ITC Hotels shares fell as much as 5% on Thursday, hitting a day’s low of Rs 173.25, despite posting solid year-on-year profit growth.

Compared to a year ago, ITC Hotels had a strong quarter. Profit jumped 36% to around Rs 181.91 crore, and revenue grew nearly 15% to Rs 936.02 crore. Margins improved too.

But investors weren’t comparing this quarter to last year, they were comparing it to the previous quarter, which was much stronger. Profit fell 43% and revenue dropped 25% compared to the January to March period.

That drop makes more sense once you understand how hotel businesses work. Demand for hotel rooms isn’t steady throughout the year, it swings with the seasons.

The March quarter usually benefits from wedding season and winter travel, both of which push occupancy and room rates higher.

The June quarter, by contrast, tends to be quieter because of the summer heat, so a sequential dip was somewhat expected, even if the size of the fall still spooked the market.

There was other news buried in today’s announcement too. ITC Hotels said it has agreed to buy full ownership of GHK Hospitality, a company that runs a 130 room hotel in Ahmedabad called Welcomhotel Ahmedabad.

The deal values the target company at Rs 155 crore and is expected to close sometime in the current quarter. It’s a small but steady business, having grown its revenue every year over the past three years.

ITC Hotels shares closed the day at Rs 174.00 on the NSE, down 5.17% compared to the previous close.

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