Iran war hits inbound tourism; hotels report cancellations, fewer bookings

Hotels in India see drop in check-ins by international travellers.

• Iran war cuts overseas hotel bookings in India by 10-12%.
• Gulf hub flight disruptions affect March–April travel arrivals
• Travelers reschedule abroad trips; domestic demand remains strong

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The Iran war, which is in its third week, is beginning to take a toll on India’s tourism sector, with hotels and leisure destinations reporting cancellations, delayed arrivals and fewer booking inquiries from international travellers.

Hospitality chains say disruptions in flight, especially on routes passing through Gulf hubs, have led to a slowdown in inbound travel, especially for the peak March–April period.

Sarovar Hotels, which operates more than 150 properties, has already seen a 10–12 percent drop in room bookings by overseas tourists.

“The impact is largely concentrated in March arrivals and early April bookings,” said Akshay Thusoo, senior vice president–commercial at Sarovar Hotels. Cancellations and short-term delays are driving the dip.

The effect is most pronounced in gateway cities such as Delhi, Mumbai, Bengaluru and Hyderabad, as well as tourism-heavy destinations like Agra and Pondicherry, which typically see a higher share of foreign travellers.

At Kairali Ayurvedic Group, out of eight expected international arrivals over the next two weeks, three travellers from the Middle East have cancelled, while others transiting through the region are expected to reroute.

“We expect disruptions in key Middle East aviation corridors to continue impacting international travel flows to India,” Kairali Ayurvedic Group executive director Abhilash Ramesh said.

Similarly, boutique hospitality players like Eco Glamp in Kanatal are seeing a drop in travel queries.

Flight disruptions trigger booking shifts

Other hotel chains are seeing rescheduling and deferred bookings.

At Royal Orchid Hotels, instead of cancelling visits, tourists affected by flight disruptions are changing dates or opting for flexible bookings.

“We are seeing a degree of caution, particularly among travellers originating from or transiting through Middle Eastern hubs,” said Arjun Baljee, Founder of ICONIQA and president of Royal Orchid Hotels.

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The February 28 US–Israel strike on Iran and Tehran’s retaliation have since ensnared West Asia in the war, severely disrupting air connectivity, resulting in multiple countries shutting their airspace. Major hubs like Dubai are facing temporary closures.

On March 16, after a massive fire broke out at the Dubai International Airport (DXB), the authorities diverted some flights to Al Maktoum International Airport. Emirates said all flights to and from Dubai stand disrupted.

On March 18, Emirates was operating a reduced flight schedule from Dubai.

A key revenue segment under pressure

International travellers form a critical segment for Indian hotels, especially in major cities and leisure destinations where they typically stay longer, Thusoo said.

Baljee added that international travellers are an important segment for their hotel chains, as they account for around 20–25 percent of room demand in key business and gateway cities and tend to book at higher average room rates compared to domestic travellers.

"They also contribute significantly to ancillary revenues such as dining, airport transfers and extended stays," he said.

International travellers account for roughly 15–18 percent of Sarovar Hotels' guest mix and about 18–20 percent of room revenue.

"That said, in certain destinations such as Goa, Jaipur, Agra and some heritage or coastal markets, international travellers can represent 30–40 percent of room nights during peak inbound seasons, which is why these destinations tend to experience the effects of aviation disruptions sooner than others," he added.

Thusoo is counting on Sarovar's diversified presence across business destinations, domestic leisure markets, weddings and pilgrimage travel. "The overall portfolio impact is expected to be more moderate over time," he said.

Short-term concern, long-term watch

While the current disruption is expected to have a near-term revenue impact, industry players expect the situation to stabilise if flight connectivity improves quickly.

Based on current booking patterns, Thusoo said the disruption could translate into an approximately 10–12 percent impact on near-term revenues in affected markets, largely driven by cancellations and booking delays.

Ramesh said future inquiries may also slow down due to higher airfares, limited flight availability and travel uncertainty, with a potential 5–8 percent impact on near-term revenues.

But the overall impact on inbound travel has remained limited so far, Baljee said, adding most international guests are choosing to reschedule rather than cancel their India trips.

"At the same time, domestic travel demand continues to remain robust, supporting occupancy levels across key markets," he added.

Much will depend on how soon West Asia air routes normalise and traveller confidence returns, hotel executives said.

For now, the war has added a layer of uncertainty to India’s inbound tourism outlook — right at the cusp of the summer travel season.