A Beginner’s Guide to Hotel Investment
Dipika Patel
Co-Founder
GreatX
Co-Founder
- Location: USA
Here’s a hotel investment guide for lenders and owners
1. Type of hotels
- Full-service hotels: These hotels, which include luxury hotels and resorts, offer multiple services and amenities like on-site retail, spas, meeting rooms, restaurants, golf courses, etc. Full-service hotels rely on a large staff with a dependence on the competitive positioning of their amenities.
- Select-service hotels: These hotels offer fewer amenities and often include free breakfast, a swimming pool and a fitness center. They generally come without restaurant or banquet facilities. These hotels can differentiate themselves by location and brand and have lower overhead than full-service hotels. Because of the smaller staff, efficiently run select service hotels can be strong performers.
- Budget hotels: Focusing purely on cost-effective services, these hotels offer little to no amenities or services.
- Extended stay hotels: These hotels cater to longer-term stays, for example, families undergoing relocation or business travelers on extended assignments. Usually, they offer suite-style rooms with at-home features like a kitchen and access to laundry.
2. Hotels are unlike other real estates
3. Key metrics in the hotel sector
Hotel investors should learn the terminology and variables of hotel real estate investment. For instance, ADR or average daily rate, measures the average nightly rate paid for rooms at a hotel. It is calculated by dividing room revenue by rooms sold over a specific period. The driving number for hotels is RevPAR, or revenue per available room which is calculated by multiplying the ADR by the occupancy rate. Hotel owners and operators use daily, weekly, monthly, and annual RevPAR to gain valuable insights into the hotel’s performance.
In comparing hotels, look at the RevPAR compared to the competitors’ RevPAR year on year. Demand segmentation of clients is important to understand for hotels, namely business travelers, tourists, or groups. The demand for hotels can also be seasonal, for example, ski resorts experience peak occupancies during winter, while beach resorts witness peaks during summer or winter, depending on their location.
3. Key metrics in the hotel sector
4. Getting started with hotel investment
Are you ready to invest in hotels?
To Own A Hotel Room can be a lucrative and sophisticated investment opportunity. It is up to investors how they approach these investments. The above-mentioned factors will guide one to make more informed decisions. However, since the hotel sector is generally a new investment opportunity for most, it is always prudent to speak to an investment professional.
GreatX presents the first asset-backed tokens focused on savings. We offer hotel tokens as an institutional-grade investment opportunity backed by US Treasury Bonds. This means the capital is protected. The GreatX tokens enable the global investor community to own US real estate asset income. GreatX fulfills aspirations allowing retail investors to partake in a market now limited to institutions.
Disclaimer
This commentary is provided as general information only and is in no way intended as investment advice, investment research, a research report or a recommendation. Any decision to invest or take any other action with respect to the securities discussed in this commentary may involve risks not discussed herein and such decisions should not be based solely on the information contained in this document.
Statements in this communication may include forward-looking information and/or may be based on various assumptions. The forward-looking statements and other views or opinions expressed herein are made as of the date of this publication. Actual future results or occurrences may differ significantly from those anticipated and there is no guarantee that any particular outcome will come to pass. The statements made herein are subject to change at any time. GreatX disclaims any obligation to update or revise any statements or views expressed herein.
In considering any performance information included in this commentary, it should be noted that past performance is not a guarantee of future results and there can be no assurance that future results will be realized. Some or all of the information provided herein may be or be based on statements of opinion. In addition, certain information provided herein may be based on third-party sources, which information, although believed to be accurate, has not been independently verified. GreatX and/or certain of its affiliates and/or clients hold and may, in the future, hold a financial interest in securities that are the same as or substantially similar to the securities discussed in this commentary. No claims are made as to the profitability of such financial interests, now, in the past or in the future and GreatX and/or its clients may sell such financial interests at any time. The information provided herein is not intended to be, nor should it be construed as an offer to sell or a solicitation of any offer to buy any securities. This commentary has not been reviewed or approved by any regulatory authority and has been prepared without regard to the individual financial circumstances or objectives of persons who may receive it. The appropriateness of a particular investment or strategy will depend on an investor’s individual circumstances and objectives.
Here’s a hotel investment guide for lenders and owners
1. Type of hotels
- Full-service hotels: These hotels, which include luxury hotels and resorts, offer multiple services and amenities like on-site retail, spas, meeting rooms, restaurants, golf courses, etc. Full-service hotels rely on a large staff with a dependence on the competitive positioning of their amenities.
- Select-service hotels: These hotels offer fewer amenities and often include free breakfast, a swimming pool and a fitness center. They generally come without restaurant or banquet facilities. These hotels can differentiate themselves by location and brand and have lower overhead than full-service hotels. Because of the smaller staff, efficiently run select service hotels can be strong performers.
- Budget hotels: Focusing purely on cost-effective services, these hotels offer little to no amenities or services.
- Extended stay hotels: These hotels cater to longer-term stays, for example, families undergoing relocation or business travelers on extended assignments. Usually, they offer suite-style rooms with at-home features like a kitchen and access to laundry.
2. Hotels are unlike other real estates
3. Key metrics in the hotel sector
Hotel investors should learn the terminology and variables of hotel real estate investment. For instance, ADR or average daily rate, measures the average nightly rate paid for rooms at a hotel. It is calculated by dividing room revenue by rooms sold over a specific period. The driving number for hotels is RevPAR, or revenue per available room which is calculated by multiplying the ADR by the occupancy rate. Hotel owners and operators use daily, weekly, monthly, and annual RevPAR to gain valuable insights into the hotel’s performance.
In comparing hotels, look at the RevPAR compared to the competitors’ RevPAR year on year. Demand segmentation of clients is important to understand for hotels, namely business travelers, tourists, or groups. The demand for hotels can also be seasonal, for example, ski resorts experience peak occupancies during winter, while beach resorts witness peaks during summer or winter, depending on their location.
3. Key metrics in the hotel sector
4. Getting started with hotel investment
Are you ready to invest in hotels?
To Own A Hotel Room can be a lucrative and sophisticated investment opportunity. It is up to investors how they approach these investments. The above-mentioned factors will guide one to make more informed decisions. However, since the hotel sector is generally a new investment opportunity for most, it is always prudent to speak to an investment professional.
GreatX presents the first asset-backed tokens focused on savings. We offer hotel tokens as an institutional-grade investment opportunity backed by US Treasury Bonds. This means the capital is protected. The GreatX tokens enable the global investor community to own US real estate asset income. GreatX fulfills aspirations allowing retail investors to partake in a market now limited to institutions.
Disclaimer
This commentary is provided as general information only and is in no way intended as investment advice, investment research, a research report or a recommendation. Any decision to invest or take any other action with respect to the securities discussed in this commentary may involve risks not discussed herein and such decisions should not be based solely on the information contained in this document.
Statements in this communication may include forward-looking information and/or may be based on various assumptions. The forward-looking statements and other views or opinions expressed herein are made as of the date of this publication. Actual future results or occurrences may differ significantly from those anticipated and there is no guarantee that any particular outcome will come to pass. The statements made herein are subject to change at any time. GreatX disclaims any obligation to update or revise any statements or views expressed herein.
In considering any performance information included in this commentary, it should be noted that past performance is not a guarantee of future results and there can be no assurance that future results will be realized. Some or all of the information provided herein may be or be based on statements of opinion. In addition, certain information provided herein may be based on third-party sources, which information, although believed to be accurate, has not been independently verified. GreatX and/or certain of its affiliates and/or clients hold and may, in the future, hold a financial interest in securities that are the same as or substantially similar to the securities discussed in this commentary. No claims are made as to the profitability of such financial interests, now, in the past or in the future and GreatX and/or its clients may sell such financial interests at any time. The information provided herein is not intended to be, nor should it be construed as an offer to sell or a solicitation of any offer to buy any securities. This commentary has not been reviewed or approved by any regulatory authority and has been prepared without regard to the individual financial circumstances or objectives of persons who may receive it. The appropriateness of a particular investment or strategy will depend on an investor’s individual circumstances and objectives.
Dipika Patel leads GreatX as co-founder and a member of the board. A third-generation hotelier, Dipika comes with extensive experience in hotel asset investment. She is detail-oriented and has a strategic eye for all things financial. In her previous roles, Dipika has displayed innovation and leadership at its finest.
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