The hospitality industry in the country is seeing fresh investments on both new hotel projects and sales of existing ones after a two-year lull induced by the Covid-19 pandemic.
Ludhiana-based Jujhar Group has acquired around 12.5 acres of land in its home city for construction of two hotels at prime locations, and will invest around Rs 350 crore in the construction. It has also acquired Fairfield Marriott hotel in Amritsar from NCLT for Rs 67.5 crore.
“The hospitality sector is back in demand, and this is the right time for expansion,” said Arshdeep Singh Mundi, executive director of Jujhar Group.
Hoteliers are getting bullish with leisure travel returning to pre Covid levels and business travel making a promising comeback as well.
Real estate service firm JLL said it is working on deal closures amounting to 1,450 keys across four and five-star hotels, mostly in business cities.
“People keep asking about leisure destinations but, regrettably, not enough assets are available that could be worth transacting in terms of valuation or inventory,” said Jaideep Dang, managing director, hotels and hospitality group, India, at JLL.
As per JLL’s findings, in the first quarter of 2022, about 70% of hospitality transactions comprised of new projects and the rest were conversions with some cases of brand change. Most conversions were a change from non-branded to branded hotels.
Nandivardhan Jain, CEO of hospitality advisory firm Noesis Capital Advisors, said the company is in discussions for a pipeline of 1,900 hotel rooms and is in talks with high net-worth individuals (HNIs) and family offices. “Some of them are operational projects, some are under construction, while others are low performing assets,” he said. “The interest level is very high. Institutional players are back, and family offices are very aggressively looking for acquisitions. Banks that were shying away from the sector are more comfortable evaluating proposals now.”
Deepak Jain, founder of MayFair Consultants that specialises in hotel, restaurant and real estate consulting, said the sector is currently the most active since the pandemic outbreak. “There is serious investment in major cities and tier two markets,” he said. “The market has rebounded strongly post Covid and investors are venturing out for new potential opportunities in hotel development as they recognise domestic demand.”
Sensing more opportunities, Delhi-headquartered Nirman India, an interior fitout company catering to luxury hospitality and commercial projects, is foraying into the development of ‘bespoke’ hospitality assets.
“The first property in Goa is scheduled to be operational by the beginning of the third quarter. We have plans of expanding further to Coorg and Rishikesh,” said Karanvir Vasudeva, executive director at Nirman India.
He said hotels today are a robust asset class and owners are taking wise economic decisions. “It is not about the ‘return on ego’ anymore. “The domestic Indian tourist has been a great supporter of the industry over the last two to 30 months,” Vasudeva said.
More properties are being signed this year than pre-pandemic times. As per JLL’s Hotel Momentum India (HMI) quarterly hospitality monitor, 56 hotel deals were signed in the first quarter of 2022 against 53 hotels in quarter one of 2019.
Anant Kumar, cofounder of Brij Hotels, said the chain is also planning to go global and is looking at active tie-ups in Sri Lanka and Europe. “This will be the best year for growth as we will be opening over 18 hotels under the brand, The Clarks Hotels & Resorts, and four hotels under our Brij brand,” he said.
Jain of Noesis Capital Advisors said key micro-markets in cities like Mumbai, Bengaluru, Hyderabad, Pune, and Delhi NCR are clocking average daily rates of over 15% compared to pre-pandemic months of April and May 2019.
“This is encouraging for investors who had put their decisions on hold because of the vulnerability in the market,” he said.