The positive growth in the hotel sector in 2022 and 2023 compared to other asset classes signals that the present time is the perfect opportunity for investment, according to a whitepaper by Pro-Invest Group.
The whitepaper titled “Finding the Silver Lining: A New Perspective On Hospitality As An Alternative Investment” noted that hotels were the only real estate asset class to show positive quarterly returns from Q2 2022 to Q1 2023. Additionally, in contrast with industrial, offices, retail and residential, hotel values across Europe rose by an average 3 per cent in 2022.
Pro-Invest noted that unlike many other real estate assets, the flexibility of hotel properties and operational aspects provide a unique ability to outperform the market, with this advantage becoming even more pronounced post-pandemic.
Pent-up post-pandemic demand, the willingness of younger generations to spend their disposable income on travel/experiences as well as evolving working practices are all signs which point to a renaissance for what has traditionally been seen as an alternative investment.
Many single-asset hotel owners without institutional backing are now motivated sellers. Banks which have not dealt with non-performing Loans will need to address them in the next twelve months, creating opportunities for investors to acquire these assets at potentially favorable prices. At the same time, the deceleration of hotel supply growth, coupled with continued pent-up travel demand, is creating the right dynamics for increased hotel investment opportunities.
With the resilience demonstrated by the sector, motivated sellers, the inflationary hedge, value-add potential and attractive cap rates, Pro-Invest says hotels can offer a lucrative investment opportunity for those willing to tap into the market.
What they said
Sabine Schaffer, co-founder & CEO (Europe) at Pro-Invest said: “Hotels have a distinct advantage in that they can adjust rates dynamically, maximise revenue during peak periods, maintain occupancy during slower periods, and proactively manage staffing, maintenance, and utilities on a daily basis. This gives them an edge over many other asset classes.”