The COVID-19 pandemic hit businesses worldwide. But one sector that bore the brunt of it was hospitality, which brought the hotel industry to a standstill. Nationwide lockdowns, travel bans, and consumer fear caused a massive drop in hotel occupancy during the pandemic years.
In India, occupancy levels for branded hotels fell from over 65% in 2019 to as low as 18% in Q1 FY21. Revenue per available room (RevPAR) collapsed, and many hotels, including those in the small cap category, reported heavy losses and suspended operations.
Fast forward to 2025, and the story is remarkably different. Things have stabilised, and hotel companies, especially in the small cap category, have managed to make gains and get back to profitability. Here’s a look at what happened and how these hotel companies have recovered.
COVID stressors
During the COVID-19 pandemic, small-cap hotel companies in India faced severe challenges that led to losses and profit declines in FY21 and FY22.
- Occupancy dip: Occupancy rates collapsed due to lockdowns, travel bans, and a near-total halt in international tourism. This sharp drop in demand triggered a dramatic fall in revenues, with many listed operators reporting sustained losses through FY21 and FY22.
- High fixed costs: The situation was made worse by the high fixed costs that are typical of the hospitality industry. Expenses related to debt servicing, property upkeep, and staffing weighed heavily while income dried up. Even when occupancy was low, hotels still incurred costs for maintaining and sanitising their properties, which added to the fixed expenses. An ET Hospitality expert points to how hotels need to be at 40-50% occupancy just to keep up with the fixed costs, something that took a nosedive during the pandemic, leading to a rapid erosion of margins.
- Cost-cutting: While larger hospitality companies had access to more capital, small hotels, often with less financial flexibility, faced significant challenges in meeting debt obligations during the COVID period of low or no revenue. These firms were forced to implement several cost-cutting measures, including layoffs, multitasking workforce, reducing the staff/room ratio and reducing overhead expenses.
Post-COVID bounceback and demand drivers
Once the pandemic ended, lockdowns lifted and borders opened, a number of factors contributed to the rise in travel and demand for hotel stays.
- Revenge travel: The phrase “revenge travel” entered popular vocabulary in 2021–2022, capturing the pent-up desire of consumers to resume travel. While international travel remained restricted initially, domestic tourism saw a surge. For small-cap hotel companies, this was a key turning point. Hotelivate’s Indian Hospitality Report 2023 notes that the trend of “revenge travel” helped fuel strong occupancy and ADR (average daily rate) growth across branded hotels in fiscal 2022–23. Domestic tourism was identified as a primary growth driver with occupancy rising and ADR reaching record highs across segments. The Economic Survey FY23 noted average hotel occupancy was around 42–45% in 2021, recovering to 68–70% by November 2022—effectively matching pre-pandemic 2019 levels.
- Supply-demand imbalance: According to industry analysts, while demand for hotel rooms recovered strongly, the supply of new rooms lagged behind. Developers paused or canceled hotel construction during the pandemic, which created a favourable environment for existing hotel players, including small caps. The imbalance between hotel room supply and burgeoning demand helped elevate room rates and enhance profit margins.
- Cost rationalisation: One positive outcome of the pandemic was that it pushed small-cap hotel companies to become more cost-conscious. Faced with high operating expenses and heavy losses, many hoteliers took proactive steps to cut costs. This included employee pay cuts, layoffs, deferring non-essential renovations, renegotiating AMC contracts and lease rentals, and reducing corporate overheads. These efforts helped bring down fixed costs significantly. At the same time, the adoption of digital check-ins, contactless services, and more efficient food and beverage operations helped improve margins, even as revenues were slow to recover. As demand eventually returned, hotels were leaner, more efficient, and better positioned for profitability.
Hotel companies post-COVID, haven’t just recovered, they have managed to grow and even achieve good profits. India’s hospitality and tourism industry continues on a strong growth path, supported by rising travel demand, increasing domestic consumption, and sustained investment in infrastructure and services. Here’s a closer look at 3 small cap hotel companies that have shown steady gains post pandemic.
Samhi Hotels Ltd (SAMHI)
Among the small-cap hotel companies making headlines, Samhi Hotels Ltd. has emerged as a major turnaround story. Backed by investor Madhuri Madhusudan Kela and known for acquiring and rebranding distressed assets, Samhi operates properties under brands like Marriott and Hyatt. The company’s revenue for the December 2024 quarter stood at ₹295 crore, up from ₹267 crore the previous year, and it reported a net profit of ₹23 crore, a significant reversal from its ₹74 crore loss a year earlier. The gains can be attributed to higher occupancy and improved operational efficiencies.
Apeejay Surrendra Park Hotels Ltd (PARKHOTELS)
Once beaten down by the pandemic, Apeejay Surendra Park Hotels Ltd has staged a strong comeback. ASPHL operates the brands The Park, The Park Collection, Zone by The Park and Zone Connect in their hotel portfolio.
The company reported impressive financial results for the fourth quarter and full financial year ending 31 March 2025, with a net profit of ₹84 crore, reflecting a 22% year-on-year growth. ASPHL also achieved an industry-leading occupancy rate of 92 per cent during Q4. The company has capitalised on demand recovery in business and boutique luxury segments.
The group’s expansion into Tier 2 and Tier 3 markets and the recent acquisition of Zillion Hotels and Resorts, along with the launch of Zone Connect by The Park in Jaisalmer, has reinforced ASPHL’s footprint in the upscale and upper mid-scale segments. Meanwhile, its flagship brand, The Park Hotels, continues to lead the upper upscale category, particularly in terms of revenue per available room (RevPAR).
EIH Associated Hotels Ltd (EIHAHOTELS)
EIH Associated Hotels, as part of the Oberoi group’s flagship entity, benefited from strong global and domestic travel resurgence. A joint venture between the Oberoi Family and the Rajan Raheja Group, EIH Associated Hotels Ltd owns premium hotels under the luxury Oberoi and five-star Trident brands.
In the aftermath of the COVID‑19 crisis, EIH Associated Hotels Ltd., part of the Oberoi Group, orchestrated a well-paced financial recovery, capitalising on renewed demand across its luxury portfolio. EIH hotels operated at high occupancy (80–85%) with ARR rising to above ₹24k in Q4 FY 25. There has been strong room revenue tailwinds across all segments, including corporate, leisure and MICE. For fiscal year 2025, EIH Limited reported consolidated revenues of ₹2743 crore, up 10% year on year and a profit after tax of ₹770 crore for the full fiscal year, up 14% year on year – a marked improvement from losses in FY21 and FY22.
A story of resilience and revival
The COVID‑19 pandemic compelled many small‑cap hotel businesses to improve cost discipline and operational efficiency, switching to leaner models. And it has paid off: a report from ratings agency ICRA (Information and Credit Rating Agency) has revised the outlook on the Indian hotel industry to stable, with the pace of growth set to normalise by FY2026.
And now, five years since the pandemic, publicly listed small-cap hotel companies in India have not just survived, but in some cases, thrived. Backed by a resurgence in domestic tourism, cost discipline, and a shift in market perception, this segment has seen a strong revival and will be one to watch out for in the quarters ahead.
Sources
ET Hospitality: Leading the restructured hospitality landscape
ET Hospitality: Hospitality reborn: Adapting costs and strategies for a resilient future
Hotel Management Network: India’s hotel supply shortage drives room rates up
Telegraph: Demand-supply gap, post-Covid recovery to push hospitality industry’s growth prospects
IIFL: Samhi Hotels Swings to 22.7 Cr profit in Q3, Revenue up 10%
ET: Madhuri Kela-backed smallcap stock zooms nearly 100% in 3 months, hits new all-time high
NDTV Profit Markets: Samhi Hotels – What Will Aid Inventory Additions?
BW Hotelier: ASPHL announces financial results for Q4 FY 24-25
Get Transfer: Apeejay Surrendra Park Hotels Reports ₹84 Crore Profit and Significant Growth