MAPPING HOTEL INVESTMENT TRENDS ACROSS INDIA

India's hospitality sector witnessed a landmark year in 2025, with hotel investment volumes soaring to approximately USD 567 million across 28 transactions, marking a 67% increase over the previous year. The sharp rise highlights growing investor confidence in India's tourism and hospitality ecosystem, supported by strong operating performance, expanding travel demand, and increasing interest in emerging markets. One of the defining features ofthe year was the diversity of capital entering the sector. Institutional investors and private equity firms accounted for the largest share of investment activity, contributing 35% of transaction volumes. They were followed by high-net-worth individuals, family offices,and private hotel owners, while listed hotel companies also played a significant role.

The broad mix of investors reflects confidence in the sector's long-term growth potential and resilience. A major shift continued to emerge beyond India's traditional hospitality hubs. Tier II and Tier III cities accounted for nearly 40% of total transaction volume, reinforcing their growing importance in the investment landscape. Premium resorts and upscale hotels in destinations such as Rishikesh, Goa, Udaipur, Nashik, Vadodara, Ludhiana, and Lonavala attracted strong interest from investors seeking growth opportunities outside major metropolitan markets. Operational hotels remained the preferred investment choice, accounting for nearly 70% of total transaction activity. Investors showeda clear preference for assets with proven revenue streams and established market performance.

Luxury and upscale properties dominated transactions, together contributing more than 80% of total investment volume, highlighting sustained demand for premium hospitality experiences. The expansion of branded hospitality also gathered pace. Hotel operators signed over 51,000 branded keys across 424 hotels during 2025, representing a 23% year-on-year increase. Significantly, more than two-thirds of these signings were concentrated in Tier Iland Tier III cities, underlining the rapid growth of organised hospitality across emerging destinations. Asset-light management contracts remained the preferred model for operators, allowing brands to expand while limiting capital exposure. Development activity remained robust as well. Greenfield projects added more than 33,000 keys during the year, surpassing the previous record and demonstrating confidence in long-term market fundamentals. Large-format hotels with more than 250 rooms also gained momentum, expanding beyond major metros into fast-growing cities such as Guwahati, Indore, Visakhapatnam, and Pushkar.

The strong momentum has continued into 2026. Hotel transactions in the first quarter alone reached approximately USD 185 million, up 58% from the same period last year. Strategic investments, portfolio acquisitions, and platform-level partnerships are increasingly shaping the market, indicating a more mature and sophisticated investment environment. Government-led infrastructure development, tourismfocused policies, airport land monetisation initiatives, and improved connectivity are expected to create additional opportunities in the coming years. Markets such as Goa continue to benefit from rising tourist arrivals and growing brand penetration, further strengthening investor confidence.

Despite the positive outlook, limited availability of highquality hotel assets remains a challenge. Strong operating performance has encouraged many owners to hold on to their properties, creating scarcity in the market and supporting premium valuations. While geopolitical uncertainties and global economic fluctuations remain factors to watch, India's domestic travel demand, expanding infrastructure network, and diversified investor base provide a strong foundation for sustained growth. As capital flows deepen and investment activity spreads across newer markets, India's hospitality sector is entering a new phase of maturity, driven by institutional participation, strategic partnerships, and rising demand across both established and emerging destinations.


India's hotel investment market is reflecting a clear step-up in both investor confidence and market depth, with rising transaction activity supported by a broader mix of institutional and domestic capital. What is particularly encouraging is the continued expansion beyond gateway cities, with Tier II and III markets steadily evolving into more mature, investment-grade destinations backed by improving operating performance and scalability. This shift is meaningfully expanding the investable universe and enabling more strategic capital deployment across geographies. The momentum has carried strongly into 2026, with a robust start to the year underscoring sustained capital appetite. Beyond volumes, we are seeing increasing sophistication in how capital is being deployed, through platform-led strategies and institutional partnerships, signaling a more mature and organized investment landscape. At the same time, strong asset performance has introduced a degree of supply-side discipline, with high-quality hotels being tightly held, making available opportunities more selective and highly sought after. Gaurav Sharma, Managing Director, Hotels, India & Senior Director, Hotels Capital Markets, Asia