Investing in Hotel Properties: Things to Know
By Lillian Connors, Senior Digital Marketing Strategist at Bizzmark
The hospitality industry is one of the most solvent and fluctuating industries, dealing with transient customer groups on a daily basis. With this type of climate being prevalent in the hotel industry, there are numerous lucrative reasons why you would want to invest in hotel properties. Here are the key variables you need to take into account when planning your investment.
Overview of Asset Classes
There are four main types of hotels, and they are classified by the types of services and amenities they offer. The "full-service" type of hotel offers everything a guest might want, from restaurants and bars, to conference halls, fully equipped spas, and leisure and sports centers.
A step down is a "limited-service" hotel, offering almost as much as a "full-service", typically a restaurant, a fitness center, conference rooms, and a swimming pool. You can expect to run a more predictable operation with this type of property.
Budget hotels are characterized by a couple of basic amenities and services, such as a laundry service and a cafeteria. These hotels have low rates.
Finally, the "extended stay" hotel type is aimed at providing features and amenities you would find in a home, as the hotel is catering to a specific demographic of people in need of a temporary home.
Tracking Performance and Growth with Metrics
Unique metrics are applied in the hotel industry to make tracking of growth and progress viable under the specific circumstances. These are Average Daily Rates (ADR) and Revenue per Available Room (Rev Par). The metric you use to track your progress can be used to gauge your standing in the industry and against similar businesses in your market area.
Capitalizing on Hotel Demand
The demand for hotel rooms is driven mainly by two key demographics: tourists and business travelers. Hotels can also have a number of other drivers depending on their location, such as special events, attractions, colleges, etc.
While tourism tend to drive demand throughout high seasons and weekends, business travelers dominate heavily from Sunday through Thursday. You can use you unique location and on-site services and amenities to fully capitalize on the demand of each demographic.
Optimizing Your Operations per Customer Profile
The modern age has seen a substantial shift in how hotels are developed, marketed, and managed. This is due to the rise of technology and the need to establish a business that can fully cater to a demographic of digital natives.
Millennial hotels are steadily on the rise, catering to young demographics, from travelers to business entrepreneurs. These establishments are defined by their stellar, urban locations, innovative interior designs, open spaces and vibrant room designs to appeal to the modern guest profile. You want to use the rising demographic profiles to tailor your services to fully meet their demands.
Benefits of Investing in Hotel Properties
There are a number of benefits to investing in a hotel property, ranging from increased and diversified returns, to the rising number of hotel investment firms offering support, information, and resources to new investors. Moreover, hotels are always in high demand as more and more people round the world are traveling and in need of accommodation.
Among the most promising benefits for new hotel property investors are the business immigration (Golden Visa) programs that allow individuals to become citizens of certain countries by investing in this type of real estate. This not only creates a promising business opportunity, but also allows the investor to obtain a valuable passport and citizenship in a country of choice. Malta, Hungary and different Caribbean and Pacific islands are currently the hottest spots for this type of investment.
With the demand for hotel rooms constantly on the rise across the world, investing in hotel properties is becoming one of the most prominent business opportunities in the hospitality industry. With these five essential tips you will have an easier time taking that crucial first step towards a successful future.
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