Longer heatwaves caused by El Niño have become a cautionary factor for the wider market, with dropping water reservoir levels setting off alarm bells for highly populated cities like Mumbai and Delhi. Brihanmumbai Municipal Corporation, which manages water supplies to Mumbai, has halted water for construction sites and swimming pools and cut supplies for commercial and industrial users by a fifth, in turn prompting some hotels to curtail services like laundry and pool access, the people cited above told Business Standard.

 


“Some impact on hotel operating costs can be expected, especially as the water shortage comes at a time when fuel costs, including LPG (liquefied petroleum gas) prices, have increased due to the ongoing crisis in West Asia,” said K B Kachru, president, Hotel Association of India (HAI) and chairman, South Asia, Radisson Hotel Group.

 


“The West Asia conflict already hurt inbound and Gulf linked revenue in the March quarter and a weak monsoon can slow down discretionary spending for the next two to three quarters,” cautioned Nandivardhan Jain, founder and CEO at Noesis Capital Advisors, a hospitality investment advisory and hotel consulting firm.

 


Puneet Chhatwal, managing director and CEO at Indian Hotels Company Ltd, India’s largest hospitality provider, pointed to these concerns in the company’s annual report for FY26 issued on Tuesday.

 


“FY26 was a volatile year marked by geopolitical shifts, extreme weather events, international trade limitations and airline disruptions. The volatility continues into the current financial year through the ongoing West Asia conflict with extended economic impact of rising fuel prices and broader retail inflation implications,” he said.

 


The red flags come as the Indian summer holiday season reaches its culmination where a larger share of travellers have chosen to explore Indian destinations rather than go overseas. The overall cost of an overseas trip has risen 20-30 per cent owing to higher air fares, again linked to rising fuel costs. Prime Minister Narendra Modi’s call to avoid foreign travel, aimed at conserving foreign exchange, has added to this shift.  

 


Hotel operators are taking measures to prevent a slide in occupancies, which would create a dent in revenue and hurt profitability.  

 


Chander K Baljee, chairman and managing director at Royal Orchid Hotels Ltd which operates Royal Orchid Hotels, Regenta Hotels and ICONIQA Hotels, said water conservation and resource management initiatives, including sewage treatment plants, water-efficient fixtures, and regular monitoring of consumption patterns to optimize usage and minimize wastage, were being implemented across the portfolio in anticipation of increasing water stress in certain regions.

 


“In markets that may face water shortages, hotel teams are working closely with local authorities, utility providers, and approved suppliers to ensure adequate water availability and operational continuity,” he added. Guests are being encouraged to reuse towels.

 


Tejus Jose, director of operations, ibis & ibis styles said the company was adopting measures such as water-efficient fixtures, regular monitoring of consumption patterns, preventive maintenance to minimise leakages, and wastewater treatment and recycling wherever infrastructure permits. “The industry has become increasingly agile in managing external challenges, whether they relate to utilities, input costs or broader geopolitical developments. Building resilience through disciplined operations, sustainability initiatives and long-term planning enables us to navigate these evolving conditions while continuing to deliver a consistent guest experience,” he added.

 


“Across our hotels, we actively implement measures such as water-efficient fixtures, consumption monitoring, and reuse systems where feasible, along with other best practices across our operations,” said Sudeep Jain, MD SWA IHG Hotels & Resorts, adding that sustainable resource management is becoming increasingly important for the hospitality industry, .

 


Noesis’ Nandivardhan Jain, however, added that utilities were about 8 per cent of expenditure, so if hotels were planning for solar power, piped gas and water recycling right at the design stage, the cost is recouped in three to four years, saving money over the next 30 years. “Build it right once, or pay the cost every summer for the life of the hotel,” he said.

 


Shwetank Singh, managing director & CEO, Chalet Hotels Ltd said the sector’s growth prospects have been given a strong cushion by the fact that people are now travelling through the year rather in the two peak holiday seasons of summer and winter.

 

“The hospitality industry is now far more resilient in managing short-term variables, whether it’s weather patterns or input costs. We are encouraged by the recent moderation in commercial fuel prices, which is a welcome development,” he said. 


Monsoon rainfall drops to a third 


Rainfall across India since the advent of the southwest monsoon this year (between June 1 and July 2) has been around 33 per cent below the long period average despite a recent uptick. With El Niño established, most weather-watchers, including the India Meteorological Department (IMD), expect “below-par” monsoon rainfall in the crucial month of July, as well.  Sanjeeb Mukherjee