Last week at America’s Lodging Investment Summit in both private meetings and on the main stage experts were optimistic and even bullish, referring to hotels as “the golden child” of commercial real estate asset classes. The forecast for hotel investments in the near future looks promising as the economy stabilizes and people are eager to travel. The industry is expected to continue to present opportunities for investors interested in hospitality commercial real estate buildings.
Key Reasons to Add Hotels to Investment Portfolio
- Opportunities for Quality Investment: The hospitality industry offers some of the best opportunities to invest in real estate, as it allows investors to diversify their portfolios. In fact, hotels are among the best commercial properties to invest in, especially because of the hopeful prediction for the industry in 2023.
- High Return: The high yield return that comes with this kind of real estate investment is the main factor that attracts most hotel investors. The revenue generated from investing in hotels is primarily realized from the operating cash flow. Therefore, it’s crucial to have a skilled management team in place to help balance hospitality-associated risks. Successfully handling these risks, however, allows for even higher returns on investments.
- Tax Efficiency: Another important advantage of investing in hotels is the tax benefits. Investing in commercial real estate is one of the most tax-efficient methods of investment. Investing in hospitality properties combines the core benefits of investing in real estate into a centralized property. Investing in hotels can reduce your tax liability, stemming from equity expansion, depreciation, and tax-deferred exchanges in commercial real estate.
- Community Impact and Brand Awareness: To run a hotel effectively, a lot of hands have to be hired, as labor consists of almost half of the running costs of a hotel. A majority of the employees would mostly likely come from the local neighborhood, creating a significant job-creating impact on the community’s economy. Being actively involved in providing steady employment and developing a community establishes a positive outlook in the public’s eyes. Any business that invests in such will not only be impacting the community, but will also create a positive brand awareness.
Common Ways to Invest in Hotels
Buying hotel property is likely the most straightforward way of investing in hotels. Hotels come in different styles, sizes, and affordability which invites flexibility to find a hotel property that meets your investment criteria. Below are the most common ways to invest in hotels.
- New Hotel Construction Projects
- Hotel Renovation
- Hotel Franchise
- Hotel Refinancing
- Hotel REITs
Are you looking for commercial property investment opportunities or need help investing in commercial real estate? Sands Investment Group is the right place to be. We are a commercial real estate brokerage firm with years of experience buying and selling investment properties. Visit our website today to learn more about our expert investment advisors and how they can help.