New Delhi, Dec. 9 -- Amid the peak travel season, India's hospitality and tourism sector has suffered a temporary slump due to IndiGo, the country's largest budget carrier, cancelling thousands of flights and leaving scores of travellers stranded across major cities.

Many hotel chains reported as much as 10% cancellations in bookings following the mass flight cancellations that affected business, weddings, and holiday plans. The October-December quarter is a critical travel season in the country, with weddings and family holidays typically scheduled during the winter months.

"We saw a lot of cancellations and are still facing some, but numbers have gone down drastically. What began as about 10% cancellations is now down to 1-2%, with an...