India’s hospitality sector sees shift towards tier-II and III cities such as Amritsar, Mathura and Bikaner

India’s hospitality sector witnessed a shift towards Tier II and III cities in 2024 bringing quality accommodations to previously underserved markets such as Amritsar, Mathura, Bikaner, and several others. The segment saw approximately 25 deals, primarily involving operational properties in both business and leisure destinations, a report by JLL said on April 14.

It said there was a significant shift towards tier-II and III cities, which accounted for nearly half of all hotel transactions.

The year 2024 saw approximately 25 deals, primarily involving operational properties in both business and leisure destinations, real estate consultant JLL said in a report.

CY 2024 witnessed 42,071 keys in terms of branded hotel signings and 11,352 keys in terms of branded hotel openings. As many as 77% of these signings were concentrated in Tier 2 and 3 cities, underlining the sector’s expansion beyond traditional urban centers, it said.

Investor diversity was a key feature of 2024’s landscape. High-net-worth individuals, family offices, and private hotel owners led the charge, contributing 51% of the transaction volume. Listed hotel companies followed closely at 34%, while owner-operators and real estate developers made smaller but significant contributions at 8% and 7% respectively.

Management contracts dominated these agreements, accounting for 81% of the total keys signed, while franchises and lease / revenue share agreements across tiers stood at 14% and 5% respectively. The number of greenfield projects in 2024 (~28,281keys) crossed the full year of 2023 (~13,600 keys), indicating the enduring confidence of hotel developers in the sector’s long-term growth, it said.

Tier 1 markets such as Mumbai, Bengaluru, Hyderabad, Pune, and Chennai saw signings of hotels with 250+ keys, signaling sustained interest in these hubs due to robust domestic demand and thriving commercial activity.

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“The first quarter of 2025 has ignited a dynamic hotel transactions market, with JLL already facilitating two deals in Chennai and Goa. Investor enthusiasm for both operational assets and land parcels underscore the sector’s attractiveness, buoyed by favorable economic conditions, expanding commercial markets, and Government’s recent budget push for tourism,” said Jaideep Dang, managing director, Hotels and Hospitality Group, India, JLL.

“This positive outlook is reinforced by substantial hotel development across various tiers, with over 42,071 keys signed in 2024. Following 2024’s record-breaking year in hotel investments, openings, and signings, 2025 has commenced strongly and is further expected to maintain this momentum,” he said.