Many investors think that hotels are out of their league. But, if you feel the same way, take note that this isn’t really the case! With some assistance from interim hotel management and hotel consultants you can rest assured in your new investment. Plus, putting money in hotels is something that every investor should consider since it helps them enjoy several benefits.
The Benefits of Investing in Hotels
One of the biggest advantages of hotel investment is that it helps you diversify your portfolio and reduce the risks that come from putting all your eggs in one basket. This is particularly true if your portfolio is currently composed of mostly stocks and bonds. Another benefit is that it has a high ROI, meaning it can provide you with above-average dividends and give you your money’s worth.
Investing in hotels also lets you ride the growth of the hospitality industry. Despite the presence of Airbnb and other home sharing programs, hotel revenues are still expected to grow in the coming years, especially those coming from business travelers and tourists looking for a luxurious experience. By adding hotels to your portfolio, you’ll get to take your slice of this growth and enjoy substantial return on investment.
The Challenges You’ll Face
Before you invest in hotels, though, you must be aware of the issues you’ll come across and know how to deal with them. One of the biggest challenges is the fact that hotel investments require huge capital, particularly if you’d opt for direct investments and purchase properties of your own. If you don’t like taking big risks, or if you don’t have access to enough funds in the first place, the large outlay can discourage you.
Another challenge is the amount of knowledge and experience needed to make the right investments. Thorough analysis is needed to ensure you choose the right hotels to buy or invest in; without this, you’ll most likely end up making the wrong decisions and wasting your money. If you plan to become actively involved in managing your hotel, you’ll need to develop your leadership and management skills. On top of that, having a sound knowledge and understanding of the hospitality industry. You could also look into interim hotel management as a short-term solution while you learn or hire someone else.
Hotel Investment Options to Choose From
The easiest way to add hotels to your portfolio is to invest in real estate mutual funds and/or real estate investment trusts (REIT). They’re considerably less expensive than purchasing a property, making them accessible even to investors with limited funds. They also come with less hassle and take less time. It’s important to note that they’re more volatile since they’re correlated to the stock market, like other stocks and shares.
The traditional way of investing in hotels is to buy one of your own (or become part-owner of one). This is more capital-intensive and requires you to pay more up front. It also requires active involvement in the business, so you’ll need to allot time and effort to it. You need to be knowledgeable, not just about business management, but also about the hospitality industry.
Fortunately, you can always get the help of Perry Group International. We’re a team of hospitality management consultants who can help you choose the right property to buy. We can also provide you with interim hotel management services during your first few months as a new hotel owner. Call now to learn more about the solutions offered.
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