13th Aug 2014
The hospitality industry always represents an investment opportunity. People will always need hotels of all kinds – from grungy motels on the side of the road to luxury glass towers in the middle of bustling cities.
But if you’re thinking of investing in the hotel industry, you should consult with Hotel Experts first. Because like any other investment, hotels go through boom and bust periods based on many factors: The economy, world politics and changing public attitudes. Before you risk your money assuming something is a sure thing, make sure the Hotel Experts agree with you.
The Hospitality Industry is extremely cyclical, meaning that it not only follows the predictable pattern of boom and bust so prevalent in the real estate industry, but it is, in fact, one of the most volatile types of real estate. This is because travel, business, the economy and hotels are engaged in a very complicated dance that only experts in the Hotel industry understand. A bad economy might be expected to hurt hotel profits, but occasionally the opposite occurs, as companies step up sales travel to make up shortfalls. However, often leisure travel is one of the last items of discretionary income to recover after a recession, so the down-cycle of the hotel business can be steeper and longer than other types of real estate or the general economy.
Even luxury hotels are not immune to economic forces, and even popular destination choices can shift unexpectedly, leaving formerly reliable investments reeling. The timing of the purchase and sale of hotels is especially important in the overall return on such an investment.
Opportunities and Hotel Experts
Another aspect of the hospitality investment game is seeing where new hot spots will emerge in developing neighborhoods and cities. Being able to see five or ten years into the future and predict the success of a hotel requires Hotel Experts who have the data, experience and analytic ability to better guide your investments. While hotel investing can be exhilarating, it is not for the faint of heart.