India’s hospitality sector recorded a landmark year in 2025, with hotel investments reaching approximately USD 567 million across 28 transactions, marking a 67% increase from USD 340 million in 2024. The surge highlights growing investor confidence in India’s tourism infrastructure and the sector’s resilience across multiple market tiers. The investment landscape reflected a diversified capital base. Institutional capital and private equity firms led activity with 35% of total transaction 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 composition underscores the sector’s appeal across varied investment strategies and risk profiles.
Tier II and III cities emerged as key growth drivers, capturing nearly 40% of total transaction volume—a trend sustained from the previous year. Investors showed strong interest in premium assets, including luxury resorts in Rishikesh, upper-upscale properties in Goa, and upscale to midscale hotels across emerging cities such as Ludhiana, Nashik, Vadodara, Udaipur, and Lonavala.
Gaurav Sharma, Managing Director, Hotels, India & Senior Director, Hotels Capital Markets, Asia, said, “India’s hotel investment market is reflecting a clear step-up in both investor confidence and market depth. The continued expansion beyond gateway cities is particularly encouraging, with Tier II and III markets evolving into mature, investment-grade destinations backed by improving operating performance and scalability. The momentum has carried strongly into 2026, underscoring sustained capital appetite and increasing sophistication in capital deployment through platform-led strategies and institutional partnerships.”
Beyond asset transactions, institutional capital deployment for consolidation and strategic partnerships reached approximately USD 125 million in 2025. Strong operational performance has created scarcity in tradeable assets, with owners retaining high-performing properties and positioning premium hotels as highly sought-after opportunities commanding strong valuations. Operational hotels dominated transactions, accounting for 69% of total volume, while under-construction assets represented 18% and land transactions 13%. Segment-wise, luxury hotels led with a 42% share, followed closely by upscale properties at 41%, highlighting strong demand for premium positioning.
Branded hotel signings surged to 51,647 keys across 424 hotels in 2025, a 23% year-on-year increase, with 71% of signings concentrated in Tier II and III markets. Management contracts continued to dominate at 84%, reinforcing the shift toward asset-light growth models. Meanwhile, greenfield development reached 33,170 keys, up 17% year-on-year, signalling sustained developer confidence. Momentum has continued into 2026, with Q1 transactions reaching USD 185 million, a 58% increase over the same period last year. Notable activity includes Warburg Pincus’ acquisition of a 41% stake in Fleur Hotels, a subsidiary of Lemon Tree Hotels, with a USD 107 million commitment for portfolio expansion.
Supportive government initiatives—including land monetisation at airports and strategic auctions in micro-markets such as Yashobhoomi (IICC), Neopolis in Hyderabad, Fintech City in Chennai, and Jewar Airport—are expected to unlock new investment opportunities. Tourism-focused infrastructure upgrades and the development of new cultural destinations further strengthen long-term demand.
Despite supply constraints and geopolitical uncertainties, strong domestic tourism and diversified capital sources provide a resilient foundation for growth. As India’s hospitality market continues evolving toward consolidation and platform-level investments, the sector remains well-positioned for sustained expansion, reinforcing India’s standing as a compelling global hospitality investment destination.