Research

India | April 2024

jll.co.in

Hotel investment
trends in India
A spotlight on 2024, reflecting on 2023
Hotel investment trends in India

01
Hotel investments

2023 in review Outlook

Hotel investments in 2023 touched USD We expect 2024 to ride on the tailwinds of
401 million which was nearly four-fold the 2023. Q1 2024 has already begun on a high
volume witnessed in 2022. The year also note with an 80% y-o-y growth in trade
saw three hotel companies launching their volumes as compared to Q1 2023. This year
Initial Public Offerings (IPOs) and successfully is expected to be characterized by a variety
listing. We’ve witnessed these companies of transactions ranging from marquee hotels
achieving a premium over their issue price, in tier 1 markets to land leases in airport
indicating significant investor appetite for districts and greenfield developments in
hotel investments. The buoyancy in the sector emerging markets. Hotels located within
is expected to continue into 2024 with a few mixed-use developments and growth
more entities following this route. corridors in proximity to key infrastructure
will also contribute to the next phase of the
hotel investment story.

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Hotel investment trends in India

Key highlights

1 CY 2023 recorded 22 deals, marking the largest

number of assets traded in the last decade.

2
About 25% (6 assets) of the transaction volume
was for under-construction hotels across
business and leisure locations.

The upper upscale segment witnessed

3 the highest number of keys being

transacted, followed by upscale, luxury, and
midscale segments.

HNIs and Institutional Capital* accounted for

4
the largest volume of investments in 2023 (31%),
followed by Real Estate Developers (27%) and
Owner-Operators (11%). The mix remains almost
similar despite a huge increase in the sample set.

The year also witnessed five transactions

5
through the insolvency resolution process
under the NCLT, accounting for 33%
of the total transacted value in 2023,
which equates to ~USD 132 million.

*The high share of institutional capital is due to the additional infusion of capital towards the
completion of an older investment
**Large format hotels refer to hotels with 250+ keys

3
Hotel investment trends in India

Figure 1
Hotel investment sales

USD Mn
900
800 762

700
600
500
401
400 362
300
200 284
82 67 76
100
42 11 78
0
2017 2018 2019 2020 2021 2022 2023 2024 (F)
Transaction volume Forecasted volume

Figure 2 Figure 3
Source of capital - Hotel No.of keys transacted
Transaction volume (2023) by segment (2023)

31% HNI/Other 12% Luxury

31% PE/Institutional
capital 44% Upper upscale

27% RE developer 32% Upscale

11% Owner
12% Midscale
operator

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Hotel investment trends in India

Hotel signings
1 CY 2023 witnessed the highest number
of signings till date (25,176 keys). Most
of these signings are concentrated in
4 The number of greenfield projects in 2023
(~13,600 keys) crossed that of 2022 (~8,000
keys), indicating the sustained confidence
tier-2 cities (54%). of hotel developers in the sector’s
long-term growth.

2 While management contracts continue to

hold the higher share of signings
(78% of the total number of keys), there has 5 Strong commercial sector performance has
directly benefited key urban centers – tier
been a significant uptick in lease / revenue 1 cities saw the highest number of keys
share models (4%) across tiers. signed since 2020. The number of keys
signed in 2023 also recorded a notable rise

3 The rising share of lease / revenue share

agreements in tier-1 cities (5% of the total
of 31% as compared to 2022.

number of keys signed) indicate hotel

developers’ increased confidence and hotel
owners’ growing interest in models with less
6 Tourism & leisure destinations have moved
beyond their traditional offerings, now
emerging as hubs for MICE activity. This
risk exposure. was evidenced by the signing of three large
format hotels** with a total of ~900 keys,
suitable for catering to such demand.

*The high share of institutional capital is due to the additional infusion of capital towards the completion of an older investment
**Large format hotels refer to hotels with 250+ keys

5
Hotel investment trends in India

Figure 4
Hotel signings by tier city (No. of keys)

Total no. of keys (in '000s)

30

20

10

-
2016 2017 2018 2019 2020 2021 2022 2023
Tier 1 Tier 2 Tier 3

Figure 5
Type of development

% No.of keys
120%

100%

80%

60%

40%

20%

0%
2016 2017 2018 2019 2020 2021 2022 2023
Greenfield Brownfield Conversion

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Hotel investment trends in India

Figure 6
Share (%) of different contract types in total signings (2018 - H1 2023)

100%

80%

60%

40%

20%

0%
2018 2019 2020 2021 2022 2023
Management contract Franchise Lease/Rev share

Figure 7
Share (%) of different contract types in tier 1 and tier 2&3 cities

100%

80%

60%

40%

20%

0%
2018 2019 2020 2021 2022 2023
Tier 1 management contract Tier 2&3 management Contract
Tier 1 franchise Tier 2&3 franchise
Tier 1 lease/rev share Tier 2&3 lease/rev share

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Hotel investment trends in India

Hotel openings

CY 2023 saw the highest number of openings The midscale segment holds the highest
till date (12,647 keys), of which ~82% of the share (53%), followed by upscale (24%),
number of keys opened were concentrated in then luxury and economy (9% each), and
tier 2 & 3 cities (~10,300 keys). upper upscale (5%).

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Hotel investment trends in India

Figure 8
Hotel openings by tier city (No. of keys)

Total no. of keys (in '000s)

10

-
2019 2020 2021 2022 2023
Tier 1 Tier 2 Tier 3

Figure 9
Share of opening by positioning (2019 - H1 2023)

Share (%) of segmentation

120%

100%

80%

60%

40%

20%

0%
2019 2020 2021 2022 2023
Luxury Upper Upscale Upscale Midscale Economy

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This report has been prepared solely for information purposes and does not necessarily purport to be a complete analysis of the topics
discussed, which are inherently unpredictable. It has been based on sources we believe to be reliable, but we have not independently verified
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