Favorable hotel investment opportunities amid a pandemic

The hospitality industry was among the hardest hit sectors throughout the pandemic, however with the combination of lockdowns and stay-at-home orders, tight restrictions on travel and trillions of dollars distributed in stimulus money, this left consumers’ desire to travel and ability to spend strong. 

Even so, some markets are still struggling as they are faced with over supply and not enough demand. Whether it’s due to the lack of international travel, corporate/business travel, group/convention center business, or the recent spike in the delta variant, these markets are desperately trying to fill the void by identifying other revenue sources and continuing to cut top-line expenses in order to sustain their operation. However, many industrial and multi-family buyers see these markets and key real estate locations as a unique opportunity. Though it’s high-risk, these opportunistic buyers have the capital and investment means to strike while the iron’s hot, purchasing in a high barrier to entry market, offering a competitive price based on pre-pandemic performance and financials with the hope that it will pay dividends in the end.

Yet, one of the biggest opportunities remains in the secondary and tertiary markets where there is little to no new supply on the horizon and many hotels performing at or better than pre-pandemic levels. The majority were able to withstand far better than others with record-breaking occupancy and ADR, leaving a niche opportunity for hotel sellers, buyers, and lenders alike. While we all have high hopes of being able to look the pandemic in the rear-view mirror, hotel lenders are slowly starting to ease their restrictions and open with aggressive rates. This allows for the perfect opportunity not only for hotels with 12 months of strong profits but also hotels starting to show improvements, to sell – providing a favorable investment opportunity to those wanting to get into the next hotel cycle. PHG has the brokerage experience and know-how to pursue these opportunities as well as advisory services to those needing to turn their properties around and present them for sale or renegotiate terms and agreements to drive value.

If you’re interested in the estimated value of your hotel, contact us today for a free Broker Valuation.