Hotels

50 Replies

@Donald Taite What are you looking for specifically? Are you looking to simply be an investor or be involved in the day-to-day business operations of running the hotel as well as being an investor? Starting one from the ground up, or buy an existing property that is for sale? Are you looking in a specific region? I'm assuming since you are in VA, you are looking there; however, I could be wrong, you could be open to anywhere.

As a current owner, I can tell you in this business you can achieve great returns, but you have to know what you are doing or you can lose your shirt. First thing to know is, do you want to be an owner operator or an investor. There is a big difference in the two. Since you are new, I recommend staying with flagged properties that way you get support from the franchise and access to loyalty members. I really recommend you invest with others before operating on your own. When I first started out, I invested with a family I knew well. They are good operators. I still invest with them, but have some hotels that I operate on my own as well. 

@Evan Bell "Flagged" properties refers to hotels that are a franchisee of a hotel chain.  A good example would be a Holiday Inn, Ramada Inn, Comfort Inn, etc.  They are independently owned and operated under an agreement with the Franchisor.  The franchisor does marketing and helps with distribution to fill the hotel rooms as well as setting and enforcing brand standards.

Banks prefer flagged properties because the franchisors enforce standards and these properties tend to benefit from their franchisee relationship in filling rooms.

Originally posted by @Evan Bell :

Knowing nothing about hotels, what is meant by "flagged properties"? Jimmy Klein

 Evan,

A flagged property is a "branded" hotel like one in the Marriott, Hilton, Hyatt, or even "lesser" brands. Rather than "Joe Blow's Roadside Inn."

@Aaron Mazzrillo,

Hotel income, as you may imagine, is highly cyclical. There are hotels doing 400-600% more revenue today than they were doing at the bottom of the crisis.

REVPAR (Revenue per available room) has skyrocketed in the hotel industry the last few years, primarily because of Average Daily Rate (ADR) increases, but also because of boosts in occupancy, and ancillary income. Many chains are building brand new properties right now. Hilton is launching a more affordable chain shortly - mostly new construction.

I'm interested in hotels, as I've already been expanding my furnished model. But even more so than other RE, I want to wait until a cyclical low to wade into that industry. With low cap rates and high revenue and profit, valuations are off the charts!!!... And that won't last forever!!

@J. M.

Exactly. My partner is looking for land to build the new Hilton midscale brand. The issue with waiting for a low cycle is that you will be waiting a very long time. The recession is still in fresh in the eyes of hoteliers. Outside of tier 1 markets, valuations are high actually. We are not likely to see a low cycle for another 7 years or so. Also you look at cap rate, but my partner and most other owners look at GRM multiples. He has actually bought properties for the same if not cheaper valuation in this cycle. Cap rate doesn't apply that well in this business because expenses can skew the numbers greatly. In certain markets I wouldn't touch hotels, but most markets have reasonable valuations still if your buying based on GRM. Are you looking at a specific franchise your looking to purchase?

This is the most recent thread on hotels I could find so I thought I'd start here. Seems some of you have some good experience with the industry.

I've been doing direct mail to commercial apartment owners, but one of them brought a hotel to me that he wants to sell. He's got some decent motivation so I don't want to pass up a good opportunity.

Would someone be willing to give me some guidance on evaluating and negotiating a hotel deal? Or point me in the right direction of some resources?

What you need to ask yourself can you be able to handle the task. Try  to reach out someone that knows this industry. Get answers, but is best to sit with the owner and discuss his reason for selling.      

Originally posted by @Josiah Swartz :

This is the most recent thread on hotels I could find so I thought I'd start here. Seems some of you have some good experience with the industry.

I've been doing direct mail to commercial apartment owners, but one of them brought a hotel to me that he wants to sell. He's got some decent motivation so I don't want to pass up a good opportunity.

Would someone be willing to give me some guidance on evaluating and negotiating a hotel deal? Or point me in the right direction of some resources?

 Josiah, feel free to shoot me a message with your questions and I'll be happy to help out where I'm able.

I have also been looking into hotels on the oregon coast but want to learn more. Are hotels on the coast a good idea? And would like to get in touch with someone who has done it. Thanks!

MF is probably more scalable as you have much less involvement and operations are smaller. You dont need housekeepers or a 24/7 front desk staff, just a leasing agent and good maintenance staff. 

very interesting forum , i happen to have some clients willing to sell medium sized hotels in Seychelles islands and also some property ideal for resort development. One big property is near Four seasons resort Seychelles. I like the way they operate, basically they build villas , which they sell to private buyers who in turn gives it to the resort to manage when they are not using it themselves. Tourism is very big industry in my country , we have a few of the big brands like Hilton, Banyan tree , Four seasons etc..

you can find some additiona linfo here

four seasons

you can see their details in the link below, the price of the villas a re pretty high.

http://www.petiteansedevelopments.com/res_detail.php

i have a few properties posted on this page

http://agent.4321.co.il/agent59913.aspx

and a website i am working on

http://rlarchitecturepropertyseychelles.weebly.com/

If anyone is interested in financing options for large projects such as hotels and resorts feel free to reach out to me - my partner is in the process of funding a hotel in El Paso, TX and we're looking to do more.

Originally posted by @Shital Thakkar :

Hi @Jimmy Klein ,

I am SF investor and looking for MF.

What is opinion about MF Vs Hotel business. what business can have better scalability.

 Multi family out the gate will perform better than hotel.  However most people don't realize that a hotel is basically MF with a high turnover rate.  Instead of months it is days.  It also does have high expenses. The real key with Hotels is your manager.  A good hotel management group makes your breaks your hotel.

I focus in ground up hotel development here in the Western US.  We develop and build Major brand limited service. 

In my personal opinion, MF is so competitive and I have be focusing solely in hotels so I feel it is a strong asset class.  Also hotel typically fall behind the trends in the market so according to several market experts we still have a good amount of good years remaining in hotels.

@Donald Taite are you looking to purchase existing assets? The hotel market is limited because typically the people that build them do not let them go or they change hands in a small circle of hotel owners compared to retail or Multi.  Once a hotel has a good flag and management it can be a long term profitable asset.  That is why I decided to start from the beginning and go from the ground up instead of competing in the buying of them.