Planning to increase your investment portfolio by investing in Hotels? The question is, is it a viable investment? Yes! Hotels are generally a profitable source of income. The hotel industry offers endless opportunities to investors. Investing in a well-known Hotel brand can spell high returns for you. While the risks associated are always a concern, the high traffic to hotels especially after the Pandemic means the profits outweigh the risks.
Have you done your research? Here are a few tips that will help you to make a wise choice-
Research Comes First- The first step to successful investing is to know your brands. Have you done your homework and got to know how the hotel is doing? Before making a choice you need to be well versed with the hotel, its profitability, its reputation, and marketing strategies. Make sure you gain insights into all the inner workings of the brand before investing.
Location Matters- Before you move forward with the investment, take a look at the surroundings. Are there tourist attractions nearby? Shopping malls, stations, and activities in close proximity make a hotel more in demand. Destinations that are rising in popularity with tourists are often affordable and great options to invest in.
Think Glocal- While investing in a popular tourist destination in the Maldives might sound interesting, look at local options as well. Analyze the market carefully and see what your local hotels have to offer, and where they will go in the future. Sometimes the best opportunity is right under your nose, literally!
Create a realistic Budget- Consider how much you want to invest, especially if you are going to borrow. If the numbers don’t add up then look for a different game plan.
Know the operators- remember that operator is the one who will be responsible for ROI. Do your research and understand who will be handling your investment before committing. Be very sure you know who you will be working with.
Read between the lines- We all do this, but we will just remind you once again -read the whole contract carefully. Each hotel has a different ratio of what an investor will get, so understand this. Move forward with the contract only when you are satisfied that your investment will have a sufficient rate of return.
Look for Guarantees- no investment has guaranteed returns, especially in the hospitality industry. Work on your negotiation skills and while creating the contract take a percentage that will make your investment worthwhile or opt for a hotel that assures guaranteed returns.
Revisit the Risks- Before making a final decision, keep in mind that all investments come with a risk. So before proceeding make sure you understand the particular pitfalls of the hotel industry. Sometimes hotels may not reach their ideal occupancy in time so there might be a delay in returns, remember this. Delayed or less than expected returns are a normal occurrence.
Consider all the factors before making your investment. This is a good way to generate income in the long run and be a part of the business. But make sure you know exactly what you will be getting into. Research, Research, Research is our advice!