India’s marquee luxury hotels are filling faster this summer than they did a year ago, and the guests booking the suites are increasingly local. ITC Hotels, Radisson Hotel Group and The Leela all report stronger domestic leisure demand for the 2026 summer season, as affluent Indians trade overseas holidays for hill stations, lake palaces and temple towns at home. Radisson alone says occupancy across its India portfolio is up 5 per cent on last year, with leisure properties running close to 75 per cent full.
The easy explanation is geopolitics. Tension across West Asia, airline disruptions and a pricier overseas trip have nudged wealthy travellers to look closer to home. The more lasting shift sits underneath that: the rooms, brands and capital chasing this demand are moving toward spiritual circuits and smaller cities that barely registered on a luxury map five years ago.
The Summer Scorecard Across the Big Chains
Talk to the people running the booking engines and the message is consistent. Demand is ahead of last summer, leisure is leading it, and the standout destinations are no longer just Goa and the metros. The table below pulls together what the major operators told the news agency PTI about how the season is tracking.
| Operator | Summer 2026 signal | Standout domestic destinations |
|---|---|---|
| ITC Hotels | Bookings ahead of last year across several leisure markets | Prayagraj, Katra, Amritsar, Bhubaneswar |
| Radisson Hotel Group | Occupancy up 5 per cent year on year; leisure near 75 per cent | Jammu and Kashmir, Manali, Mussoorie, Udaipur, Ayodhya |
| The Leela | Strong traction at experiential, heritage and wellness resorts | Heritage towns and nature-led escapes |
| Jaypee Palace, Agra | Occupancy up about 8 per cent year on year | Agra |
Anil Chadha, Managing Director of ITC Hotels, put it plainly when he said the summer season was progressing well, with demand tracking ahead of the same period last year in several destinations. Hari Sukumar, general manager of Jaypee Palace Hotel and Convention Centre in Agra, was blunter about the scale, calling the season significantly stronger than the year before. The pattern holds from a 140-property group to a single heritage hotel.
Geopolitics, Airfares and the Pull Back Home
Why now? Part of it is fear of friction. Conflict and uncertainty across parts of West Asia have made some long-haul itineraries feel risky or simply inconvenient, and a weaker rupee has made Europe and the Gulf more expensive than they were a couple of summers ago. For a household weighing a two-week trip abroad against a week in the hills, the maths has shifted.
Industry executives are careful to say the appetite for foreign travel has not vanished. It has been deferred. The clearest framing came from the head of one of India’s most prestigious resort groups.
While affluent Indian travellers continue to maintain strong long-term interest in international travel, near-term geopolitical uncertainty, airline disruptions and elevated travel costs have encouraged many consumers to increasingly explore premium domestic alternatives.
That was Anuraag Bhatnagar, chief executive of The Leela Palaces, Hotels and Resorts. His point matters because it sets the timer on the story. If the conditions pushing travellers home are temporary, so is part of this summer’s bump. What the operators are betting on is that a chunk of these guests will like what they find and come back, geopolitics or not.
Hill Stations and Temple Towns Set the Pace
Where the money is landing tells you more than the headline occupancy figure. Radisson’s data points to two clear winners this season, and neither is a beach. Hill station properties recorded 69 per cent growth over last year, the group says, the single biggest jump in its India network.
Nikhil Sharma, Managing Director and Chief Operating Officer for South Asia at Radisson Hotel Group, said the strongest momentum was coming from properties that offer either climatic relief or a deeper cultural pull. Jammu and Kashmir, Manali, Mussoorie, Udaipur and Ayodhya have emerged as standout performers, while Goa and the coastal resorts of South India keep drawing steady traffic. The segments driving Radisson’s summer break down like this:
- Hill retreats for heat escape: Manali, Mussoorie and Kashmir, up roughly 69 per cent
- Spiritual circuits for faith-led journeys: Ayodhya, Prayagraj, Katra, Amritsar and Vrindavan
- Heritage and lake stays built around storytelling: Udaipur and the palace towns of Rajasthan
- Coastal resorts that remain reliable: Goa and South India’s beaches
The mix is the point. This is not one hot destination carrying a season. It is several distinct kinds of trip booking at once, which is exactly the diversification that makes a demand surge harder to write off as a fluke. India recorded its hottest months on record again this year, and the cooler hills did well partly for that reason, much as Delhi-NCR hotels track occupancy to the weather at the other end of the calendar.
Where the Next Wave of Rooms Is Going
Here is the part that outlasts a single summer. The faith-and-hills demand is not just filling existing hotels; it is deciding where the next several years of luxury supply gets built. The capital is rotating toward places it used to ignore.
ITC Hotels Plants Flags in Pilgrimage Country
ITC Hotels, which demerged from parent ITC Ltd on 1 January 2025 and listed on the National Stock Exchange and BSE on 29 January 2025, has made small-city spiritual tourism a stated growth lane. In April 2026 it signed a 100-key Fortune property in Vrindavan, the Krishna pilgrimage town, lifting its Uttar Pradesh tally to 17 hotels and projects. That follows Fortune Select Ayodhya and Welcomhotel Prayagraj, both planted squarely in the temple-town belt.
The group has told the market it wants to scale to 250 hotels and more than 22,000 keys by 2031, from roughly 140 operating properties today. A large share of those signings are landing in Tier-2 and Tier-3 cities, where land is cheaper, competition is thin and a single big temple can anchor year-round footfall. You can see the brand strategy laid out across ITC Hotels’ six-brand portfolio, from luxury ITC properties down to the franchise-led Fortune line aimed at exactly these markets.
The Supply Math Behind the Boom
Zoom out and the numbers are large. India logged more than 303 crore domestic tourist visits in the year to February 2026, and domestic travel now accounts for close to 88 per cent of all tourism spending. The branded supply pipeline is being sized to match.
- 303 crore domestic tourist visits in the year to February 2026
- 20,000 new branded rooms expected across FY26 and FY27, a roughly 20 per cent jump in supply
- US$52 billion projected hotel market size by FY27, up from US$32 billion in FY20
The pull of pilgrimage cities shows in local economics too. In Kashi, the Varanasi temple economy, regional output has climbed from about Rs 22,586 crore in 2017 to an estimated Rs 56,900 crore (around US$6.7 billion) in 2026, on the back of roughly Rs 50,000 crore in investment. Numbers like that are why a budget chain such as OYO pledged 500 new hotels in religious hubs, and why the luxury players are no longer leaving these towns to them. Figures here draw on the India tourism and hospitality sector data set maintained by the India Brand Equity Foundation.
The Experiential Turn Behind the Bookings
Demand is not just moving geographically. It is changing shape. Guests are choosing where to stay based on wellness, food, heritage and local immersion rather than a checklist of monuments, and the chains have noticed. Radisson says spiritual destinations grew 41 per cent this summer, its second-fastest segment after the hills.
Chadha of ITC Hotels describes guests seeking heritage-inspired stays, forest and nature-led experiences, and trips that braid together wellness, gastronomy and destination storytelling. Bhatnagar at The Leela sees the same diversification, with experiential resorts, heritage destinations and wellness retreats pulling the strongest traction. Avni Tripathi, chief marketing officer at Aahana Resort and Spa, framed the change neatly when she said the sharper shift was not the volume of domestic travel but the kind of destinations travellers now want, from wildlife to wellness to spiritual circuits.
For operators, this is more profitable than it looks. An experience-led guest pays for the spa, the curated dinner and the guided heritage walk on top of the room, lifting spend per stay. That is part of how ratings agency ICRA expects average room rates to reach Rs 8,200 to Rs 8,500 (about US$96 to US$100) in FY2026, with premium occupancy holding at 72 to 74 per cent and operating margins near 34 to 36 per cent, according to its Indian hospitality industry outlook.
What Could Cool the Streak
None of this is risk-free. A strong summer driven partly by deferred outbound travel is, by definition, borrowing demand from somewhere. If West Asia calms and the rupee steadies, some of these guests will fly out next year instead, and the new rooms in Vrindavan and Ayodhya will open into a softer patch. A surge in supply, the same 20 per cent that excites investors, can also outrun demand and squeeze rates. The Estonian hotel trade learned that lesson when a packed events calendar did not translate into profit, a reminder that busy seasons and good margins are not the same thing.
If the geopolitical pressure eases and the affluent Indian traveller goes back to Europe, this summer reads as a cyclical blip. If the hills and temple towns keep the guests they won this year, the rooms going up across Tier-2 India will meet a demand curve that was already bending their way, and the chains will have called it right.
