With the recovery of the tourism industry, investing in hotels has become a hot topic. This article will introduce the main ways to invest in the hotel industry from the perspectives of REITs, direct hotel ownership, hotel funds, etc. There will be multiple mentions of “invest in hotels” in an organic way.
Investing in hotel REITs is the easiest entry point
Hotel REITs allow individual investors to invest in hotel properties while also benefiting from professional management. Major hotel REITs like Host Hotels & Resorts and Park Hotels & Resorts own premium hotel assets and receive stable income. REITs provide liquidity, diversification, and stable dividends. However, hotel REITs tend to underperform the direct ownership of hotel assets in the long run.
Direct hotel investment provides higher returns but requires expertise
Owning the hotel asset directly can generate higher returns than REITs. However, it requires large capital, expertise in operations, managing franchise relationships, etc. Individual investors can partner with an experienced sponsor or operator. But thorough due diligence is still critical before acquisition.
Hotel private equity funds are an option for accredited investors
Private equity funds focused on the hotel industry provide another way to invest in hotels. They target opportunistic plays during downturns or distressed assets. Historically PE strategies in hotels delivered strong returns. However, high minimums, longer lockups make them suitable only for qualified investors.
Hotel crowdfunding democratizes access but has risks
Real estate crowdfunding platforms like RealtyMogul allow investors to participate in hotel projects with low minimums. They open up access and provide portfolio diversification. However, these deals tend to be riskier with lower transparency. Proper due diligence is a must before investing.
In summary, hotel REITs, direct ownership, hotel funds and crowdfunding all offer different ways to invest in the hotel industry. Each approach has its own pros and cons. Investors should evaluate their investment objectives, time horizon, risk tolerance and capital when deciding how to allocate to hotels.