The US-Iran war could weigh on tourism-related stocks, as rising crude oil prices push up operating costs and security concerns dampen travel demand and sentiment.
While airlines are likely to be the most vulnerable due to higher fuel expenses, hotels and medical tourism players could also face near-term pressure from softer bookings and more cautious consumer behaviour.
“Airline stocks will face a double whammy of rising crude oil prices and weaker travel demand. While higher fuel costs directly hurt margins, geopolitical uncertainty leads to flight cancellations, lower passenger traffic, and reduced seat occupancy as travelers defer or cancel plans,” said Siddharth Bhamre, head of institutional research at brokerage Asit C Mehta Institutional Equities.
Since tensions began escalating on 26 February, Brent crude has risen from $71.7 per barrel to $79.7 per barrel as of 3 March. The surge comes on top of already high aviation fuel costs.
InterGlobe Aviation Ltd, the operator of India’s largest carrier by market share, IndiGo, derived around 30% of its expenses from aviation fuel in the December quarter, according to the company’s investor presentation. For SpiceJet, the corresponding figure stood at the same level at about 30% in Q3FY26.
For Interglobe Aviation, aviation fuel costs rose 8.1% year-on-year to ₹6,944 crore in the December quarter, affecting its margins. Indigo’s EBITDA margin fell from 27.4% in Q3FY25 to 25.6% in Q3FY26. For Spicejet, the aviation fuel costs increased 17% on-year to ₹548 crore in Q3FY36. EBITDA is short for earnings before interest, taxes, depreciation, and amortization.
“The impact is likely to show up in the fourth quarter, as March is a key travel month and higher, so aviation stocks and hotel companies will see some impact in earnings in Q4,” Bhamre said.
Interglobe Aviation fell 6.09% in Monday’s trading session, while Spicejet fell 5.72%.
West Asia accounted for 41% of all international flights from India as of 2023, according to a report, Value of Air Transport to India, by industry body International Air Transport Association (IATA). Dubai alone handled 5% of India’s total international departures, the report noted.
Brunt of the war
“ Hotel stocks could face short-term pressure if geopolitical tensions lead to higher airfares and a slowdown in international travel. Any spike in crude oil prices feeds into costlier flights, prompting travelers to defer leisure trips, which in turn impacts hotel occupancy, food and beverage revenues, and ancillary spending,” said Kranthi Bathini, equity market strategist at investment management firm Wealthmills Securities.
The impact is expected to be largely temporary and more visible if travel plans are postponed during key months such as March, Bathini added.
For Indian Hotels Co. Ltd (IHCL), ₹Rs 6,035 crore, or 22% of its consolidated operating revenues in Q3FY26 came from international business, according to its investor presentation. The same for ITC Hotels was not available.
For hotels, the direct impact will be on properties outside the country, where travelers may delay their plans due to the ongoing conflicts, according to experts.
IHCL and ITC fell 2.4% and 2.04%, respectively, in Monday’s trading session, compared with the Nifty’s 1.2% decline.
