May 13, 2020 In
By SHS May 13, 2020 In
The most straightforward argument in favor of investing in a hotel is a perceived supply gap for a certain type of hotel category in a market. The second reason is solid ROI. The total financial return a real estate asset can achieve (holding period return) is a function of the cash flows generated by its operations and the value appreciation of the underlying real estate asset.
For budget hotel the value of operations drives 85% of the holding period return whilst for luxury hotels it is 70/30 between real estate appreciation and operations. This is understandable as a budget hotel is mostly about running a tight ship whilst a luxury hotel tends to be situated in prime locations with very high barriers to entry and by definition tend to derive more value from property appreciation.
SHS team and in-depth outlook on the industry, helps to determine the right move to achieve solid ROI. Get in touch with us today to learn more.