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KOLKATA: According to JLL India’s latest report titled “Hotel Investment Trends in India 2023”, hotel transaction volume in the Indian hospitality industry increased by 80% year-on-year, reaching 78 million in the first quarter (January-March 2024) Dollar’.
Growth showed a positive start to the first quarter (January to March) of 2024 for the hotel industry, the report said.
The industry has been experiencing good growth since last year (2023). In 2023, the number of hotel contracts and openings reached a record high, with 25,176 keys signed and 12,647 keys opened. There is growing interest in hotel development activity in second-tier cities, with 54% of total signings occurring in these areas.
In 2023, hotel investment in India reached US$401 million, almost four times the level in 2022. 25% of total transactions involved hotels under construction in business and leisure destinations. 2023 also saw the significant milestone of 22 hotel transactions achieved, the highest number of assets traded in the past decade. It also witnessed the successful listing of three hotel companies through initial public offerings (IPOs).
In 2023, approximately 13,600 new projects will be built, exceeding the previous year’s figure (8,000), demonstrating hotel developers’ enduring confidence in the industry’s long-term growth potential. The report states that tourism and leisure destinations are becoming hubs for meetings, incentives, conferences and exhibitions (MICE) events, with three large hotels contracted for a total of about 900 rooms.
“2023 will be a record year not only in terms of hotel investment, but also in terms of new brand hotel openings and signings. Additionally, 2024 is off to a good start, and we have seen some eye-catching hotel deals at the beginning of the year. The performance of hotel stocks has further bolstered enthusiasm for the industry, which has also given confidence for more hotel companies to enter the public markets and achieve strong valuations. We expect this story to continue in 2024 due to diversified growth avenues, such as The expansion of the commercial office market and the development of infrastructure such as new airports and highways, as well as the increase in pilgrimage travel, have led to the emergence of new real estate and tourism hotspots, said Jaideep Dang, managing director, JLL India Hotels and Restaurants Group.
High net worth individuals (HNI) and institutional capital played a major role in hotel investment activity in 2023, accounting for the largest share at 31%. Real estate developers accounted for 27% of investments, followed by self-employed owners at 11%.
The upper premium segment has the highest number of keys changing hands, followed by the premium, luxury and mid-range segments.
Insolvency resolution proceedings through the National Company Law Tribunal (NCLT) facilitated five transactions, accounting for 33% of the total deal value in 2023, amounting to US$133 million.
While management contracts continue to dominate the majority of signings, accounting for 78% of total keys, leasing and revenue sharing models at different tiers have increased significantly, accounting for 4% of total signings. The strong performance in the commercial sector directly benefited major urban centers, with the number of key signings in first-tier cities reaching the highest level since 2020, a significant increase of 31% compared to 2022.
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