The pandemic may have given some investors pause when looking at the hotel sector, but despite the short-term pain, the long-term prospects remain good as a rising global middle class helps drive leisure travel and a globalised world pushes ever-more corporate movement.
Hotels offer a rare chance in the investor world - the opportunity to bring in daily revenue and revenue which can be tweaked on an hourly basis depending on the levers pulled. Get your mix right and you can grow what you bring in every night.
As many hotels have found during the pandemic, when room revenues fall off, there remain other options to bring in cash. And under normal conditions these proliferate. F&B, spas, gyms, coworking, even renting out car parking spaces can add to daily revenue.
Growth in asset value
A well-managed hotel has the added advantage of being a traditional real estate asset which appreciates over time. So even in times of poor trading, the asset itself is there to fall back on.
Hotels have a track record of performing well in times of high market volatility and offer largely predictable cash flows, creating a safety net when other asset classes, such as retail and office, may not.
Hands off or hands on
Depending on your investment style, you can be as involved or not as you want. Go the full owner/operator and live over the shop, or buy shares in a Reit and never have to darken its doors.