Family offices bet big on hospitality amid travel surge

Economic Times

13-07-2025

Family offices are increasingly channelling capital into hospitality, traditionally seen as a cyclical sector, but currently emerging as a core component of yield-driven portfolios, as India experiences rising demand for business and leisure travel.
In a recent marquee transaction, a prominent Mumbai-based family office acquired a 130-key hotel in Manipal, Karnataka, for about ₹150 crore. The asset, currently nearing completion, will be housed under one of Indian Hotels Company's (IHCL) upscale brands. In another deal, a business house promoter picked up a 190-room hotel in Kolkata. About six months ago, the family office of SanRaj acquired the 245-key Holiday Inn near Mumbai International Airport, underscoring a clear trend—private capital is pivoting to hospitality.
Value of hotel deals in India climbed to $167 million in the first half of 2025, from $93 million a year ago, according to JLL data.Family offices and HNIs, either directly or through wealth arms, comprised 54% of these deals, more than double of 26% in the year-ago period.
'There is a clear shift from viewing hotels as trophy assets to treating them as structured, yield-generating investments built on strong brand affiliations and operator partnerships,' said Nandivardhan Jain, CEO of Noesis Capital Advisors, which has executed multiple hotel deals across Kolkata, Amritsar, Vithalapur, Khandala, Khopoli, Vadodara, and Udupi.
Ashvini Chopra, head of family office solutions at Avendus Wealth Management, noted that hospitality assets, alongside student housing, are experiencing a boom, particularly in tier-2 locations. 'Hotel investments offer a unique combination of depreciation cover, stable rental income, and long-term capital appreciation,' he said.The growing appeal of hospitality assets is backed by strong fundamentals. India's total hotel transaction volume grew at steady pace to $340 million in 2024, from $337 million in 2023.With robust activity in the first half of 2025, JLL forecasts volumes to accelerate and touch $400 million by December-end.'We anticipate the momentum seen in H1 2025 to sustain through the rest of the year,' said Jaideep Dang, managing director, hotels and hospitality group, India, JLL. Significantly, family offices—from being passive observers—are emerging as key drivers of deal-making in the hospitality sector.Markets like Manipal, with their expanding university ecosystems and regional healthcare hubs, are experiencing a surge in domestic travel and room demand. Analysts highlight limited branded supply in tier-2 cities like Manipal as a compelling opportunity for both greenfield and brownfield investments.Unlike traditional real estate, hospitality assets demand deep operational alignment and brand partnerships. Once considered a high-risk segment reserved for large, diversified conglomerates, hotels are now firmly on the radar of family offices looking for stable income and long-term value creation.'We expect at least ₹5,000 crore of family-office capital to flow into Indian hotels over the next 2-3 years,' said Jain.Government initiatives aimed at promoting tourism, coupled with a rising domestic consumption story, have further bolstered investor confidence in hospitality as a strategic asset class. With rising RevPARs (revenue per available room), inadequate new supply in several micro-markets, and improving occupancy levels, experts say hotels will continue to attract private capital.