The Indian hospitality industry is clocking strong growth led by robust domestic travel demand, rising room rates and growing business across weddings, MICE (meetings, incentives, conferences and exhibitions) and corporate segments. Against this backdrop, The Lalit Suri Hospitality Group is shifting its focus towards consolidation and an asset-light expansion model while keeping an IPO on the horizon.
In an interaction with TNIE’s Arshad Khan, executive director Deeksha Suri and CFO Rakesh Mitra discuss the group’s growth strategy, operating performance and the resilience of luxury travel demand amid global and domestic economic headwinds. Edited Excerpts:
How has domestic tourism and hospitality performed in recent years? Can domestic demand offset the decline in inbound travel?
Suri: Domestic tourism has gone through the roof over the last four years with a significant uptick in demand. Today, 90% of my business or revenue comes from domestic travellers. We have also benefited from several major national events. The G20 Summit gave us a massive boost, followed by the BRICS Summit. With Bharat Mandapam located in Delhi, these events had a favourable impact on our Delhi property, which is also our largest inventory. Other segments are also booming, including weddings, MICE, conferences and corporate travel.
Given the aggressive expansion plans of other hotel chains, what is The Lalit’s growth and expansion strategy going forward?
Suri: For us right now, the focus is consolidation. We want to consolidate, generate revenues and pump back into our various units. We are not in a race against anybody even if they (competition) have charted out aggressive growth plans. That being said, we are going asset-light. We are engaged in some advanced-level conversations, and by the end of this year or early next year, we will be making announcements.
You are an asset-heavy hotel brand. What’s the idea behind going asset-light?
Suri: When you are building something from scratch, it requires capital. There are two ways of doing it -- internal accruals or an IPO. At this juncture, whatever we are generating through internal accruals, we want to reinvest in our products, people and technology. Once we have done that, we will be able to increase our prices and extract greater value from our existing assets. Seven to 10 years down the line, there is nothing stopping us from acquiring new assets. We are looking at Ahmedabad, where we are developing another asset from scratch. This property is expected to be operational by 2030. We will also develop a hotel in Chitrakoot as part of a broader focus on religious tourism.
Can your effort to consolidate or adopt a new model be seen as a prelude to launching an IPO?
Suri: Not necessarily at this point. An IPO is on the horizon and when the time is right and market conditions are favourable, it is something we will pursue. Obviously, when we raise capital, we have to demonstrate a growth story.
What has been the occupancy rate lately, and can you give some data on your operating metrics, such as ARR or RevPAR?
Mitra: Industry occupancy has been growing steadily with a 2-3 percentage-point improvement year-on-year. For us, the growth has been higher. Broadly, we are growing in the mid-teens at present. It has always been our endeavour to grow in double digits. Some of this growth is coming from higher occupancy, while the balance is driven by an increase in average room rates (ARR).
Your revenue in FY26 declined compared to FY25. What was the reason? Was it mostly because of Kashmir Hotel or were there some other factors?
Mitra: Last year, we had some dent as far as The Lalit Srinagar was concerned. We all remember what happened in April 2025 (referring to Pahalgam attack and aftermath). Post that we have had a setback there.
Suri: We are not back, to be honest. The entire financial year 2026 was washed away. If you recollect, it happened on the 22nd of April last year. We literally had 22 days of operation and the remainder of the financial year was a complete washout. Srinagar hotel was on track to do a substantial number. Unfortunately, because of reasons which are beyond our control, we were not able to do that. The recovery there is slow.
You had a debt of around Rs 700 crore by the end of FY26. By when do you expect to become a completely debt-free company?
Suri: The thing is that no organisation is always debt-free. The moment you become debt-free, the story is closed. Our debt ratio is probably one of the best in the industry. We were sitting on a very high debt ratio. We brought it down significantly over the last several years. And now we're accredited with an A-plus credit rating.
Mitra: We are almost reaching a stage wherein our EBITDA-to-debt ratio will be 1:1.
Inflation has seen a surge while there is war going on in West Asia. The stock market too has given no returns in two years. Do these headwinds impact demand for luxury stays?
Mitra: International tourist arrivals may have declined, and that is a possibility. However, demand from domestic travellers remains strong. So, I don’t see stock market performance impacting our growth. That said, the market has been very iffy over the last 18-20 months, and that is one of the reasons why we are not immediately pursuing an IPO.
Suri: Going back to the original question, there has been no adverse impact. On the contrary, the growth story has become even stronger.