India’s hospitality sector recorded a robust USD 93 million in investment activity during the first half of 2024, with the year expected to close at a projected USD 413 million, marking a 22 per cent increase compared to 2023, according to JLL‘s latest report on Hotel Investment Trends in India for H1 2024.
The report highlights that listed hotel companies dominated the transaction landscape, accounting for 44 per cent of the total investment volume. Owner-operators followed with 30 per cent, and High-Net-Worth Individuals (HNIs), family offices, and private hotel owners contributed 26 per cent to the total transactions.
Out of the total transaction volume, 72 per cent involved operational hotels, 23 per cent were under-construction properties, and the remaining were related to land leases. The first six months of 2024 saw six significant hotel transactions across Tier I and leisure markets, including land leases for greenfield development in key airport districts.
JLL anticipates a continued strong performance for the remainder of 2024, driven by favorable macro-economic conditions and growing investor interest. The second half of the year has already seen two major transactions facilitated by JLL, totaling USD 70 million, reinforcing the sector’s positive momentum. Tier I markets, including Mumbai, Hyderabad, Pune, and Chennai, continue to lead the way, accounting for 78 per cent of the projected transaction volumes, with Tier II and III markets making up the remaining 22 per cent.
In the first half of 2024, a total of 19,442 hotel keys were signed, with a significant 83 per cent of these located in Tier II and III cities. Management contracts were the preferred mode of operation, constituting 89 per cent of the signings, followed by franchises (8 per cent) and lease/revenue share agreements (3 per cent). The number of greenfield projects also surged, with approximately 13,700 keys signed, surpassing the total for all of 2023.
Radisson’s growth was spearheaded by the expansion of its Radisson Collection, Radisson Blu, and Radisson RED brands. The Radisson RED brand, in particular, made a notable entry into new markets such as Ireland, New Zealand, Thailand, Laos, and China, bringing its global portfolio to nearly 90 hotels. The introduction of Radisson Collection properties in key destinations further underscored the brand’s appeal in the luxury segment, with the signing of the first Radisson Collection in Paris, near the Louvre Museum, and the opening of the Radisson Collection Hotel, Roma Antica in Rome, close to the Pantheon.
Additionally, 6,071 keys were added through new hotel openings in H1 2024, with the midscale segment capturing the largest market share at 46 per cent. The upscale segment followed with 29 per cent, upper-upscale with 12 per cent, luxury with 8 per cent, and the economy segment with 5 per cent.Commenting on the market dynamics, Jaideep Dang, Managing Director of Hotels and Hospitality Group, India, JLL, said, “The first half of 2024 has set the stage for a vibrant hotel transactions landscape for the rest of the year. The projected year-end volume of USD 413 million reflects a 22 per cent growth over 2023. The surge in investor interest in both operational assets and land sales illustrates the attractiveness of the current investment environment, which is bolstered by favorable macro-economic factors, expanding commercial markets, and improved air connectivity. This positive outlook is further supported by the substantial hotel development activity across various tiers, with over 19,440 keys signed in the first half of 2024 alone.”
The report underscores the sustained confidence in India’s hospitality sector, driven by strong domestic demand, thriving commercial activity, and the continuous expansion of air connectivity, particularly in Tier I cities.
