The Indian hospitality industry is witnessing a surge in investments from family offices and high net worth individuals (HNIs). In the first nine months of 2023, family offices have invested Rs 900 crore in hotels, which is two-thirds of the total investments of Rs 1,400 crore made in the industry. This marks a substantial increase compared to 2022 when family offices invested Rs 190 crore out of the total Rs 600 crore in the hotel sector. The investment momentum is expected to continue, reaching Rs 2,000 crore in 2023, driven by robust average daily rates (ADR) and occupancy levels in hotels across the country. Emerging markets like Ayodhya, Varanasi, Haridwar, and Rishikesh are also attracting investment.
India's hospitality industry is experiencing a notable increase in investments, primarily driven by Family offices and HNIs. In the first nine months of 2023, family offices have contributed a substantial ?900 crore to the total investments in the hotel sector, which stands at Rs 1,400 crore. This marks a significant increase compared to the previous year when the total hotel investments in the sector was Rs 600 crore and family offices accounted for just Rs 190 crore.
For instance, a SoftBank-promoted institutional investor recently purchased a 96-room hotel in Vadodara, strategically located near an upcoming high-speed bullet train station. Similarly, the family office of Gland Pharma's former promoter acquired GBJ Hotels, the operator of the 135-room Radisson Blu in Coimbatore, a luxurious five-star property. Another family office secured a 115-room hotel in the Mumbai Metropolitan Region, strategically positioned to serve Navi Mumbai's upcoming airport with a focus on meetings, exhibitions, and free independent travellers (FIT).
Industry experts predict that this investment momentum will persist and may even reach Rs 2,000 crore in calendar year 2023. Several factors contribute to this optimistic outlook, including the record-high average daily rates (ADR) and occupancy levels seen in hotels across the country. These favourable conditions are resulting in healthier balance sheets for hotel companies, allowing them to experience cash flows and yields that have not been witnessed since the 2008 subprime crisis.
This investment surge is not limited to major cities but also extends to emerging towns and regions across India such as Ayodhya, Varanasi, Haridwar, and Rishikesh. This diversification of investment destinations highlights the sector's resilience and adaptability, reflecting the evolving preferences and interests of both domestic and international travellers. These emerging markets are witnessing a surge in visitor interest, and investors are keen to capitalize on the potential growth opportunities they offer.
In conclusion, the Indian hospitality industry is witnessing a remarkable infusion of investments from family offices and HNIs, and this trend is expected to continue. The sector's adaptability, coupled with favourable market conditions, is driving this surge in investment, offering promising prospects for the industry's future growth and development.
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