According to research, overall hotel investments in India during January to June 2024 totaled $93 million, with listed businesses accounting for 44% of total transaction volumes. Furthermore, as per the JLL Hotel Investment Trends - India H1 2024 study, owner-operators accounted for 30% of overall transaction volumes, followed by high net worth individuals, family offices, and private hotel owners at 26% each.
According to the report, hotel investment volumes are predicted to reach $413 million this year, a 22% increase over 2023. The upscale segment accounted for 44% of overall transaction volume, followed by mid-scale (31%), luxury (23%), and economy (the remainder).
Six hotel transactions were closed in the first half of 2024, comprising operational assets in Tier I and leisure markets, as well as site leases in the airport district for greenfield development. According to the research, operational hotels accounted for around 72% of the transaction volume, while under-construction hotels accounted for 23%. The remaining transactions were related to land leases.
"The surge in investor interest for both operating assets and land sales demonstrates the attractiveness of the investment landscape, bolstered by favourable macroeconomic factors, an expanding commercial market, and improved air connectivity," JLL stated in the release, citing Jaideep Dang, managing director, hotels and hospitality group, India.
JLL has already completed two big transactions in the second half of 2024, including an operational hotel in Mumbai and a premium hotel property sale in Goa, he added. These trades have a combined value of $70 million.
In the first half of 2024, a total of 19,442 keys were signed, with Tier II and III cities accounting for 83% of them. Management contracts accounted for the majority of signings (89%), followed by franchises (8%) and lease and revenue share agreements (3%). According to the research, the number of greenfield projects in the first half of the year was over 13,700 keys, exceeding the total amount for the entire year of 2023, which was around 13,600 keys.
Tier-I markets such as Mumbai, Hyderabad, Pune, and Chennai saw hotel signings totaling more than 250 keys due to strong domestic demand and increased commercial activity.
Furthermore, in H1 2024, a total of 6,071 keys were added through new hotel openings, with the midscale sector accounting for 46% of the market, followed by upscale at 29%, upper upmarket at 12%, luxury at 8%, and economy at 5%. According to the analysis, Tier-I markets account for 78% of predicted transaction volumes, with Tier-II and III markets accounting for the remaining 22%. For the rest of 2024, the hospitality sector will continue to profit from the positive trends seen in the first half.
