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India's hotel investment landscape is shifting beyond metros, with nearly half of 2024's hotel deals taking place in tier-II and III cities like Amritsar, Mathura, and Bikaner, according to JLL. Driven by rising domestic travel and religious tourism, investors are targeting operational hotels for rebranding, while greenfield developments crossed 28,000 new rooms-double that of 2023. Notably, 51% of deals came from individual investors and family offices. While metros still draw interest for large-format hotels, smaller cities are gaining traction, influencing local land prices and real estate trends. Government support for tourism further fuels optimism in India's expanding hospitality sector.
India's hotel industry is seeing a big shift in where money is flowing. A new report by real estate advisory firm JLL shows that in 2024, nearly half of all hotel transactions happened in tier-II and tier-III cities-marking a clear turn away from the usual focus on metros like Mumbai and Bengaluru. Cities such as Amritsar, Mathura, and Bikaner, which earlier had fewer branded hotels, are now attracting more attention from investors. Advertisement
This change is largely driven by rising domestic travel, growth in religious tourism, and more business activity in smaller towns. As demand grows, hotel developers and investors are finding new opportunities outside traditional big-city markets. Many of the 25 hotel deals recorded in 2024 involved already-operational hotels in both business and leisure destinations. This not only widens the travel options for customers but also gives new life to older properties through rebranding and renovation.
The JLL report shows that a large portion'51%'of all hotel deal value came from individual investors, family offices, and private hotel owners. Listed hotel chains contributed 34%, while developers and owner-operators added the rest. This shows that the investor base is becoming broader and more diverse, with smaller players and wealthy individuals entering the market alongside established hotel companies.
The number of greenfield hotel projects (brand-new properties built from scratch) jumped to over 28,000 rooms in 2024, more than double the figure from 2023. This shows a long-term confidence in the hospitality sector, even in a market where land and construction costs remain high.
While tier-II and tier-III cities are growing fast, metro cities like Mumbai, Bengaluru, and Chennai are still seeing large hotel signings, especially for bigger properties with 250 rooms or more. These cities continue to benefit from steady business travel and events, making them attractive for luxury and upscale hotel brands.
According to JLL's Hotels and Hospitality head Jaideep Dang, the early part of 2025 has already seen two hotel deals closed-in Goa and Chennai. He says this early activity, along with the government's support for tourism in the recent Budget, has created a strong environment for both hotel operations and land deals.
Experts say the rise in hotel transactions across smaller cities will also impact local real estate markets. Land near transport hubs, pilgrimage sites, and upcoming industrial corridors is likely to become more valuable as hospitality infrastructure expands. Cities like Varanasi, Ayodhya, and Rameswaram are already witnessing hotel development interest, especially as government schemes promote tourism and connectivity.
As more travelers explore smaller cities, the hotel sector is adapting quickly-offering not just more rooms but better quality and service across India.
Source: PTI
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