New Delhi, September 5th: Hotel investments in India reached USD 93 million in the first half of 2024, with projections pointing towards a total volume of USD 413 million for the year. This represents a 22% increase from the previous year. The robust activity was driven by a surge in investor confidence, favourable macroeconomic conditions, and expanding commercial markets.
Key Transaction Insights
According to JLL’s Hotel Investment Trends – India H1 2024 report, operational hotels led the investment volume, accounting for 72% of the total transactions from January to June 2024. Under-construction hotels represented 23% of the investments, while the remainder involved land leases for greenfield developments, including high-demand areas such as airport districts. JLL noted that six major hotel transactions were completed during this period, including operational assets in Tier I and leisure markets.
Looking ahead, the outlook for the rest of 2024 remains positive. Tier I cities, particularly Mumbai, Hyderabad, Pune, and Chennai, are expected to continue dominating the landscape, contributing to 78% of the projected transaction volume for 2024. Tier II and III cities are forecasted to account for the remaining 22%.
Market Segment Analysis
The upscale hotel segment secured the largest share of transactions in H1 2024, contributing 44% to the total volume. Mid-scale properties followed with 31%, while the luxury and economy segments contributed 23% and 3%, respectively. The varied interest across these segments reflects the broad spectrum of investor appetite in the hospitality industry.
Hotel Signings and Greenfield Projects Surge
India’s hotel industry also saw significant activity in terms of new signings. In the first half of 2024, 19,442 keys were signed, with Tier II and III cities claiming 83% of the total. Management contracts dominated these signings, accounting for 89%, followed by franchises (8%), and lease agreements (3%). Notably, greenfield projects surpassed 2023 levels, with approximately 13,700 keys signed in H1 2024, a testament to the sector’s growth potential.
New Hotel Openings: Midscale Leads the Pack
A total of 6,071 new keys were added in H1 2024 through new hotel openings. The midscale segment captured the largest share with 46%, followed by upscale (29%), upper upscale (12%), luxury (8%), and economy (5%). This expansion demonstrates the sector’s resilience and its ability to cater to a range of market demands.
Favourable Outlook for the Remainder of 2024
Jaideep Dang, Managing Director of JLL’s Hotels and Hospitality Group in India, expressed optimism for the sector’s performance in the second half of the year, citing increased investor interest and macroeconomic stability. “The surge in investor interest for both operating assets and land sales illustrates the attractiveness of the investment landscape, bolstered by favorable macroeconomic factors, an expanding commercial market, and improved air connectivity,” he said. He also highlighted the continued hotel development activity, which saw over 19,440 keys signed in H1 2024 alone.
Conclusion
With a strong first half and encouraging developments in Tier I and II markets, India’s hotel industry is poised for a year of substantial growth. JLL’s forecast of USD 413 million in transactions for the full year, combined with the increasing volume of new hotel signings and projects, underscores the sector’s long-term potential.