Indo-Pak tensions: Hotels wary of short-term dip in check-ins

Hotels expect dip in occupancy in the short term.

As peace returns, 32 airports in the country are back in action following the India-Pakistan ceasefire but hoteliers are wary of lower occupancies as the border tensions dealt a blow to the travel sentiment which was at its peak just before the attack in Pahalgam.

Saurabh Gahoi, Senior Vice President of the Ramee group of hotels in India, expects a short-term dip in occupancy, especially among international and business travellers.

"Geopolitical tensions always have a ripple effect on the hospitality sector. Uncertainty affects travel sentiment, especially among international guests," he added.

Kushal Ranjan, AVP Revenue, Pride Hotels Group also anticipates a short-term decline in occupancy rates and new bookings in the affected regions.

"The geopolitical tensions have led to immediate challenges, including increased cancellations and reduced bookings. The broader hotel industry is likely to experience a short-term downturn, especially in regions directly affected by travel restrictions and security concerns," he added.

While flight operations are gradually returning to normal, there may be a few delays and last-minute adjustments, said IndiGo in its latest statement. Uncertainties like concerns related to flight operations, regional stability, and shifting consumer sentiments are expected to impact demand for hotels in the near term, noted Atul Thakkar, Director – Investment Banking, Anand Rathi Advisors, who tracks the hospitality sector.

Mass cancellations

Due to the closure of as many as 32 airports across northern and western India, including key hubs like Amritsar, Srinagar, and Chandigarh, the hospitality sector faced significant disruptions, said Jyoti Mayal, Chairperson of THSC (Tourism and Hospitality Skill Council).

She said that the hotels in affected regions had experienced mass cancellations and logistical challenges due to halted air travel and heightened security concerns.

Gahoi, for instance, saw significant cancellations of around 70-80 percent of upcoming bookings, particularly from travellers from affected zones or those transiting through closed airports.

Ranjan also observed around a 30 percent increase in cancellations for current and upcoming bookings across their North India properties.

Thakkar pointed out that hotel occupancy in Amritsar plummeted by 80–90 percent due to the proximity to conflict zones and reduced tourist footfall at major sites like the Golden Temple. He added that the same was the case with other border areas, including Jammu & Kashmir and Rajasthan.

"In Kashmir, hotels and houseboats are offering discounts of up to 70 percent to attract guests amid plummeting occupancy rates," he added.

"Indian Hotels Company Ltd (IHCL) is estimated to incur Rs 1-1.5 crore daily EBIT (Earnings Before Interest and Taxes) losses due to reduced international tourism. Ventive Hospitality is losing Rs 50 lakh daily from international cancellations," Thakkar said.

The border tensions resulted in significant business disruptions for the hotel industry, leading to a sharp drop in bookings, increased cancellations, reduced occupancy and revenue for hotels of all sizes, from large establishments to smaller guesthouses and local businesses that depend on tourism, said Aditya Sanghi, CEO & Co-founder, Hotelogix.

Sanghi added that with the summer holiday season underway, travel agents and hotels, instead of getting calls for bookings, were reporting a surge in anxious calls about cancellations, refunds, and rescheduling.

Mayal also said that the rising geopolitical tension created an atmosphere of uncertainty, which directly impacted travel sentiment.

"People are becoming cautious about planning trips, especially to northern regions. Even those with existing bookings are reconsidering or rescheduling. The lack of clarity on safety and connectivity is leading to hesitancy among both domestic and international travellers, she added.

Momentum derailed

It all started with the Pahalgam attack. The summer season was showing remarkable promise for hotels in north India and destinations like Srinagar, Gulmarg, and Pahalgam were seeing unprecedented demand, with accommodations fully booked until mid-June, surpassing the occupancy levels of the 2024 summer season, Mayal noted.

Thakkar cited the example of Himachal Pradesh which was expecting to generate Rs 2,800 crore in tourism revenue this summer, a 20 percent increase over last year.

However, the Pahalgam attack flipped the situation as top tourist locations like Kashmir and Amritsar witnessed a dramatic surge in travel disruptions with flight cancellations rising seven times, and future bookings dropping by nearly 40 percent, Thakkar pointed out.

"Some travel agencies reported that over 70 percent of bookings for May and June were cancelled or put on hold. The Tourism Association of Bihar estimates a loss of Rs 10–15 crore for tour operators in May alone due to continued cancellations," he added.

Although some bookings made for Jammu & Kashmir got redirected to Himachal Pradesh and Uttarakhand, only about 15–20 percent of the cancelled bookings had shifted to Himachal’s popular destinations.

Thakkar said that the Pahalgam attack came at a time when the region was seeing a record tourism season, with occupancy rates at 82–85 percent and premium hotel room rates exceeding
Rs 30,000. "The incident abruptly ended this momentum, causing significant revenue loss for local hoteliers, travel operators, and the broader tourism industry."

Counting on comeback

Despite the blow, hoteliers are confident of travel demand reviving.

Gahoi noted that many guests are opting to reschedule rather than cancelling bookings entirely. "We are seeing a preference for later dates in June and July and our reservation team is providing flexible options and honouring existing rates to encourage rebooking."

Pride Hotels' Ranjan is also seeing many guests opting to reschedule their bookings to later dates, anticipating stabilization in the region. "We are accommodating these changes without any penalties to support our guests during this time."

Amruda Nair, Founder and CEO, Araiya Hotels, continues to see enquiries coming in.

"We are a 4-hour drive from our key feeder cities in Punjab, so the summer enquiries continue to come in. In Uttarakhand, both at Kinwani House in Rishikesh and at Aalia Jungle Retreat and Spa in Haridwar, which are within a 5-hour drive from Delhi, we continue to get bookings for the month and for near future dates."

Although the impact of India-Pakistan tensions on the hotel sector will linger on in the short term, Thakkar noted that, in the long term, there will be stabilisation, especially if the government ramps up recovery efforts such as the ‘Safe Tourism Zones’ initiative, increased security deployments, and interest-free credit lines for tourism operators.