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India's hospitality sector sees $93 million investment surge in H1 2024
The Indian hospitality market is thriving with $93 million in investments during the first half of 2024. Key growth is seen in Tier II and III cities
The country’s hospitality sector recorded an investment activity of around $93 million in the first half of the year (January to June 2024). Listed hotel companies accounted for 44% of the total transactions volume, followed by owner-operators (30%), and HNIs, family offices and private hotel owners (26%), a report by JLL has shown.
Listed hotel companies led the hotel transactions in the first half of 2024, with the upscale segment claiming the highest share of the total transaction volume (44%), followed by mid-scale (31%), luxury (23%), and economy (3%) segments. In the first half of 2024, a total of 19,442 keys were signed, with 83% of them located in Tier II and III cities.
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The year is expected to end on a strong note, at a forecasted volume of $413 million, a 22% increase from the previous year. H1 2024 witnessed 19,442 keys in terms of branded hotel signings and 6,071 keys in terms of branded hotel openings, as per the report titled Hotel Investment Trends - India H1 2024.
Of the transaction volume, approximately 72% were related to operational hotels, 23% involved under construction hotels, and the remaining involved land leases. During the first six months of 2024, six hotel transactions were concluded, ranging from operational assets in Tier I and leisure markets to land leases in the airport district for greenfield development.
Hospitality investments in Tier 1 and Tier 2 markets
JLL anticipates that the remainder of 2024 will continue to benefit from the favorable trends observed in its first half. The second half of 2024 has already started positively, with two transactions facilitated by JLL in key hospitality markets, totaling $70 million. Tier I markets remain robust, accounting for 78% of the projected transaction volumes, while Tier II and III markets make up the remaining 22%.
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Listed hotel companies led the hotel transactions in the first half of 2024, with the upscale segment claiming the highest share of the total transaction volume (44%), followed by mid-scale (31%), luxury (23%), and economy (3%) segments.
In the first half of 2024, a total of 19,442 keys were signed, with 83% of them located in Tier II and III cities. Management contracts accounted for the majority of signings (89%), followed by franchises (8%), and lease and revenue share agreements (3%).
The number of greenfield projects in the first half of 2024 (around 13,700 keys) surpassed the count for the entire year of 2023 (~13,600 keys), demonstrating the enduring confidence of hotel developers in the sector's long-term growth.
Tier I markets such as Mumbai, Hyderabad, Pune, and Chennai witnessed hotel signings with 250+ keys, indicating sustained interest in these cities due to strong domestic demand and thriving commercial activity, the report noted.
Furthermore, in H1 2024, a total of 6,071 keys were added through new hotel openings, with the midscale segment capturing the largest market share (46%), followed by upscale (29%), upper upscale (12%), luxury (8%), and economy (5%) segments.
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“The first half of 2024 has paved the way for a dynamic hotel transactions landscape for the rest of the year, with the entire year’s forecasted volumes at $413 million, a 22% growth over 2023 volumes. Notably, JLL has already facilitated two significant transactions at the onset of the second half of 2024, comprising an operational hotel in Mumbai and a premium hotel land sale in Goa,” said Jaideep Dang, Managing Director, Hotels and Hospitality Group, India, JLL.
“The surge in investor interest for both - operating assets and land sales illustrate the attractiveness of the investment landscape, bolstered by favorable macro-economic factors, an expanding commercial market, and improved air connectivity. This positive outlook is further reinforced by the substantial hotel development activity witnessed across various tiers, with over 19,440 keys signed in the first half of 2024 alone,” he added.
