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India’s hospitality sector witnessed a record $ 401 million worth of investment activity in 2023, a nearly fourfold rise compared to 2022, as per data cited in JLL India’s ‘Hotel Investment Trends – India 2023’ report shared exclusively with ET.
JLL said 2023 saw 22 hotel transactions, which is the largest number of assets traded in the last decade, with high net worth individuals and institutional investors contributing the most to transaction activity.
The report mentions that January to March, the first quarter of calender year 2024 has seen a significant 80% year-on-year increase in hotel transaction volumes, reaching $ 78 million.
A record number of signings and openings took place in 2023, with 25,176 keys signed and 12,647 keys opened. There were greenfield projects totalling 13,600 keys in 2023, up from 8,000 keys in 2022, demonstrating the confidence of developers in the long term growth potential of the sector.
Jaideep Dang, managing director, Hotels and Hospitality Group for India at JLL said 2024 has started with strong tail winds as the company has seen prominent hotel deals early on in this year.
“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. The enthusiasm of the sector is further strengthened by performance of hotel stocks, which also gave confidence to hotel companies entering public markets and achieving strong valuations,” he said.
“We expect this story to continue in 2024 on the back of diversified avenues of growth such as expanding commercial office markets and with the development of infrastructure such as new airports, expressways, and increasing pilgrimage travel leading to the emergence of new realty and tourism hotspots across the country”,he added.
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 $ 133 million.
JLL said there is an increasing interest in hotel development activity in tier two cities, with 54% of the total signings taking place in these locations. About 25% of the overall value of transactions last year involved under-construction hotels in both business and leisure destinations.
The upper upscale segment saw the highest number of keys changing hands, followed by the upscale, luxury, and midscale segments. 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 performance of the commercial sector has directly benefited major urban centers, the JLL report stated, as tier one cities experienced the highest number of keys signed since 2020, with a notable increase of 31% as compared to 2022.
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