- Hotel transaction volumes in Q1FY24 at USD 78 million
- Approximately 25% of the total value was transacted for under-construction hotels across business and leisure locations
JLL India, the country’s largest consultancy firm today released its latest report titled ‘Hotel Investment Trends – India 2023,‘ highlighting the growth and positive start of the first quarter (Jan-March) of 2024 in the hospitality sector. The report mentions that the first quarter of 2024 witnessed a significant 80% Year-on-Year increase in hotel transaction volumes, reaching USD 78 million.
The sector has been witnessing good surge since last calendar year (2023). A record number of hotel signings and openings took place in 2023, with 25,176 keys signed and 12,647 keys opened. There is an increasing interest in hotel development activity in Tier-2 cities, with 54% of the total signings taking place in these locations.
In 2023, Hotel Investments in India touched USD 401 million which was nearly four-fold the volumes witnessed in 2022. 25% of the overall value of transactions involved under-construction hotels in both business and leisure destinations. 2023 also achieved a significant milestone of 22 hotel transactions, which is the largest number of assets traded in the last decade. It also saw three hotel companies successfully debuting on the stock market through their Initial Public Offerings (IPOs). There were greenfield projects, totaling approximately 13,600 keys in 2023, surpassed the figure from the previous year (8,000 keys), showcasing the enduring confidence of hotel developers in the long-term growth potential of the sector. Furthermore, the report notes, the emergence of tourism and leisure destinations as centers for Meetings, Incentives, Conferences, and Exhibitions (MICE) activities, with the signing of three large-format hotels with a total of approximately 900 keys.
“The year 2023 has been a record year not only in terms of hotel investments but also in terms of new branded hotel openings and signings. Furthermore, 2024 has started with strong tail winds as we saw prominent hotel deals early on in this year. The enthusiasm of the sector is further strengthened by performance of hotel stocks, which also gave confidence to a couple more hotel companies entering public markets and achieving strong valuations. We expect this story to continue in 2024 on back of diversified avenues of growth such as expanding commercial office markets and with development of infrastructure such as new airports, expressways, increasing pilgrimage travel leading to the emergence of new realty & tourism hotspots across the country”, stated Jaideep Dang, Managing Director, Hotels and Hospitality Group, India, JLL.
Key highlights of the report are as below:
- High Net Worth Individuals (HNIs) and Institutional Capital played a major role in hotel investments activity during 2023, accounting for the largest share at 31%.
- Real estate developers accounted for 27% of investments, followed by owner-operators at 11%.
- The upper upscale segment saw the highest number of keys changing hands, followed by the upscale, luxury, and midscale segments.
- There were five transactions facilitated through the insolvency resolution process under the National Company Law Tribunal (NCLT), representing 33% of the total value of transactions in 2023, which amounts to USD 133 million.
While management contracts continue to dominate the majority of signings, representing 78% of the total number of keys, there has been a notable increase in lease and revenue share models across different tiers, comprising 4% of the total keys signed. The robust performance of the commercial sector has directly benefited major urban centers, as Tier 1 cities experienced the highest number of keys signed since 2020, with a notable increase of 31% as compared to 2022.
Also Read: India’s hospitality sector witnessed 15.8% year-on-year RevPAR growth in Q4, 2023
