India's hotel investment market surges 67% to $567 million in 2025: JLL

India's hotel investment market surged 67 per cent year-on-year to $567 million in 2025 across 28 deals, driven by institutional capital, private equity, and strong demand from Tier II and III cities

Tier II and III cities have been the growth driver, contributing about 40 per cent of transaction volumes, led by premium assets such as luxury resorts

Aneeka Chatterjee Bengaluru

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India’s hospitality sector saw strong momentum in 2025, with hotel investments rising 67 per cent year-on-year (YoY) to about $567 million across 28 transactions, underscoring growing investor confidence in tourism infrastructure and demand across market segments.

The hotel investment landscape reflected diversified capital from institutional capital and private equity firms with a 35 per cent share, followed by HNIs, family offices and private hotel owners at 27 per cent, listed hotel companies, real estate developers and owner-operators. Beyond traditional hotel transactions, 2025 witnessed substantial institutional capital deployment for consolidation and strategic partnerships, totalling approximately $125 million.

“This shift is meaningfully expanding the investable universe and enabling more strategic capital deployment across geographies. In 2026, beyond volumes, we are seeing increasing sophistication in how capital is being deployed through platform-led strategies and institutional partnerships, signalling a more mature and organised investment landscape,” said Gaurav Sharma, Managing Director, Hotels, India & Senior Director, Hotels Capital Markets, Asia.

Moreover, Tier II and III cities have been the growth driver, contributing about 40 per cent of transaction volumes, led by premium assets such as luxury resorts in Rishikesh, upper-upscale properties in Goa, and upscale to midscale hotels across emerging urban centres such as Ludhiana, Nashik, Vadodara, Udaipur and Lonavala.

Looking ahead, Sharma said supportive policies, including land monetisation and tourism-led infrastructure development, are expected to spur investment. Despite external uncertainties, resilient domestic demand, infrastructure expansion and diversified capital sources continue to underpin long-term growth.

Operational hotels represented 69 per cent of total transaction volume, followed by under-construction or non-operational properties and land transactions, including leases, JLL said.

Segment analysis showed the luxury category commanding the highest transaction volume share at 42 per cent, followed closely by upscale properties at 41 per cent, indicating strong demand for premium positioning. Upper-upscale, midscale and economy segments completed the market distribution.

Branded hotel signings touched 51,647 keys across 424 hotels in 2025, up 23 per cent YoY. Tier II and III cities accounted for 71 per cent of signings, highlighting expanding organised hospitality demand, as per JLL. Management contracts rose to 84 per cent, while lease and revenue-share models declined, underscoring operators’ preference for asset-light expansion strategies.

First-quarter 2026 results reflected accelerating momentum, with transaction volumes rising 58 per cent to nearly $185 million from $117 million a year earlier. Key deals included Warburg Pincus acquiring a 41 per cent stake in Fleur Hotels, alongside operating hotel transactions, land monetisation deals and platform consolidation acquisitions.

Moreover, the FY27 tourism-focused budget further supports expansion through initiatives to develop 15 new cultural destinations around archaeological sites and transport infrastructure upgrades designed to stimulate demand and development.

JLL also stated that India’s hotel investment market is underpinned by strong fundamentals, driven by diversified capital inflows, expansion into emerging markets, government-led infrastructure development and resilient operational performance.