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Investing in Hotels & Motels
Why Hotels are the Prime Real Estate Investment Choice Today (VBW Ventures, May 23, 2024)
Diversification is paramount in crafting a resilient investment portfolio, and hotels present an enticing opportunity for real estate diversification. Beyond conventional property types, hotels offer unique investment propositions, attracting investors to spread their holdings across various property types and geographic regions.
Hotel Investors are Focused on Upgrading Older Properties Amid a Challenging Debt Market (Hospitality Investor, Apr. 29, 2024)
While owners are focused on making hotel upgrades and other changes to meet guest expectations, concern over the high cost and availability of capital is limiting investment in renovations for many hotel owners, especially those with maturing mortgages in need of refinancing.
Investing in Hotel Developments: a Lucrative Path to Diversify Your Portfolio (Wealth Hospitality, Mar. 8, 2024)
Why Consider Hotel Investments – Hotel investments offer several compelling advantages:
- Steady Income: Hotels generate regular income through room bookings and services.
- Portfolio Diversification: Diversify your investments beyond stocks and bonds.
- Passive Income: Hotel investments can provide passive income streams.
- Tangible Asset: Real estate investments like hotels are tangible assets.
- Wealth Preservation: Real estate can act as a hedge against inflation.
Hotel/Motel Management
Hotel Management: Everything You Need to Know About Managing a Hotel (Revfine, Jan. 30, 2024)
Hotel management involves the management of anything that’s related to the hotel industry. Suppose you want to gain a foothold in this business.
In that case, you will need to learn about all the techniques of managing a hotel business, including marketing, hotel administration, catering management, housekeeping, and accounts. The primary goal behind learning the ins and outs of hotel management is to run a hotel successfully while simultaneously managing other aspects of the business.
Poor Management Drives Hotel Distress, Finance Executives Say (CoStar, May 9, 2024)
During the "Winning in the Distress Game" session at the 2024 Meet the Money conference, Kevin Gallagher, senior director at Trimont, said people need to remember hotels are operating businesses, and people can make or break financial outcomes.
"Yes, there are economic [headwinds] and yes, there are issues with capital stack structures, but a great hotel is run by a great general manager and a great director of sales," he said. "When you look at a distressed hotel, it almost always boils down to the competence of the people on the property."
What is Hotel Management? (Hotel Tech Report, May 8, 2023)
Hotel managers are responsible for overseeing the day-to-day operations of the hotel, as well as developing and implementing strategies to improve the hotel's performance and profitability. They must also be able to anticipate and respond to the changing needs and preferences of their guests, and to ensure that the hotel maintains a positive reputation in the industry.
Safety & Security Issues
Hotel Cybersecurity Vulnerabilities Extend to Key Cards (Hotel Dive, Apr. 11, 2024)
Saflok-brand key card machines are in use at 13,000 properties, Wired reported, and the researchers began to try hacking them while attending back-to-back hacker conferences in Las Vegas, where the hotel room they experimented with used Saflok keys. They were able to break into the room by obtaining another keycard from the hotel and reading code from that card with the help of a $300 RFID read-write device, a machine that’s readily available online.
Hotel Management: Walking the Fine Line Between Security and Privacy Protection (Ark Systems, Mar. 2, 2023)
The most difficult security for any business is always cybersecurity. Everyone has their information stored on servers around the globe in relation to the businesses they use, and that means every major data breach can be one that results in stolen identities, banking fraud, and all sorts of serious problems. Hotels, like every other business, need to employ strong cybersecurity measures that are constantly being updated in order to protect any sensitive information about their guests. Over the years, this data will be extensive and significant, making it a tempting target for hackers.
Hotel Security Amenity Moves to the Forefront of What Guests Really Want (Crime Doctor, Jan. 30, 2023)
Solid deterrent cues include significant barriers like perimeter walls, decorative fencing, landscaped terraces, and a well-defined driveway and main entrance. A strong transition sends a subliminal message to the criminal that this hotel is private property and for use by hotel guests only.
Appraisal Considerations
S.F. Hotel's Value Plunges by 25% as Business Travel Remains Sluggish (San Francisco Chronicle, Feb. 23, 2024) E
A distressed San Francisco hotel in the portfolio of one of the world's largest property owners saw its value fall by 25% amid the city's sluggish tourism recovery.
The value of the Club Quarters hotel at 424 Clay St. fell from $160.8 million to $120.4 million after a recent appraisal, according to a report from Morningstar Credit.
How to Value a Hotel or Motel (Peak Business Valuation, Dec. 5, 2023)
The market approach is one of the most common business valuation approaches. This method is similar to how a real estate appraiser values a house. During the real estate appraisal process, appraisers assess similar properties that recently sold in the area. This allows them to accurately determine the fair market value of a home. When valuing a hotel or motel with the market approach, business appraisers consider similar businesses that recently sold on the market. If the hotel or motel is a private company, the expert relies on private transaction databases to gather information.
How to Value a Hotel (howtovalueahotel.com, Jun. 27, 2023)
Professional appraisers (such as those who hold the Certified Hotel Appraiser (CHA) certification from the International Association of Hotel Appraisers) use a combination of three approaches in appraising hotels for market value:
- Cost Approach
- Sales Comparison Approach
- Income Approach.
Usually, all three approaches are employed in an appraisal, and the appraiser considers the inherent strengths of each, as well as the nature of the subject property when making the final estimate of market value.
3 Ways to Calculate Valuation for a Hotel Appraisal (Hospitalitynet, Jan. 27, 2022)
“There are three typical and most widely recognized approaches to determine the value of real estate. These are: cost, income capitalization and sales comparison.The Uniform Standards of Professional Appraisal Practices (USPAP) requires that the hotel appraiser address any, and all, of the approaches necessary to produce a credible result.”
eBooks & Other Resources
eBooks.realtor.org
The following eBooks and digital audiobooks are available to NAR members:
Chocolates on the Pillow Aren't Enough: Reinventing the Customer Experience (eBook)
Commercial Real Estate Restructuring Revolution: Strategies, Tranche Warfare, and Prospects for Recovery (eBook)
Growth Strategies for Hotels (eBook)
Hotel Success Handbook (eBook)
The Ultimate Guide to Managing Distressed Hotel Assets (eBook)
Books, Videos, Research Reports & More
As a member benefit, the following resources and more are available for loan through the NAR Library. Items will be mailed directly to you or made available for pickup at the REALTOR® Building in Chicago.
Commercial Real Estate Quarterly Market Survey (
National Association of REALTORS®)
See this report for quarterly cap and vacancy rates for hotel properties.
Resort Development (Chicago: Urban Land Institute, 2008) NAC 1800 Ur1rd1
Climbing the Real Estate Risk Spectrum (Chicago: Real Estate Research Corp., 2007) HD 1375 R22c
Have an idea for a real estate topic? Send us your suggestions.
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