India’s hospitality sector saw significant growth in the first half of 2024, attracting $93 million in investments according to the JLL Hotel Investment Trends-India H1 2024 report. This period has been marked by a substantial increase in hotel transactions, demonstrating the sector's robust appeal among investors.
The report highlights that listed hotel companies led the transaction activity, contributing 44 percent of the total transaction volumes. Owner-operators followed with a 30 percent share, while high-net-worth individuals (HNIs), family offices, and private hotel owners accounted for the remaining 26 percent. This distribution underscores a diverse range of investment sources fueling the sector's expansion.
Looking ahead, the report projects that hotel investment volumes for the entire year will reach $413 million, reflecting a 22 percent increase compared to 2023. This growth is attributed to the increasing investor confidence and the sector's attractiveness, driven by favourable macroeconomic conditions, an expanding commercial market, and improved air connectivity.
In terms of transaction types, the upscale segment emerged as the leader, capturing 44 percent of the total transaction volume. The mid-scale segment followed with 31 percent, while luxury hotels made up 23 percent of the transactions. The economy segment, though smaller, accounted for 3 percent of the total.
During the first six months of 2024, there were six notable hotel deals, including both operational assets in major cities and leisure markets, as well as land leases for new developments in airport districts.
Operational hotels dominated these transactions, representing about 72 percent of the volume. Under-construction hotels made up 23 percent, with the remaining transactions related to land leases.
Jaideep Dang, Managing Director of JLL's Hotels and Hospitality Group in India, noted the surge in investor interest for both operating assets and land sales. He attributed this rise to favourable macroeconomic factors and increased commercial activity.
JLL facilitated two significant transactions at the start of the second half of 2024: an operational hotel in Mumbai and a premium hotel land sale in Goa, totaling $70 million.
The report also highlights that 19,442 hotel keys were signed in the first half of 2024. A significant 83 percent of these were located in Tier-II and Tier-III cities. Management contracts dominated with 89 percent of signings, followed by franchises at 8 percent, and lease and revenue share agreements at 3 percent.
The number of greenfield projects surpassed previous figures, with around 13,700 keys planned for 2024, exceeding the entire count for 2023.
In Tier-I markets such as Mumbai, Hyderabad, Pune, and Chennai, hotel signings with over 250 keys were reported due to strong domestic demand and growing commercial activity.
Additionally, 6,071 new hotel keys were added in H1 2024, with the midscale segment capturing the largest share at 46 percent, followed by upscale at 29 percent, upper upscale at 12 percent, luxury at 8 percent, and economy at 5 percent.
The report concludes that Tier-I markets are expected to account for 78 percent of the projected transaction volumes, while Tier-II and Tier-III markets will represent the remaining 22 percent. The hospitality sector is poised to continue benefiting from these positive trends throughout the remainder of 2024.
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