A ₹10,000 crore bet on India's hotels: Investors pile in and mergers and acquisitions follow as sector scales up

“What we’re seeing now is not just expansion — it’s a recalibration of the sector," Nikhil Sharma, managing director and COO – South Asia, Radisson Hotel Group, told Mint.

Consolidation and capitalisation, he said, are helping companies scale up faster and tap into emerging markets. This inspires confidence in newer entities that want to list on the stock exchanges. Northeastern chain Hotel Polo Towers, Mint has learnt, is preparing for an initial public offering while Pride Hotels has revived its 2017 listing plan.

These companies are following Schloss Bangalore (which owns The Leela), ITC Hotels, Ventive Hospitality and Brigade Hotels, which have listed or have filed for an IPO in the past year or so.

Also Read | Leela Hotels’ ₹3,500 crore IPO to test investor appetite for India's luxury travel boom

Mint reported earlier that others such as FMCG conglomerate Dharampal Satyapal group have scaled up operations and are on an acquisition spree, looking to deploy ₹800 crore into buying and building hospitality assets.

New names could get added. The Adani Group intends to take over Jaiprakash Associates Ltd, a company undergoing insolvency proceedings. If the deal goes through, Adani will also enter the hotel sector inorganically and have six properties across the country.

The wave of IPOs and fund raising, along with strategic shifts like leasing and asset-light models, reflects a structural change in how the hospitality sector is being developed and scaled up in India, experts said. It highlights the sector's transformation and the growing appetite for both public and private investment in travel and tourism.

New management companies

The new generation of operators is challenging traditional models, becoming more flexible and creating opportunities for smaller hotel owners to work with them. Alivaa Hotels, backed by Ananta Capital, is using leases rather than ownership to expand.

Araiya Hotels & Resorts, Brij Hotels, Cygnett Hotels and others are following suit, targeting tier II and III cities with flexible, asset-light strategies aimed at tapping India’s surging demand for leisure and spiritual travel.

Even unlisted companies have sensed the scale of the opportunity. Hoteliers say this interest and further formalisation bodes well for the entire sector as India is the most underpenetrated hotel market with just 200,000 rooms (according to hotel consultancy Horwath HTL) and a consuming population of 200 million, which is growing. Comparatively, China has more than 7 million hotel rooms across 93,300 properties, according to media reports.

"India has the capacity to add as many as 10 more new chains at this stage. In less than one year of our first hotel opening, we now have 12 hotels on board, of which eight are operational," said Vikramjit Singh, founder of Alivaa Hotels.

Singh was earlier president of Lemon Tree Hotels. Alivaa aspires to manage 100 hotels in the next five years and will look at acquisitions to achieve the target.

 

Tier-I cities will stay in focus for many companies, but growth in these cities is limited because of fewer greenfield development opportunities. Some larger companies may now look at leisure destinations across India more seriously.

“India has a strikingly low number of leisure hotels. Despite strong demand, thanks to the booming domestic tourism, supply hasn’t kept pace, leading to higher average rates," Mandeep Lamba, president & CEO (South Asia) at hotel consultancy HVS Anarock, told Mint.

With greenfield development in tier-I cities becoming tougher due to land and cost constraints, Radisson is focusing on tier II and III cities, especially leisure and spiritual hubs.

Also Read | How Mhow, Silvassa and Rewa emerged as hotspots for Indian hotels

“Our recent signings in Ujjain, Ayodhya, and Dhanbad reflect this focus on high-potential micro-markets," Sharma of Radisson said, adding that the group is prioritising the conversion of existing hotels, operating partnerships and selective acquisitions for efficient growth.

India will remain a key growth engine for the business over the next 3-5 years, with expansion planned across categories — from lifestyle to midscale — and across formats like franchise, management and hybrid models.

“Our goal is not just to grow in numbers, but to create differentiated value in every destination we serve," Sharma said.

More mergers and acquisitions

In March, Mint broke a story on how Marriott International was acquiring a minority stake in Concept Hospitality, which runs The Fern, to launch a new, no-frills hotel brand in India. The deal, reportedly worth $15 million, valued Concept at $100 million and marks a rare strategic investment for Marriott, which typically avoids equity stakes. Many hotel companies could consider more acquisitions in these locations to grow faster, said experts.

“As the sector matures, we’ll continue to see more mergers and acquisitions. Companies that have recently gone public are particularly well-positioned to grow – both organically and inorganically – backed by fresh capital from their IPOs," Lamba added.

In February, two smaller chains – Larisa Hotels and AM Hotel – merged and are targeting smaller cities and resort locations to expand their business.

Also Read | Accor, InterGlobe look to inject ‘audacity, vision’ into their hospitality ties, eye 300 hotels by 2030

“The India growth story is unfolding. As the country emerges as the world’s fourth-largest economy, rising per capita income and the resulting growth in discretionary spending will continue to drive steady growth in the hotel sector," said Lamba.

As more hospitality companies go public, the sector becomes increasingly visible, accountable and investment-worthy, Lamba added.