Many industries pose considerable risk to investors. Between lack of experience in the field to consumer whims changing, and every reason in between, businesses often find themselves swimming at high tide and low tide just to try to stay afloat. However, the hospitality industry seems to be relatively immune from this phenomenon and, in fact, is generally a very profitable venture for its investors. Hotel brokerages see a continuous stream of clients who want to become owners. Why is this the case?
Broad Appeal and Needs
Most businesses have at least an occasional need for its employees to get together physically at a location, whether for a large-group meeting, an on-site review visit, or a critical conversation that just can’t happen online. Travel can be a critical part of a successful business, including hotel stays with amenities that businesspeople expect, such as high-speed Internet, business services such as printing, and ‘happy hour’ sessions at the end of a tough workday. Likewise, people always need to travel in their personal lives, and they look for hotels that will provide them an escape from their everyday experiences.
Profitability as an Owner
The profitability margin of hotels is one of the main appeals to considering hotel ownership as an investment. Especially when procuring a franchise opportunity, there is an understood base level of service that is at a reasonable cost for owners yet brings in sizeable profits from visitors. Even when consumers request or insist on extra amenities at a hotel, the prices usually do not significantly impact the owner’s bottom line.
Less Susceptible to Economic Flux
The economy, in general, is hardly dependable, sometimes seeming to go from excellent times to difficult financial times at the drop of a hat. But the hospitality industry typically does not suffer extreme changes in its profitability, even if economic times are challenging in other ways. Business travel may get scaled back to some degree during difficult economic times, but the need is never eliminated entirely. And even though tough economic times may cause households to travel differently, such as driving instead of flying, they will still need a hotel room at the end of their trip. People depend on the use of hospitality services, no matter how the economy is doing.
Before you invest in a hotel, make sure you talk to expert hotel brokers. Contact NewGen today for professional hotel investment consultations. Whether you’re buying or selling a hotel, we guide you every step of the way.
If you are looking for an investment opportunity, you should take a look at a hotel business for sale. It could be a perfect financial match for you.