I’ve just recently got a deal from a buddy in Central Park. Just curious to how can you determine if the hotel is a good deal? Also what do investors look for in hotel deals?
It's like evaluating any other business or commercial property. You need to evaluate the Net Income, Cash Flow and ROIC on the investment. Besides, you need to understand the market condition, building condition and franchise agreement if it's a chain. These are just the basics..
Understand hotels can be more cyclical. When economic down turn happens people tend to travel less and when they do they stay local or maybe go a few states away. Also businesses tend to cut back on travel meetings and holding conventions in a physical space.
That can all lead to decreased revenue for hotels.