According to JLL India’s ‘Hotel Investment Trends – India 2023’ report, India’s hospitality industry saw a remarkable investment activity of $401 million in 2023. This marked a nearly fourfold increase from the previous year’s investment of 2022.
In 2023, JLL noted a peak of 22 hotel transactions, the most significant volume of asset exchanges in the past decade. High net worth individuals and institutional investors were predominantly responsible for driving this increased transaction activity.
The report highlights a notable 80% year-on-year surge in hotel transaction volumes, totaling $78 million for the first quarter of the calendar year 2024, spanning from January to March.
In 2023, the hotel industry witnessed a record number of signings and openings, with 25,176 keys signed and 12,647 keys opened. Additionally, greenfield projects accounted for 13,600 keys in 2023, showing a significant increase from 8,000 keys in 2022. This growth underscores developers’ confidence in the sector’s long-term growth potential.
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Jaideep Dang, who serves as the Managing Director of the Hotels and Hospitality Group for India at JLL, remarked that 2024 has begun with robust momentum, evidenced by notable hotel deals occurring early in the year.
“2023 has been a record year for hotel investments as well as for the opening and hiring of new, branded hotels. The strong performance of hotel stocks, which also gave confidence to hospitality businesses entering public markets and achieving good valuations, has further bolstered the sector’s enthusiasm, he said.
“We anticipate that this development will continue in 2024 due to a variety of growth avenues, including expanding commercial office markets, the construction of new airports and motorways, and an increase in pilgrimage travel, which will result in the emergence of new real estate and tourism hotspots across the nation,” he continued.
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There were five transactions conducted through the insolvency resolution process by the National Company Law Tribunal (NCLT) in 2023, representing 33% of the total transaction value, which amounts to $133 million.
JLL reported a growing interest in hotel development activity in tier two cities, with 54% of the total signings occurring in these areas. Approximately 25% of last year’s total transaction value was attributed to under-construction hotels in both business and leisure destinations.
The upper upscale segment recorded the highest number of keys exchanged, followed by the upscale, luxury, and midscale segments. Although management contracts still make up the majority of signings, accounting for 78% of the total number of keys, there has been a significant rise in lease and revenue-sharing models across various tiers, making up 4% of the total keys signed. According to the JLL report, the performance of the commercial sector has directly benefited major urban centers. Tier one cities saw the highest number of keys signed since 2020, with a notable increase of 31% compared to 2022.
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