Delhi: Hotel investment market in India is on track for robust growth, with a projected 22 percent increase in total transaction volume for 2024, according to the latest report by JLL. The Hotel Investment Trends – India H1 2024 report notes that the first half of the year saw investments reach USD 93 million, with projected volumes expected to rise to USD 413 million by the end of the year, indicating a 22 percent increase compared to 2023.
The report attributes the growth to strong domestic demand and thriving commercial activities, which have intensified investment interest leading to a sharp rise in transaction volumes across Tier I markets, including Mumbai, Hyderabad, Pune, and Chennai. In the first six months of 2024, six major hotel transactions were completed, ranging from operational assets in Tier I and leisure markets to land leases in airport districts for greenfield development.
Of the total transaction volume during this period, approximately 72 percent was related to operational hotels, 23 percent involved hotels under construction, and the remaining share consisted of land leases. JLL anticipates continued momentum in these segments, particularly in Tier I markets, which are expected to contribute 78 percent of projected transaction volumes for the remainder of the year.
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The activity in Tier II and III markets has also been noteworthy. These cities captured a large portion of hotel signings in the first half of 2024, suggesting a promising outlook for future growth. Out of the 19,442 hotel keys signed during this period, 83 percent were in Tier II and III markets. This trend underscores growing investor confidence in emerging markets beyond the traditional Tier I cities. Additionally, 13,700 of these keys were greenfield projects, a number higher than the 13,600 keys signed in 2023.
In terms of segment distribution, the upscale segment claimed the largest share of hotel transactions in the first half of 2024, accounting for 44 percent of the total volume. Mid-scale properties followed with a 31 percent share, luxury hotels captured 23 percent, and economy properties made up the remaining 3 percent. The mid-scale segment also dominated new hotel openings, with 46 percent of the 6,071 keys added in H1 2024 being in this category. Upscale hotels represented 29 percent of new openings, while the upper-upscale, luxury, and economy segments followed with 12 percent, 8 percent, and 5 percent, respectively.
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Looking ahead, the report forecasts that the hotel investment market will continue to benefit from favorable macroeconomic conditions, including expanding commercial activity and improved air connectivity. The second half of 2024 has already seen positive developments, with JLL facilitating two key transactions in hospitality markets, totaling USD 70 million. These include an operational hotel in Mumbai and a premium hotel land sale in Goa.
Commenting on the report, Jaideep Dang, Managing Director of Hotels & Hospitality at JLL, said, “The first half of 2024 has created a dynamic hotel transaction landscape for the rest of the year. Investor interest has increased in both operational hotels and land sales for new developments. This rise in activity highlights the appeal of the hotel market in India, supported by strong economic indicators, improved connectivity, and a growing commercial sector.”
With over 6,000 new hotel keys added in the first half of 2024, led by the mid-scale segment, the hospitality industry in the country is poised for a bright future. This ongoing expansion illustrates how the sector can effectively handle and adapt to market changes, driven by both local demand and international interest.
