The Indian hotel industry is on its way to recovery, as evident from a survey wherein 75 per cent of the respondents said their business prospects would improve in the next six months.

"While nearly 40 per cent of the participants said the current performance of their industry is moderately-to- substantially better than the last six months, nearly 75 per cent feel that the hotel industry's performance would improve in the next six months," a FICCI study said.

It said, although the mood among the hotel industry is "fairly buoyant", the degree of optimism differed from four star- and five-star categories to two- star and three-star categories.

According to the survey, five-star hotels are seeing an improvement in business on account of an increase in the number of foreign tourists, given the signs of improvement in the global economy.

The domestic corporate travel is showing revival signs.

Slowdown coupled with Mumbai terror attacks in November 2008 had hit the hospitality sector and the average occupancy rate dropped by about 50 per cent.

Further, the study said budget hotels (two- and three- star are still waiting to see some improvement in their performance, as they depend largely on domestic tourists.

"Tourist flows to these hotels are still limited and it will take some time for them to pick up.." the survey said.