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Hotel industry deals surge 140% in H1 2023


India’s hotel industry saw $175 million worth of transactions in the first half of 2023, up by 140% from a year ago, according to a report shared exclusively with ET. In contrast, the country’s hospitality sector had registered a deal volume of $73 million for the full year 2022.

Japan was the strongest APAC market, growing at 60% in the first half of this year, but India was also an ‘outlier’ compared with the overall APAC market and the global hospitality market where total deal volumes declined, according to consultancy firm JLL’s report titled ‘Hotel Investment Trends- India H1 2023’.

“The development pipeline has slowed down and it will translate into a trading of operating assets. We will see a year-on-year increase in hotel investments next year in India, as per our conversations with investors,” Nihat Ercan, chief executive officer, APAC at JLL Hotels & Hospitality Group, told ET. “A market like Thailand does $300 million worth of transactions each year on an average. There is no reason why over the next two years we don’t get to see India reaching that level.”

Jaideep Dang, managing director, Hotels and Hospitality Group at JLL India, said that JLL is expecting another $ 88 million worth of hotel deals in India in the second half of this calendar year.

“India has never been an active transaction market in the hotels space, but in the last 18 months, we have seen phenomenal growth. This is a big jump,” Dang said. “Two things that are in our favour are interest rates. They were always high. Maybe a quarter of a percentage here and there doesn’t make a difference to the investor mindset. It’s not a factor that deters investments here. Secondly, there is more acceptance of the hotel asset class in the investor mindset. Performance wise, we have probably had the sharpest V-shaped recovery in Asia and we continue to grow.”

To be sure, India still has a very small share in the APAC hotel transactions market. In Asia Pacific, investment volume is expected to reach $8.7 billion by 2023, led by Japan, Australia, South Korea and China.As per JLL, Japan could clock $2.9 billion in hotel transactions, while Australia, South Korea and Mainland China are expected to see transactions worth $1.5 billion, $1.1 billion and $1.0 billion, respectively.Real estate developers were primarily driving hotel transactions in India (38%), followed by high net worth individuals (32%), private equity funds (24%) and owner operators (5%).

As per JLL, National Company Law Tribunal (NCLT) resolution cases are also gaining traction, with a focus on operational assets at key destinations.

Ercan said that across APAC, when the year started, JLL was forecasting around $11.5 billion worth of hotel transactions, which would have been roughly 10% growth year-on-year.

“The macroeconomic headwinds around interest rates, inflation and geopolitical tensions have impacted investments. Currently, we are estimating transaction volumes for the full year to be $8.7 billion for APAC,” he said. “So it’s encouraging to see India bucking the trend. Transaction volumes are down generally. When you look at total transaction volumes globally, volumes are down 54% from January to June this year.”

As per JLL, HNIs are diversifying into hotels as an asset class as a part of their investment portfolios in India, and the end of the Emergency Credit Line Guarantee Scheme (ECLGS) may lead to an increase in the number of tradeble assets in the market.


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