Indian hospitality sector sees USD 401 million investment in FY23, reports JLL, ET TravelWorld

In a recent report titled ‘Hotel Investment Trends – India 2023,’ JLL India unveiled significant growth and positive trends in the hospitality sector, particularly during the first quarter of 2024. According to the report, there was a noteworthy 80 per cent Year-on-Year surge in hotel transaction volumes, amounting to USD 78 million in Q1FY24.

The sector has been on an upward trajectory since 2023, witnessing record hotel signings and openings. In 2023 alone, there were 25,176 key signings and 12,647 key openings, with a notable interest in hotel development activities shifting towards Tier-2 cities, accounting for 54 per cent of total signings.

Hotel investments in India surged to USD 401 million in 2023, marking a four-fold increase compared to 2022. A significant portion, 25 per cent of the total transaction value, involved under-construction hotels across both business and leisure destinations. Additionally, 2023 saw a milestone of 22 hotel transactions, the largest in a decade, with three hotel companies debuting on the stock market through IPOs. Greenfield projects in 2023 added approximately 13,600 keys, showcasing developers’ enduring confidence in the sector’s long-term growth potential.

Jaideep Dang, Managing Director of Hotels and Hospitality Group at JLL India, commented, “The year 2023 witnessed record hotel investments, new openings, and signings, setting a strong foundation for 2024. The sector’s enthusiasm is bolstered by the performance of hotel stocks, leading to more companies entering public markets with robust valuations. We anticipate this positive trend to continue in 2024, driven by various growth avenues such as expanding commercial markets and infrastructure development.”

Key highlights from the report include:
– High Net Worth Individuals (HNIs) and Institutional Capital were major contributors to hotel investments, accounting for 3 per cent of total investments.- Real estate developers constituted 27 per cent of investments, followed by owner-operators at 11 per cent.

– The upper upscale segment witnessed the highest number of key transactions, followed by upscale, luxury, and midscale segments.

– Five transactions facilitated through the insolvency resolution process under the National Company Law Tribunal (NCLT) represented 33 per cent of the total transaction value, amounting to USD 133 million.

– Management contracts continued to dominate signings, comprising 78 per cent of total key signings, with an increase noted in lease and revenue share models across different tiers, making up 4 per cent of total keys signed. Tier 1 cities experienced a notable increase of 31 per cent in key signings compared to 2022, driven by the robust performance of the commercial sector.