Ludhiana-based Jujhar Group has acquired around 12.5 acres of land in its hometown for the construction of two hotels in prime locations and will invest around Rs 3.5 crore in the construction. It has also acquired the Fairfield Marriott Hotel in Amritsar from NCLT for Rs 67.5 crore.
“Hospitality is back and this is the right time to expand,” said Arshdeep Singh Mundi, Jujhar Group Executive Director.
Hoteliers turn optimistic as leisure travel returns to pre-Covid levels and business travel also makes a promising comeback.
Real estate services company JLL said it was working on contract deals worth 1,450 keys in four- and five-star hotels, mostly in commercial cities.
“People keep asking about holiday destinations, but unfortunately there aren’t enough assets available that could be worth a transaction in terms of valuation or inventory,” said Jaideep Dang, Managing Director, Hotels and Hospitality Group, India, at JLL.
According to JLL’s findings, about 70% of hospitality transactions in Q1 2022 consisted of new projects and the rest were conversions with some instances of rebranding. Most conversions involved moving from non-branded to branded hotels.
Nandivardhan Jain, CEO of hospitality consultancy Noesis Capital Advisors, said the company is in talks for a pipeline of 1,900 hotel rooms and in talks with high net worth individuals (HNIs) and family offices. “Some of them are operational projects, some are under construction, while others are underperforming assets,” he said. “The interest is very high. Institutional players are back and family offices are looking very aggressively for acquisitions. Banks that shied away from this sector are now more comfortable evaluating proposals.”
Deepak Jain, founder of MayFair Consultants, which specializes in hotel, restaurant and real estate consultancy, said the sector is currently the most active since the pandemic broke out. “There is serious investment in big cities and Tier 2 markets,” he said. “The market has recovered strongly post Covid and investors are venturing into new potential opportunities in hotel development as they recognize domestic demand.”
Delhi-based Nirman India, an interiors company specializing in luxury hospitality and commercial projects, sees further opportunities and is venturing into the development of ‘bespoke’ hotel properties.
“The first property in Goa is expected to be operational early in the third quarter. We have plans to expand further into Coorg and Rishikesh,” said Karanvir Vasudeva, Executive Director at Nirman India.
He said hotels are now a robust asset class and owners are making wise business decisions. “It’s not about ‘returning to ego’ anymore. “The domestic Indian tourist has been a big supporter of the industry in the last two to 30 months,” Vasudeva said.
More properties will be signed this year than before the pandemic. According to JLL’s quarterly Hospitality Monitor Hotel Momentum India (HMI), 56 hotel contracts were signed in Q1 2022, up from 53 hotels in Q1 2019.
Anant Kumar, co-founder of Brij Hotels, said the chain is also planning global expansion and is considering active connections in Sri Lanka and Europe. “This will be our best year for growth as we will open over 18 hotels under The Clarks Hotels & Resorts brand 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 showing average daily rates above 15% in April and May 2019 compared to the months before the pandemic.
“This is encouraging for investors who had put their decisions on hold due to market vulnerability,” he said.