Any Texas Hotel Owners?

Question

Anybody in Austin San Antonio or Waco investing in hotels? I'm seeing them move at cap rates north of 10% and occupancy seems to be almost back to pre-covid numbers (when they were moving at 5-6%).

Resources for evaluating/ managing/ pitfalls to be ware of seem to be lacking from the interweb in any real detail. Would love to connect and learn how to get started in this space.

Bruce Lynn · Answer

I think you just have to be careful of where you buy and what you buy.  Probably most of the traffic is leisure traffic right now and for most hotels that probably means lower revenue versus business travel.  Some people aren't sure business travel will ever come back and it's kind of a crap shoot if it does come back as to when it comes back.  So of course if you're buying a vacation resort probably business travel doesn't matter... But if you're buying a hotel next to a convention center that depends on convention center type business then that's another bowl game.  You're also starting to hear from operators as things rant back up that they're having trouble hiring staff.  So chances are the labor numbers from two or three years ago may not work in today's environment.  Since they laid off staff a year ago a lot of those people went and got other jobs and don't want to come back to hospitality industry.  Everyday I hear good operators talk about labor shortage.

with all that said I think they're probably are some great opportunities.  I heard at one point something like 80% of the properties in Texas weren't paying their mortgage So some of those will recover and some of those will trade hands.

Victor Steffen · Answer

Always appreciate your responses on this site Bruce! great insight. Didn't consider the labor shortage.