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What is the story about?
India’s hotel investment market saw a sharp rise in activity in 2025, with investments surging 67% year-on-year to nearly $567 million across 28 transactions, according to a report by JLL.
The strong growth comes amid rising domestic tourism demand, improving hotel performance, and increasing investor interest in hospitality assets beyond traditional metro markets. The report also points to a significant shift in investment trends, with Tier II and III cities accounting for nearly 40% of total transaction volumes during the year.
The surge in deal activity reflects growing confidence in India’s hospitality sector at a time when investors are looking at long-term tourism and infrastructure-led opportunities. Institutional capital and private equity firms emerged as the biggest contributors, accounting for 35% of total investment volumes. HNIs, family offices and private hotel owners contributed 27%, while listed hotel companies accounted for 25%.
According to Gaurav Sharma, the Indian hotel market is seeing stronger investor confidence supported by a broader mix of domestic and institutional capital.
He said the market is also witnessing increasing maturity, with investors now focusing on platform-level investments and strategic partnerships rather than only standalone hotel acquisitions.
A major trend highlighted in the report is the growing importance of smaller cities and leisure destinations. Tier II and III markets such as Rishikesh, Ludhiana, Nashik, Vadodara, Udaipur and Lonavala attracted strong investor attention in 2025, alongside established tourism markets like Goa.
JLL said improving infrastructure connectivity, rising domestic travel, and increasing branded hotel penetration are making these markets more attractive for long-term hospitality investments.
The report noted that investors continued to prefer operational and income-generating hotel assets. Operational hotels accounted for 69% of total transaction volumes, while under-construction or non-operational assets contributed 18%. Land transactions and leases made up the remaining 13%.
Luxury and upscale hotels dominated investor interest during the year. Luxury assets accounted for 42% of transaction volumes, while upscale hotels contributed 41%. Midscale and economy segments saw relatively lower activity.
India’s branded hotel development pipeline also expanded significantly during the year. Hotel signings increased 23% year-on-year to 51,647 keys across 424 hotels in 2025. Notably, 71% of these signings were concentrated in Tier II and III cities, underlining the rapid expansion of organised hospitality beyond metros.
The report also showed continued preference for asset-light expansion models among hotel operators. Management contracts accounted for 84% of total signings, up from 81% in 2024, while franchise agreements remained stable at 14%.
Greenfield hotel development remained strong as well, with over 33,000 keys added during the year, surpassing 2024 levels by 17%.
Another emerging trend is the rise of large-format hotels with more than 250 keys. Signings in this category rose to 29 in 2025 from 21 in the previous year. While most projects remained concentrated in major cities such as Mumbai, Bengaluru, Hyderabad, Pune and Delhi, newer markets like Guwahati, Visakhapatnam, Indore and Pushkar also saw growth in large hotel developments.
The momentum has continued into 2026. According to the report, hotel transaction volumes in the first quarter of 2026 rose 58% year-on-year to nearly $185 million.
One of the biggest deals during the period was global private equity firm Warburg Pincus acquiring a 41% stake in Fleur Hotels, a subsidiary of Lemon Tree Hotels, with a commitment of around $107 million.
JLL said multiple structural drivers are expected to support investment activity going forward. These include strong liquidity among listed hotel companies, rising institutional appetite for hospitality portfolios, and government-led tourism and infrastructure initiatives.
The consultancy highlighted opportunities emerging from land monetisation around airports and strategic business districts such as Yashobhoomi in Delhi, Neopolis in Hyderabad, Fintech City in Chennai and the upcoming Jewar Airport region.
The Centre’s tourism-focused initiatives, including plans to develop new cultural destinations and improve transport infrastructure, are also expected to support long-term hospitality demand.
At the same time, the report flagged supply-side constraints as a key issue for the market. Strong hotel operating performance has encouraged many owners to hold on to premium assets, limiting the availability of quality hotels for sale.
This shortage of tradeable assets is helping support valuations, but it could also restrict transaction volumes if fresh supply does not enter the market.
JLL added that while geopolitical uncertainties and volatility in international travel remain risks, India’s hospitality sector continues to benefit from strong domestic travel demand, which provides relative insulation against global disruptions.
The strong growth comes amid rising domestic tourism demand, improving hotel performance, and increasing investor interest in hospitality assets beyond traditional metro markets. The report also points to a significant shift in investment trends, with Tier II and III cities accounting for nearly 40% of total transaction volumes during the year.
The surge in deal activity reflects growing confidence in India’s hospitality sector at a time when investors are looking at long-term tourism and infrastructure-led opportunities. Institutional capital and private equity firms emerged as the biggest contributors, accounting for 35% of total investment volumes. HNIs, family offices and private hotel owners contributed 27%, while listed hotel companies accounted for 25%.
According to Gaurav Sharma, the Indian hotel market is seeing stronger investor confidence supported by a broader mix of domestic and institutional capital.
He said the market is also witnessing increasing maturity, with investors now focusing on platform-level investments and strategic partnerships rather than only standalone hotel acquisitions.
A major trend highlighted in the report is the growing importance of smaller cities and leisure destinations. Tier II and III markets such as Rishikesh, Ludhiana, Nashik, Vadodara, Udaipur and Lonavala attracted strong investor attention in 2025, alongside established tourism markets like Goa.
JLL said improving infrastructure connectivity, rising domestic travel, and increasing branded hotel penetration are making these markets more attractive for long-term hospitality investments.
The report noted that investors continued to prefer operational and income-generating hotel assets. Operational hotels accounted for 69% of total transaction volumes, while under-construction or non-operational assets contributed 18%. Land transactions and leases made up the remaining 13%.
Luxury and upscale hotels dominated investor interest during the year. Luxury assets accounted for 42% of transaction volumes, while upscale hotels contributed 41%. Midscale and economy segments saw relatively lower activity.
India’s branded hotel development pipeline also expanded significantly during the year. Hotel signings increased 23% year-on-year to 51,647 keys across 424 hotels in 2025. Notably, 71% of these signings were concentrated in Tier II and III cities, underlining the rapid expansion of organised hospitality beyond metros.
The report also showed continued preference for asset-light expansion models among hotel operators. Management contracts accounted for 84% of total signings, up from 81% in 2024, while franchise agreements remained stable at 14%.
Greenfield hotel development remained strong as well, with over 33,000 keys added during the year, surpassing 2024 levels by 17%.
Another emerging trend is the rise of large-format hotels with more than 250 keys. Signings in this category rose to 29 in 2025 from 21 in the previous year. While most projects remained concentrated in major cities such as Mumbai, Bengaluru, Hyderabad, Pune and Delhi, newer markets like Guwahati, Visakhapatnam, Indore and Pushkar also saw growth in large hotel developments.
The momentum has continued into 2026. According to the report, hotel transaction volumes in the first quarter of 2026 rose 58% year-on-year to nearly $185 million.
One of the biggest deals during the period was global private equity firm Warburg Pincus acquiring a 41% stake in Fleur Hotels, a subsidiary of Lemon Tree Hotels, with a commitment of around $107 million.
JLL said multiple structural drivers are expected to support investment activity going forward. These include strong liquidity among listed hotel companies, rising institutional appetite for hospitality portfolios, and government-led tourism and infrastructure initiatives.
The consultancy highlighted opportunities emerging from land monetisation around airports and strategic business districts such as Yashobhoomi in Delhi, Neopolis in Hyderabad, Fintech City in Chennai and the upcoming Jewar Airport region.
The Centre’s tourism-focused initiatives, including plans to develop new cultural destinations and improve transport infrastructure, are also expected to support long-term hospitality demand.
At the same time, the report flagged supply-side constraints as a key issue for the market. Strong hotel operating performance has encouraged many owners to hold on to premium assets, limiting the availability of quality hotels for sale.
This shortage of tradeable assets is helping support valuations, but it could also restrict transaction volumes if fresh supply does not enter the market.
JLL added that while geopolitical uncertainties and volatility in international travel remain risks, India’s hospitality sector continues to benefit from strong domestic travel demand, which provides relative insulation against global disruptions.
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