India hotel investments skyrocket 67 per cent to $567 million in 2025

MUMBAI: India’s hospitality sector demonstrated exceptional momentum in 2025, with hotel investments reaching approximately $567 million across 28 transactions, a remarkable 67 per cent increase from the $340 million recorded in 2024.

This surge reflects robust investor confidence in India’s tourism infrastructure and the sector's fundamental strength across multiple market tiers, according to a survey by international property consultant Jones Lang LaSalle.

The investment landscape revealed a sophisticated diversification of capital sources.

Institutional capital and PE firms led transaction activity at 35 per cent of total volume, followed by HNIs, family offices, and private hotel owners (27%), listed hotel companies (25%), real estate developers (8%), and owner-operators (5%). This balanced investor composition demonstrates the sector's appeal across diverse investment philosophies and risk profiles.

Tier II and III cities emerged as significant growth engines, capturing approximately 40% of total transaction volume, momentum sustained from the previous year. These markets featured premium assets including luxury resorts in Rishikesh, upper-upscale properties in Goa, and upscale to midscale hotels across emerging urban centers such as Ludhiana, Nashik, Vadodara, Udaipur, and Lonavala.

“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. 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 organised 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,” said Gaurav Sharma, Managing Director, Hotels, India & Senior Director, Hotels Capital Markets, Asia.

Beyond traditional hotel transactions, 2025 witnessed substantial institutional capital deployment for consolidation and strategic partnerships totaling approximately $125 million.

Strong operational assets and premium positioning lead market activity amid geographic expansion Transaction composition revealed strategic asset preferences. Operational hotels represented 69% of total transaction volume, with under-construction or non-operational properties accounting for 18%, and land transactions including leases comprising 13%. This distribution reflects investor preference for income-producing assets with established operational track records.

Segment analysis showed the luxury category commanding the highest transaction volume share at 42%, followed closely by upscale properties at 41%, indicating strong demand for premium positioning. Upper-upscale (9%), midscale (6%), and economy (2%) segments completed the market distribution.

Branded hotel signings reached 51,647 keys across 424 hotels in 2025—a 23% increase over the previous year. Significantly, 71% of these signings by key count were concentrated in Tier 2 and 3 cities, demonstrating the geographic expansion of organised hospitality into India's emerging urban centers. Management contracts continued their dominance, increasing from 81% in 2024 to 84% in 2025, while franchise agreements held steady at 14%. Lease and revenue-share arrangements declined from 5% to 2%, reflecting operator preferences for asset-light growth models that optimise returns while minimising capital requirements.

Greenfield development activity reached approximately 33,170 keys in 2025, surpassing 2024's record by 17%. This sustained pipeline expansion signals developer confidence in long-term sector fundamentals despite broader economic uncertainties.

Large-format hotels of 250+ keys gained momentum, with 29 signings in 2025 compared to 21 the previous year. While concentrated in Tier 1 markets including Mumbai, Bengaluru, Hyderabad, Pune, and Delhi, this format expanded into growing markets such as Guwahati, Visakhapatnam, Indore, and Pushkar, demonstrating geographic diversification of premium supply.

First quarter 2026 results underscore accelerating momentum, with transaction volumes reaching approximately $185 million—a 58% increase from Q1 2025's $117 million. Notable activity includes Warburg Pincus acquiring a 41% stake in Fleur Hotels (Lemon Tree Hotels subsidiary) with a $107 million commitment for portfolio expansion, alongside operating hotels, land monetisation transactions, and platform consolidation acquisitions.

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It will attract long-term capital gains tax (LTCG) at 12.5% along with surcharge and cess. Option exists to choose from 20% with indexation vs 12.5% without indexation. Section 54 permits to invest in another property within one year before or two years after the sale or construct a new house within three years from the date of sale.

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Assuming that your father was a Hindu and the property was self-acquired by him, you cannot stake a claim because he has the right to will to any one, he wants. In the event of you are feeling that the Will was prepared fraudulently or injustice has been done to you, as a class I legal heir, you can challenge the validity of the Will through a court of law.

V Nagarajan