If you are thinking of buying a hotel or hotels we will give you some tips on the advantages and disadvantages of hotel investment
The main disadvantage compared to other types of real estate is investing, which is much higher buying a hotel than buying a home or business premises.
• Lack of knowledge of the sector
Many real estate investors do not have important knowledge about the tourism business and that is always a handicap when buying, because you can buy overvalued assets or let pass good opportunities depending on the marked in the acquired the property.
• Double risk.
A hotel is linked to two sectors which are interdependent: real estate and tourism. That supposes greater risk because either of them can make fall the price of the hotel or to increase it, it depends on the demand of the tourist zone and the flow of tourism.
• Reduced purchase-sale market
Transactions on commercial real estate and homes are very frequent and there is a potentially large number of buyers, but the same thing does not happen in a hotel. If the area of the hotel or your business are not very good it will be difficult to have several offers for it.
• Stability of income
Due to the leases are long term, at least 10 years. This allows fixed and stable incomes provided that the operator can continue their activity, so it is also important to seek a fair agreement for both. This is one of the biggest advantages, since you can get a large amount of income in a simple way that simplifies the management of the property that involves being the owner of multiple apartments for rent.
• They have their own economic cycle
Investment cycles and price changes in the hotel sector do not coincide with that of housing. Tourism is not affected so intensely by local economic crises. This allows it to be an opportunity from which you can continue investing when the crisis affects the value of housing or premises as commercial which is a great advantage.
• It is an expandable business
There is the possibility of managing to exploit the business as the hotelier, being able to subcontract the management of the personnel in a professional of the sector.
• Hotel revaluation by regulation of the sector.
One of the effects of the greater regulation of the sector is that the price of hotels and accommodation is increased because they have a license to carry out economic activity. The fluidity of the tourism sector is also taken into account.