Investing in Hotels—Hospitality Properties and Industry Trends
Following a brutal 2020, the global hotel industry demonstrated remarkable resilience in 2021, making investing in hotels profitable again. It’s safe to say that the elevated demand for lodging in 2021 was almost unexpected. However, increasing vaccination rates coupled with lockdown fatigue and a growing sense of ennui led to record-high inventory and hotel occupancy rates – all of which played a part in accelerating the industry’s recovery.
As 2022 gears up, it looks like the lodging industry is going to enjoy a much-needed revival. Bookings have picked up as people make summer travel plans, the economy is improving, and business travel is experiencing a much-needed resurgence as conferences, trade shows, and other industry events pick up pace.
Despite the ongoing COVID-19 pandemic, investing in hotels may actually be a good choice for real estate investors this summer season.
Main Factors to Consider When It Comes to Hotel Investment in 2022
1. Hotel Revenue Strategies Got a Makeover
It’s not always on the average investor’s to-do list to buy or sell a hotel. Hotel real estate property differs significantly from other commercial real estate categories.
Unlike multifamily homes, office spaces, and other commercial investment properties, hotel operations are complex in that they’re highly responsive to changes in the market. Hotels are able to take full advantage of high seasons to reduce the risks that come with low seasons. On the other hand, this also means that hotels are highly sensitive to market disruptions, as proven by the coronavirus pandemic.
But what’s interesting, however, is how the hotel industry adapted to uncertainties caused by the COVID-19 pandemic. From contactless check-ins and robot concierges to full spa rental options, hotels worldwide swiftly adapt. Moreover, hotels prioritized health and safety plus implemented measures that would allow them to host travelers safely – from check-in to check-out. Such measures provide customers peace of mind and result in higher levels of customer satisfaction and a return to business.
As it turns out, it wasn’t the discounts that increased occupancy rates, but rather the stronger focus on client safety and communication. While past records play an instrumental role in envisaging future trends in commercial investments, it’s just as important to take into account market intelligence pointers. The world of business is changing, and the hotel niche is readjusting right along with it.
2. Travel Is On The Rise
Changes in demand during 2022 are essentially inverse to the declines experienced in 2022. Major markets (popular before the COVID-19 crisis) are picking up—as corporate, convention, and international travel resumes to pre-pandemic levels. Additionally, hotels operating in the smaller markets are rising to become more popular with leisure travelers because of the perception of being safer and healthier destinations.
As such, investing in hotels and motels might be a good idea for more cautious investors. That said, summer vacations will increase demand for hotel rooms in both major and smaller markets. High vaccination rates, loosened capacity restrictions and pent-up travel demand mean it’s a great time to invest in hotel stock. Hotels in popular vacation destinations like Las Vegas will capture the most demand during spring and summer, while hotels that cater to regional demands will continue to draw travelers and improve overall industry performance.
3. Remote Work Is Here to Stay
With the rise in travel and increasing demand for workplace flexibility, extended stay hotels are experiencing an influx of travelers looking to work and travel at the same time. The shift to remote work is enabling a new lifestyle where people can work virtually from anywhere. What this means is that the lines between work and leisure are beginning to blur. After all, in a world where people can work from home, they can work from anywhere.
Hotels are adapting by making bookings more flexible and long-term stays more affordable to cater to a mix of part-time and full-time remote workers.
Final Takeaway: How to Get Started Investing in Hotels
The hotel industry has realigned and become more resilient during the COVID-19 pandemic, making it an attractive investment option for investors looking to diversify their portfolio. When it comes to hotel real estate investing, three things are of utmost importance:
- Location, location, location
- The hotel brand is important
- Guest experience is key
Always do your due diligence, when looking to invest in motels and hotel chains. More importantly, proceed with caution.
Work with Anthony Maccaroni for Hotel and Motel Real Estate Investing in Florida
Anthony Macaroni is a real estate agent with decades of experience with commercial real estate in Florida. Anthony has a keen understanding of the hotel and motel real estate market, affording him unique insight into the best times to invest. Anthony provides detailed reports to every client he works with. These reports are vital to keeping up with market trends for investors.
If you’re ready to invest in a hotel in Pinellas or Clearwater, Florida, contact Anthony Maccaroni today for a free consultation.