ITC Hotels reported strong second-quarter growth for FY27, with revenue per room rising 21% as occupancy reached 76%. Brokerage firm Choice Institutional Equities has set a target price of Rs 210, citing improved profit margins and effective cost management. Investors should watch how the company integrates new properties and maintains pricing power amid sector competition.
ITC Hotels, the independently listed hospitality arm, has reported robust financial and operational growth for the second quarter of the 2027 fiscal year. The company saw a 21% year-on-year increase in revenue per available room, a key industry metric that measures the income generated by each hotel room, reaching Rs 9,700. This performance was supported by a 520 basis point improvement in occupancy rates, which stood at 76.0%, and a 13.3% rise in average room rates to Rs 12,800.
Profit Margins and Operational Efficiency
The company’s focus on streamlining operations contributed to a significant expansion in profitability. Operating profit margins, measured as EBITDA margins, improved by 274 basis points to 32.0%. This margin growth suggests that the company is successfully managing its cost structure even as it scales. Core hospitality revenue, which excludes income from branded residences, rose by 17% to Rs 9.8 billion. While food and beverage sales grew by 12%, the room revenue segment proved to be the stronger performer with a 22% increase.
Brokerage firm Choice Institutional Equities noted these developments while reiterating a positive outlook on the stock, with a target price of Rs 210. Analysts pointed to the stabilization of newly added hotel assets as a factor that could support future earnings. The company is currently outperforming broader industry benchmarks for revenue per room by 44%, according to the brokerage report.
Risks and Market Context
While the current momentum is strong, the hospitality sector remains cyclical and sensitive to broader economic conditions. Investors should be aware that the success of the company’s current expansion strategy depends on the timely and efficient integration of new inventory into its portfolio. Maintaining such high occupancy levels and pricing power is challenging, as the industry often faces pressure from new supply and shifting travel demand. Additionally, competition in the luxury and premium hotel segment remains intense, which could influence future occupancy and room rates.
Going forward, the key monitorables for shareholders will be the pace at which the company brings new properties into full operation and its ability to sustain these profit margins. Any changes in consumer spending or a general slowdown in the travel and tourism sector could impact the company’s revenue growth. Investors will likely look for consistent updates on fee-based income streams and how effectively the company balances growth spending with operational efficiency in the coming quarters.