Listed Hotel Companies Establish Dominance

With the hospitality sector set for a forecasted investment volume of USD 413 million, registering a 22 percent rise this year, listed companies have emerged as the dominant players in driving the business.

According to a recent HI2024 report on hotel investment trends by JLL, hotel investments in the first half, January to June of 2024, reached USD 93 million., Of the transaction volume, approximately 72 percent were related to operational hotels, 23 percent involved under-construction hotels, and the remaining involved land leases. During the first six months of 2024, six hotel transactions were concluded, ranging from operational assets in Tier I and leisure markets to land leases in the airport district for greenfield development.

JLL anticipates that the remainder of 2024 will continue to benefit from the favourable trends observed in its first half. The second half of 2024 has already started positively, with two transactions facilitated by JLL in key hospitality markets, totaling USD 70 million. Tier I markets remain robust, accounting for 78 percent of the projected transaction volumes, while Tier II and III markets make up the remaining 22 percent.

Listed hotel companies led the hotel transactions in the first half of 2024, with the upscale segment claiming the highest share of the total transaction volume at 44 percent, followed by mid-scale at 31 percent , luxury 23 percent , and economy segment  3 percent.

In the first half of 2024, a total of 19,442 keys were signed, with 83 percent  of them located in Tier II and III cities. Management contracts accounted for the majority of signings (89 percent), followed by franchises (8 percent), and lease and revenue share agreements (3 percent). The number of greenfield projects in the first half of 2024 (around 13,700 keys) surpassed the count for the entire year of 2023 (13,600 keys), demonstrating the enduring confidence of hotel developers in the sector’s long-term growth. Tier I markets such as Mumbai, Hyderabad, Pune, and Chennai witnessed hotel signings with 250+ keys, indicating sustained interest in these cities due to strong domestic demand and thriving commercial activity.

Furthermore, in H1 2024, a total of 6,071 keys were added through new hotel openings, with the midscale segment capturing the largest market share of 46 percent, followed by upscale at 29 percent, upper upscale at 12 percent, luxury  8 percent, and economy at 5 percent .

“The first half of 2024 has paved the way for a dynamic hotel transactions landscape for the rest of the year. Notably, JLL has already facilitated two significant transactions at the onset of the second half of 2024, comprising an operational hotel in Mumbai and a premium hotel land sale in Goa. The surge in investor interest for both – operating assets and land sales illustrates the attractiveness of the investment landscape, bolstered by favourable macro-economic factors, an expanding commercial market, and improved air connectivity. This positive outlook is further reinforced by the substantial hotel development activity witnessed across various tiers, with over 19,440 keys signed in the first half of 2024 alone,” says Jaideep Dang, Managing Director, Hotels and Hospitality Group, India, JLL.