Hotel Investment Opportunities – Ultimate Strategy Guide

 February 25, 2020

In this article, we demystify the types of hotel investment opportunities and explain the current state of the hospitality market. We also elucidate how to find great hotel investment opportunities, especially in the USA. Read on to learn about your options when considering hotel investments.

The decade-long bull market has created an almost insatiable desire to invest in real estate. This drive to invest certainly extends to the hotel sector. While there are several ways to accomplish hotel investing, hotel acquisition is the most direct.

If you find this article helpful, check out our Success Guide to Investing in Apartments and How to Own a Hotel – 12 Tips for Explosive Success.

Are Hotels a Smart Investment?

Hotels can deliver long-term income that can build wealth. When purchased and financed correctly, hotel investing is an extremely smart investment. Unlike other types of real estate, hotels can adjust room rates every day. For that reason, they can instantly account for fluctuations in supply and demand. When it comes to hotel investments, there are several possibilities.

Alex Rodriguez X Big Cat Interview CEO of Starwood Capital Group, Barry Sternlicht – The Corp

How Assets America® Can Help

Assets America® can provide hotel acquisition, refinances and retrofit financing starting at a minimum of $10 million, with virtually no upper limit. We work with a powerful network of private money lenders and institutional funding sources that can deliver financing quickly and affordably.  Before you settle for franchisor financing, you owe it to yourself to see what we can offer you.  Contact us today at (206) 622-3000 to schedule a confidential conference about your hotel investment opportunity, or simply fill out the below form to receive a prompt response!

Apply For Financing

Types of Hotel Investment Opportunities

1. Hotel REITs

Real estate investment trusts are a way for investors to gain exposure to real estate investments. Typically, REITs specialize in one property sector. You can purchase shares of lodging and resort (L/R) REITs that pay handsome dividends and offer capital appreciation opportunities.

These are passive real estate investments in which the REIT company actively manages its portfolio of properties. In fact, L/R REITs returned 15.65% in 2019 and currently yield 7.74%.

2. Crowdfunding

Hospitality crowdfunding is becoming a hot investment. You can find many hotel investment opportunities on crowdfunding platforms such as Crowdstreet and Fundrise.

At one time, only accredited investors could participate in hospitality crowdfunding. However, now you can be an unaccredited investor and participate in some of these private investments. That’s because Regulation A+ allows small private companies to place shares with the general public.

Note that these are non-diversified, passive investments. You should carefully read and understand the Offering Circular before investing in crowdfunded shares. Here are current Crowdstreet hotel investment opportunities and Fundrise hotel investment opportunities.

3. Hotel Operator Shares

You can also buy publicly traded shares of hotel operating companies. These are liquid investments that you can buy and sell instantly whenever the markets are open.

Unless you purchase a substantial number of shares, these are passive hotel investments. Common shares allow you to receive dividends and potentially reap capital gains. Many hotel companies also offer preferred shares that have high dividend yields.

4. Hotel Purchasing and Construction

The most direct way to invest in the hospitality industry is to buy a hotel. You will need equity capital and debt financing to proceed. This is an active investment in which you are ultimately responsible for managing daily operations.

For many investors, part of the allure of hotel ownership is the hospitality lifestyle. However, it is important to prevent romantic notions about running a hotel from clouding your financial judgment.

Clearly, a well-conceived and properly executed hotel construction or acquisition project should provide a competitive return on investment. Moreover, required returns should account for a project’s risks.

The Current State of the Hospitality Market

The 2020 outlook for the hospitality industry should continue to be strong. The strength of the economy and consumer confidence undergird continued growth. Even though hotel demand will remain strong, supply greatly increased in 2019. Therefore, returns for new investors in 2020 may decelerate slightly, although RevPAR changes should remain positive.

Until demand catches up to the newest supply, expect hotel occupancy rates to modestly drop this year. Investors must also closely monitor the state of the alternative lodging sector (Airbnb, VRBO, etc.).

2020 Outlook

With the economy at full employment, many companies will have trouble expanding. This depresses hotel demand, as expansion activities drive the need for room nights. Likely, hotel construction may suffer from a shortage of skilled labor.

National hotel occupancy should drop from 66.0% in 2019 to 65.6% to 65.8% in 2020, about a 0.3 percentage point drop (not a substantial decline in the big scheme of things).

However, the average daily rate (ADR) should climb by 0.6%, from $130.50 last year to $131.00 by the end of 2020. But ADRs may weaken if unexpectedly weak occupancy rates encourage price discounting in 2020. On a positive note, many municipalities are limiting the growth of alternative lodging sources.

As the industry absorbs new supply, net operating income (NOI) should plateau and eventually increase. Doubtlessly, higher labor costs and lower RevPARs may threaten NOI. Any price softness in 2020 should dissipate in 2021 and beyond as new additional supply tapers.

Private equity funds may commit more funds to the hospitality industry after they incorrectly predicted a correction. Therefore, acquisitions may uptick in 2020. Moreover, hotel acquisition may outpace increasingly costly hotel construction.

How to Find Hotel Investment Opportunities

It takes a tremendous amount of information to acquire a hotel that will pay off as a successful investment. You can rely on commercial realtors, hotel management companies, online marketplaces, and specialized sources, etc.

In addition, some investors may simply tour a local community to scout out possible transactions. Here are some ideas to help you organize your search.


If you are going to buy and run a hotel, you’ll probably look at areas near your residence that are easy to access. Some owners even move to their hotel properties and live there full-time. You want to be very familiar with the local areas of interest, or you’ll be at a serious disadvantage.

You also need to understand how communities evolve to avoid investing in declining areas. Learn about any large infrastructure projects, zoning changes, and other external factors that can impact your investment.


After settling on a general area, you should research and analyze the area’s hotel market. Local realtors can help you determine whether local hotels are selling at, below, or above asking prices.

If prices are low, it may indicate a depressed market. That’s not necessarily a deal killer since you might be able to pick up a bargain. You might even be able to arrange favorable seller financing.

But remember, buying into a depressed market can consign you to anemic cash flows. Naturally, if you have good information pointing at an economic turnaround, you might grab a great deal.

A market analysis looks at existing and expected competition, traffic patterns, traveler attractions, infrastructure conditions, and much more. Check out local news articles to gain insight into neighborhood dynamics. For example, a new office park or entertainment venue might increase the demand for hotel rooms.

Specialized real estate brokers can help you find candidate properties. Let them know what you’re looking for and how much you’re willing to pay. They will show you existing hotels on the market and keep you advised as other ones become available.

Perhaps you’ll find a property that can be repurposed. For instance, you might be able to convert an old armory into a luxury hotel. As candidate properties appear, pull their real estate title records to identify the owner and any liens on the property.


You need to examine all quantitative aspects of a hotel that’s up for sale. These include cash flows, net operating income, ADR, RevPAR, and dozens more.

You must also assess the financial and physical condition of the property. That is, you need to know how much debt exists and how much renovation the hotel needs.

The final product is a complete spreadsheet showing all the factors necessary to forecast cash flows. Additionally, you should subject your forecast to sensitivity analysis.

Hotel Investment Opportunities in the USA

For many years, a favorite strategy was to buy dated hotels at a low price, renovate them and up-brand them. However, the stock available for renovation has fallen in most major U. S. markets. This makes it harder (more expensive) to execute this strategy.

Franchising represents a leading way to invest in hotels. The major hotel chains have franchise programs that provide a wide range of opportunities nationwide. One play is to buy an older franchise and upgrade it to a better brand. Another strategy is to buy a hotel franchise and then unflag it.

Frequently Asked Questions

How can I start a hotel business?

The process is to start with research and planning. Narrow your choices to fit your geographic preference and budget. Work with a commercial real estate agent and a lender. Perform due diligence before negotiating a deal.

How much do hotel owners make each year?

A hotel owner’s salary or draw varies across properties and markets. In round numbers, owners can expect to make between $76,000 and $140,000 per year.

How is profit calculated in the hotel business?

When you own a franchise hotel, your net profit margin equals net profit divided by total revenue. This measures your profit on a percentage basis after paying all expenses, including franchise fees.

Which regions of the USA are the best for hotel investment opportunities?

The mountain states are hot right now for hotel investment opportunities. These include Colorado, Arizona, Montana, Idaho, Nevada, Utah, New Mexico, and Wyoming. The mature markets in Brooklyn and San Francisco are awfully expensive.

Related Articles


Eric D.
Pleasure to work with and extremely knowledgeable

Ronny was a pleasure to work with and is extremely knowledgeable. His hard work was never ending until the job was done. They handled a complex lease and guided us through entire process, including the paperwork. Not to mention a below market lease rate and more than all the features we needed in a site. We later used Assets America for a unique equipment financing deal where once again Ronny and team exceeded our expectations and our timeline. Thank you to Assets America for your highly professional service!

exp MFGroup
Great experience with Assets America

Great experience with Assets America. Fast turn around. Had a lender in place in 30 minutes looking to do the deal. Totally amazing. Highly recommend them to anyone looking for financing. Ronny is fantastic. Give them a call if the deal makes sense they can get it funded. Referring all our clients.

William P.
Assets America guided us every step of the way

Assets America guided us every step of the way in finding and leasing our large industrial building with attached offices. They handled all of the complex lease negotiations and contractual paperwork. Ultimately, we received exactly the space we needed along with a lower than market per square foot pricing, lease length and end of term options we requested. In addition to the real estate lease, Assets America utilized their decades-long financial expertise to negotiate fantastic rates and terms on our large and very unique multimillion dollar equipment purchase/lease. We were thankful for how promptly and consistently they kept us informed and up to date on each step of our journey. They were always available to answer each and every one of our questions. Overall, they provided my team with a fantastic and highly professional service!

Bob B.
The company is very capable, I would recommend Assets America

Assets America was responsible for arranging financing for two of my multi million dollar commercial projects. At the time of financing, it was extremely difficult to obtain bank financing for commercial real estate. Not only was Assets America successful, they were able to obtain an interest rate lower than going rates. The company is very capable, I would recommend Assets America to any company requiring commercial financing.

Ricardo L.
Assets America was incredibly helpful and professional

Assets America was incredibly helpful and professional in assisting us in purchasing our property. It was great to have such knowledgeable and super-experienced, licensed pros in our corner, pros upon which we could fully rely. They helped and successfully guided us to beat out 9 other competing offers! They were excellent at communicating with us at all times and they were extremely responsive. Having them on our team meant that we could always receive truthful, timely and accurate answers to our questions. We would most definitely utilize their services again and again for all of our real estate needs.

Assets America is a great company to work with

Assets America is a great company to work with. No hassles. Recommend them to everyone. Professional, fast response time and definitely gets the job done.

DAC Team
Great experience

Ronny at Assets America has been invaluable to us and definitely is tops in his field. Great experience. Would refer them to all our business associates.

MF Group
We were very pleased with Assets America’s expertise

We were very pleased with Assets America’s expertise and prompt response to our inquiry. They were very straight forward with us and helped a great deal. We referred them to all our business associates.

Manny C.
Worked with this company for decades

I’ve worked with this company for decades. They are reputable, knowledgeable, and ethical with proven results. I highly recommend them to anyone needing commercial financing.

David B.
Top-notch professional

Ronny was incredibly adept and responsive – top-notch professional who arranged impressive term sheets.

Monte M.
Assets America helped us survive a very difficult time

Assets America helped us survive a very difficult time and we most definitely give them 5 stars!

Brent G.
Gave me direction to go

Ronny was very friendly and though we were unable to make something happen at the moment he gave me some direction to go.

Allan E.
Highly recommend them for any type of commercial financing

My business partner and I were looking to purchase a retail shopping center in southern California.  We sought out the services of Ronny, CFO of Assets America.  Ronny found us several commercial properties which met our desired needs.  We chose the property we liked best, and Ronny went to work. He negotiated very aggressively on our behalf. We came to terms with the Seller, entered into a purchase agreement and opened escrow.  Additionally, we needed 80 percent financing on our multimillion-dollar purchase.  Assets America also handled the commercial loan for us.  They were our One-Stop-Shop. They obtained fantastic, low, fixed rate insurance money for us.  So, Assets America handled both the sale and the loan for us and successfully closed our escrow within the time frame stated in the purchase agreement.  Ronny did and performed exactly as he said he would. Ronny and his company are true professionals.  In this day and age, it’s especially rare and wonderful to work with a person who actually does what he says he will do.  We recommend them to anyone needing any type of commercial real estate transaction and we further highly recommend them for any type of commercial financing.  They were diligent and forthright on both accounts and brought our deal to a successful closing.