Deciding to make a hospitality investment is one of the very popular decisions for many business owners. There are truly so many great options to make a sustainable profit while you are at the same time diversifying your portfolio. When it comes to hotel investments in the real estate term, a person has the option to build a hotel or renovate the existing one. In both cases, the goal is the same – to make a real brand out of it and make an outstanding hotel that will have an amazing reputation and attract many people.
However, investing in hospitality is a very long path since a person primarily needs to gather different information that is relevant for one prospective investor. After gathering all the necessary information, a person can be able to become with the project. In this article, you are going to find different options that refer to investing in hospitality.
Are Hotels Good Investments?
Many people are still wondering whether they should invest in hotels and whether this is a sustainable type of investment. Logically, no one wants to invest in something that is not profitable. In general, hotels are considered a very good investment opportunity, therefore you will not make the mistake by taking this step. They are considered an incredible source of income. Best of all, hotels are real estates that come with great adaptability features which mean that you can constantly upgrade them by renovating them or changing their operation approach.
Additionally, if you decide to invest in one of the top hotel brands, you are going to take an advantage of the so-called high return of investment – ROI.
Even though these types of recognizable hotel brands come with a greater risk, they also experience heavy traffic and a reputation that is worth risking. Statistics show that there is a massive increase in hotel bookings across the whole world, which means that all investors are going to benefit from a high ROI. There is a truly wide range of different great possibilities that hotels offer to their investors.
Logically, the higher the income is, the value of the property of the hotel is higher as well. There are unlimited options when it comes to upgrading the value of some hotels, whether it refers to renovating hotel rooms, new features, upgrading amenities, or something else. If you are interested to give a new attractive look to your hotel and upgrade it to the next level, you can visit this site and contact expert people that will show you how you can benefit effectively from hotel investment in the long term. Best of all, this is just a surface of the reasons why hotels are a great type of investment.
How To Invest in Hospitality?
As we said, you have so many great options when it comes to investing in hospitality. You can take one of the routes that we are going to discuss below.
1. You can decide on the New Hotel Projects option
The first option that you have that is the most obvious one is to create a new hotel concept on your own. This is a very bold approach, however, it can be challenging if you have a limited budget. Let’s be honest, constructing a whole new hotel concept has its own sizable expenses. Those types of expenses refer to construction down payments, costs of the first months of hotel operation, loan payments, as well as project overruns costs. Because of the unpredictable costs, it would be a wise idea to contact the assistance of a hotel financing company and ask their experts to guide to through the whole project and provide you necessary funding so you can complete the investment effectively.
2. Consider the Hotel Renovation option
Your next option refers to hotel renovation. This means that you can find some existing real estate asset and upgrade it according to your vision. This is generally a safer option than the previously mentioned one because not only that it requires less capital, but it does not come with a great risk such as building a new hotel. If you decide to renovate hotel real estate, you should know that you actually have a couple of financing options that you can take advantage of. The first thing you can do is to talk with your bank about obtaining a conventional bank loan. This type of loan is considered the most popular and cheapest financial option. The second option refers to the commercial bridge loan which stands for a short-term loan.
3. Think about the Hotel Franchise option
Deciding to purchase some existing and highly successful hotel franchises including Hilton, Hyatt, Holiday Inn or any other is a great and attractive opportunity for the investors. Before you decide on this type of option, we want to warn you that something like this is not cheap at all because we are talking about highly reputable, popular, and successful hotel brands. You will be needing to invest up to $14 million to just open and operate the hotel, and this is after giving the initial $60,000 franchise fee. Additionally, you can expect to pay approximately $500 per guest room. No doubt that the option of this kind is highly beneficial and safe as well, however it is limited only to people that have a huge amount of money willing to invest in this type of real estate.
4. What about the Hotel Refinancing option
There is no need to look outside real estate investments when you can choose the option to refinance a current loan. In general, hotel refinancing is an asset management option that can provide you with so many benefits including lower rates, cheaper payments per month, and many other capitals that can be linked to hotel operations. If this is not something you find attractive, you can always find some other hotel investments that you can consider. For instance, you can keep in mind that asset classes such as stocks of publicly traded hotel companies are common investment options as well.