Shares of Indian Hotels Co., Lemon Tree Hotels Ltd., Chalet Hotels Ltd. and EIH Ltd. were under pressure last month after the companies reported weak first-quarter results, with revenues rising 6-20% compared to 16-26% a year ago.

According to Nuvama Research, growth slowed this quarter due to several temporary industry headwinds. “Extreme heatwaves caused the leisure group to either postpone their trips or travel abroad.”

Fewer wedding days during the seasonally strong quarter for weddings impacted the MICE (meetings, incentives, conferences and exhibitions) segment, it said. These two factors, together with the elections, led to weaker growth in the sector.

The research firm found that margins at most companies either declined or remained flat in the first quarter of fiscal 2025 due to lower productivity.

Lemon Tree’s margin shrank 5% year-on-year due to increased spending on renovations, it said.

Occupancy also declined in the April-June period due to severe heat waves, fewer wedding days, weaker MICE business and the impact of union elections, said Nuvama.

Lemon Tree Hotels saw a decline in occupancy during the quarter as about 25 percent of the company’s total Keys portfolio was closed for renovations, the research firm said.

The overall growth rates of these hotel chains fluctuated considerably in the first quarter of fiscal 2025 compared to the same period last year. Some chains, such as Lemon Tree Hotels, experienced strong growth, while others, such as Chalet Hotels, only saw a 1% increase in room rates.

Chalet has seen a slower growth in its room rates due to the 16-17% decline in the Pune market and capacity additions at Novotel Pune. The company expects this to normalise from October onwards.

In Mumbai, Vashi Hotel reported a 7% decline in revenue per available room, due to a significant increase in room availability at hotels in Navi Mumbai.

Despite the subdued development in the first quarter, most players are optimistic about growth in the second half of the year.

Here’s a look at what management has to say.