Investing in Hotels
Post Covid-19, when looking to invest in property within hospitality there are a few key things you need to consider.
The hospitality sector has taken a real beating over the last few years with pubs, bars, restaurants, theatres, leisure centres and events venues mostly being shut down for a prolonged period. Landlords have been forced to reduce rents or provide a rent holiday to help the businesses survive through what has been the worst economic crisis since the 2nd World war.
The one area of that sector that has held up well during these difficult times is hotels, many servicing key workers during the pandemic while specialist and destination hotels and events venues were closed and have struggled, hotels that were able to remain open during lockdown were kept very busy. Occupancy rates increased with many at full capacity due the restrictions on travelling meaning that key and front line workers booking into hotels resulted in them being full night after night.
When lockdown was lifted, but travel restrictions remained in place, hotels in key locations have continued to do very well as people were ‘let out’ and have taken advantage by booking a getaway or staycation as it has been aptly named. This increase has continued and shows no signs of slowing at this time.
Specialist hotels and events centres have also seen a huge surge in bookings and, of course, re-bookings from the thousands of people who had to cancel their wedding or other event. This has led to many people struggling to find a venue due to so many being fully booked for months and, in some instances years ahead as they try to catch up. Providing a much needed boost in revenue for these businesses.
From 2022 onwards as the hospitality sector recovers and staycation still remains the buzzword, the hotel sector could prove to be a good investment opportunity.
The Sterling Woodrow Offering:
Our senior portfolio managers handle everything whilst you receive your return on investment
High Yield Returns
Generate high returns for up
to 5 years.
Hotels have the opportunity for capital appreciation over time.
3 Different Ways to Invest in hotels
- You can buy the hotel or business outright. Raising finance on a lot of commercial properties, including hotels can be difficult at the minute with the current economic climate.
- You can buy shares in companies that own hotels. The main advantage is that you are benefiting from the fact that you spread the risk with all the other investors, however, the disadvantage is that you don’t own any individual assets, you effectively own a share of multiple assets.
- You can purchase a lease in a room of a hotel, although you don’t own the freehold of the hotel the lease could be long term and you receive the annual income that the room generates.
For information about investing in hotels contact Sterling Woodrow.