India's hospitality transactions saw shift towards tier II, III cities in 2024: Report

Mumbai | India's hospitality sector, which grew at par with the previous year, witnessed a shift towards tier-II and III cities, which accounted for nearly half of all hotel transactions, a report said on Monday.

The year 2024 saw approximately 25 deals, primarily involving operational properties in both business and leisure destinations, real estate consultant JLL said in a report.

It said there was a significant shift towards tier-II and III cities, which accounted for nearly half of all hotel transactions.

This trend has effectively broadened the industry's reach, bringing quality accommodations to previously underserved markets such as Amritsar, Mathura, Bikaner, and several others, it added.

During 2024, the report said, saw investor diversity with high-net-worth individuals, family offices, and private hotel owners contributing 51 per cent of the transaction volume.

Listed hotel companies followed closely at 34 per cent, while owner-operators and real estate developers made smaller but significant contributions at 8 per cent and 7 per cent, respectively, it stated.

The number of greenfield projects in 2024 (28,281 keys) crossed the full year of 2023 (13,600 keys), indicating the enduring confidence of hotel developers in the sector's long-term growth.

Tier I markets such as Mumbai, Bengaluru, Hyderabad, Pune, and Chennai saw signings of hotels with over 250 keys, signalling sustained interest in these hubs due to robust domestic demand and thriving commercial activity, said the report.

"The first quarter of 2025 has ignited a dynamic hotel transactions market, with JLL already facilitating two deals in Chennai and Goa. Investor enthusiasm for both operational assets and land parcels underscore the sector's attractiveness, buoyed by favorable economic conditions, expanding commercial markets, and the government's recent Budget push for tourism," JLL India Managing Director, Hotels and Hospitality Group, Jaideep Dang, said.