September 29, 2023: India’s hospitality sector has witnessed a resurgence in Hotel investment activity, mention the latest JLL report titled Hotel Investment Trends – India H1 2023. As per the report, in 2022, the sector saw a total deal volume of $ 73 million (Rs 580 crore), representing an upswing compared to the previous two years, which were affected by the pandemic. This positive trend has continued into the first half of 2023, with hotel transaction volumes reaching Rs 1,432 crore, highlighted the report.

According to the JLL report, unlike 2021, which saw mainly consolidations in the hotel transactions landscape, 2022 displayed various transactions, encompassing single asset deals and lease agreements for land for airport-terminal hotels. In the first half of 2023, there has been a notable increase in investment activity resulting from National Company Law Tribunal (NCLT) proceedings, especially involving high-value assets burdened with debt in strong performing markets like Mumbai and Bengaluru.

JLL foresees that the investment momentum in the hospitality sector will continue in the second half of 2023, with an anticipated volume of around Rs 722 crore and extend into 2024. This optimistic outlook is founded on the outstanding performance of the hospitality industry, bolstered by strong macro-economic fundamentals, a thriving commercial market and improved air connectivity.

Key highlights from the report indicate several noteworthy trends in the Indian hotel investment landscape.

• High-net-worth individuals (HNIs) are increasingly diversifying their investment portfolios by entering the hotel asset class.
• Furthermore, portfolios and operating assets are attracting more investors compared to Greenfield projects.
• There is a growing traction in NCLT resolution cases, particularly emphasising operational assets in sought-after destinations. The conclusion of the ECLGS (Emergency Credit Line Guarantee Scheme) may lead to an increase in tradable assets that can be found in the market, creating fresh opportunities for investors inbound institutional investment continues to gain momentum as well.

In 2022, hotel signings with a total of 19,860 keys took place. While Greenfield projects dominated the hotel signing landscape, brownfield projects witnessed a rising share, reaching 44% of the total rooms signed in 2021 and 32% of the same in 2022 as per the report. Throughout the pandemic, individual owners recognised the value of partnering with branded operators through franchise agreements to leverage their distribution and marketing strengths. Tier-1 cities experienced a gradual rise in the share of lease/revenue share agreements, as owners sought models with reduced risk exposure.

Additionally, 2022 witnessed hotel openings totalling 9,961 keys. The midscale segment maintained the highest market share throughout the years, followed by the upscale, upper upscale and luxury segments.

“We are encouraged by the strong recovery in hotel investment volumes and anticipate this positive momentum to continue in the coming years. The investment landscape remains attractive due to favourable macro-economic factors, an expanding commercial market, and improved air connectivity. As investors evaluate their options, we expect further diversification into the Hotel Asset Class by HNI’s. We see increased interest from hotel investors for both operating assets and portfolios. The other rising trend is retail investor confidence in hotel stocks which is further encouraging privately held hotel owning companies to enter public markets”, stated Jaideep Dang, managing director, Hotels and Hospitality Group, India, JLL.