highlighted that Q3FY26 was its best ever quarter, occupancy levels at 71% in the quarter under review, a rise of 2% against a year earlier.
Also, a key operating metric – average daily rate (ADR) was Rs 30,337 in the quarter under review, a gain of 17% from a year earlier.
A strong growth in ADR highlights this hotel chains’ strong and established position in the luxury segment of the hotel industry. In addition, the company has highlighted that it benefited from an upsurge in revenues related to weddings and meetings / conferences that were held across its 14 properties across the country.
Strong operational parameters helped the hotel’s operating profit margin rise 130 basis points y-o-y to 52.1 % in the December 2025 quarter. Its consolidated net profit also jumped 162.5% y-o-y to Rs 147.8 crore in Q3FY26.
Chalet Hotels: Portfolio resilience amid inventory expansion
Meanwhile, Mumbai-based Chalet Hotels in its hospitality (hotels) business benefited from average room rate at Rs 14,970 in Q3FY26 as against Rs 12,944 a year earlier. Its occupancy was at 68% in Q3FY26 as against 70% a year earlier. The company has highlighted that the decline in occupancy was owing to additional inventory of rooms at Khandala that were fully operational from mid-November, 2025.
Its portfolio comprises of 11 operating hotels and resorts with 3,389 rooms across recognized hospitality brands including JW Marriott, The Westin, and Novotel.
A strong growth in average room rates helped Chalet Hotels’ hospitality segment’s consolidated revenues grow 23.1% y-o-y to Rs 491.3 crore in the December 2025 quarter. Consolidated segment profit of this division rose 17.4% y-o-y to Rs 175.6 crore in Q3FY26.
Chalet Hotels is also present in real estate and rental / annuity segments.
Ventive hospitality: The outsized growth of a nimbler player
And Pune-based Ventive Hospitality also benefited from its ADR that grew 14% y-o-y to Rs 24,573 in Q3FY26 across its 13 properties and 2,178 rooms. Occupancy at its properties were 64% in the December 2025 quarter, a rise of 2% from a year earlier.
As a result, its consolidated revenue from operations grew 28.5% y-o-y to Rs 685.4 crore in the December 2025 quarter, and its operating profit margins were broadly stable at 45.4% in the quarter under review. Its consolidated net profit grew a staggering 303.5% y-o-y to Rs 140.4 crore in the December 2025 quarter.
The Indian Hotels Company, the largest player in the domestic hospitality sector, will declare its quarterly results on February 12. At the end of the September 2025 quarter, the Mumbai-based chain had a portfolio of 570 hotels across the country and overseas.
Growth and expansion plans of hotel chains
The good times for the sector are far from over, and mid-cap hotel chains are fast expanding to take advantage of the shifts in consumer spending patterns.
Leela Palaces Hotels & Resorts has secured a management contract for an 80-key luxury hotel in Jaisalmer spread across 30 acres, and scheduled to become operational by mid-FY27. It also has bought a 25% stake in the global icon, Dubai Palm Jumeirah. And it also has 9 properties under various stages of development across the country.
Meanwhile, Chalet Hotels has a hotel at Delhi Airport under construction and expects completion by Q4 FY27, along with Athiva Resort & Spa at Varca, South Goa expected to be operational in FY28.
And Ventive Hospitality has four hotels with 468 rooms under various stages of development.
Efficiency kings?
Leela Palaces Hotels & Resorts has a consolidated RoE of 13.1%, according to Screener.in., while for Ventive Hospitality it is 4.75%.
The Indian Hotels Company has a consolidated RoE of 16.1%, according to Screener.in.
Valuation Check: P/E Ratios Compared
| Company | Consolidated P/E |
| Leela Palaces Hotels & Resorts | 41.5 |
| Chalet Hotels | 31.8 |
| Ventive Hospitality | 55.8 |
| The Indian Hotels Company | 59.2 |
Leela Palaces Hotels & Resorts trades at a consolidated P/E of 41.5 times, according to Screener.in, while Ventive Hospitality trades at 55.8 times.
Chalet Hotels trades at a consolidated P/E of 31.8.
The Indian Hotels Company trades at a consolidated P/E of 59.2, given its preeminent position in the domestic hospitality sector.
2026 sector outlook and growth triggers
The hospitality sector is expected to see continued strong growth over the next few quarters, and mid-cap hotel chains will also benefit from their expanded room capacity becoming operational in phases, going forward.
Investors could put mid-cap hotel stocks on their watch list for 2026.
Amriteshwar Mathur is a financial journalist with over 20 years of experience.
The writer and his family have no shareholding in any of the stocks mentioned in the article. Disclaimer: The website managers, its employee(s), and contributors/writers/authors of articles have or may have an outstanding buy or sell position or holding in the securities, options on securities or other related investments of issuers and/or companies discussed therein. The content of the articles and the interpretation of data are solely the personal views of the contributors/ writers/authors. Investors must make their own investment decisions based on their specific objectives, resources and only after consulting such independent advisors as may be necessary.
