Hotel investment is one sure way to help you achieve financial freedom as a source of income. Think of hotel investments as a way of getting a regular income flow to your money earned hard at minimal risk level. This provides opportunity to increase income and realise an appreciation of capital or the residual value.
A major reason to invest in a hotel is because people need to sleep and most people are working. Most jobs require people to meet in person which entails travelling hence a place for meeting and resting/leisure.
You can choose hotel investment through a few number of considerations including direct/partial ownership, corporate participation and more. The following are a few benefits in hotel investments:
• Tenants get to stay at varying levels
• People staying in hotels are from various job profiles and diversities
Major ways of investing in hotels are:
• Real Estate Investment – They are significant in hotel industry and participate in different ways either as buyers, hotel owners or sellers. They provide the opportunity to invest in hotels without owning the hotel hence providing a chance to invest in companies without buying the stock of each company. Real estate provides increase in property value and profit is obtained from rental income obtained through property leasing to tenants.
• Funding – It’s a process of acquiring funding for a particular project by getting a large amount of people contribute small amounts towards the project. It enables entrepreneurs and investors get an easy way becoming part of the project. Entrepreneurs get to sell their products/services without giving out shares and investors receive some shares of the project depending on the amount of money they contributed towards the project.
• Creating A Hotel With Airbnb – It is an online platform that enables people with free renting spaces list them online and get clients to rent the places. It is another easy way and great way of hotel investments. The platform involves in private homes renting enabling home stays, hospitality services, lodging and tourism experience.
• Purchasing – Buying is the most expensive option but it allows you to enjoy all the profits as well as having complete control of the hotel. It means that you have to have enough capital to buy the property as some of these properties can be very expensive. You can do this by either buying the entire hotel or buying a part of it like some of the rooms or even the reception area. You will have to cater for all the expenses and costs of running the hotel. You can also purchase a freehold property where someone else runs the hotel or buy the management rights of a hotel which where you can manage a hotel belonging to someone else.
The financial aspects in hotel include:
• Rent and utilities
• Other expenses
Disadvantages of investing in hotels include:
• Operation risk
• Subject to insignificant market risk if owning a one hotel
• Vacancy risk
• Larger upfront capital costs
Take all these factors into consideration before investing in a hotel and make the best decision!