Connect with us


The Hospitality Industry Has Roared Back, and Hotels are a Solid Investment



When it comes to investments, hotels have been a sound one over time. Many well-known billionaires have made their fortunes by owning and managing a portfolio of hotels and resorts, especially those that fall into the high-end and luxury categories. And while many of the most desirable hotel projects are a major undertaking, the truth is that even small-market and low-end hospitality projects can lead to long-term success.

Owners of a low- to mid-range hotel that is part of a chain can expect to earn about $40,000-60,000 each year from one property. Since many hotel owners continue to purchase additional properties and venture into multiple franchise opportunities, those numbers can increase quickly and add up to a very comfortable living.

As the offerings of each hotel increase to include amenities such as spas, convention centers, event spaces, and even casinos, and the quality of the franchise draws a higher nightly room rate, hoteliers can find themselves sitting on a veritable fortune. Of course, location is everything, and some of the most successful hotel moguls own expansive and valuable real estate in Las Vegas, New York City, Chicago, Miami, and California, as well as international sites.

Economy and midscale hotels typically have less than 100 rooms per property, but upscale and luxury properties average over 300 rooms, with some of the largest hotels boasting 3000+ rooms. The average daily room rate in the U.S. falls somewhere between $125-150, but luxury suites in vacation destinations often fetch $1500-4000 for just one night’s stay.

Sheldon Adelson, who passed away in 2021, famously earned enough billions through his hotel empire to secure a spot on the list of the 25 Wealthiest Americans. With a fortune of nearly $30 billion, Adelson was the CEO and Chairman of casino company Las Vegas Sands and owned hotels and casinos in Las Vegas, Singapore, and Macao, China.

Other notable billionaire hoteliers include Donald Trump and the heirs to the Marriott, Hyatt, Hilton, and Loews brands. But the truth is that many hotels, motels, and inns are mom-and-pop operations, and fall squarely into the category of small businesses. Outside of independent hotels, all of the major hotel chains offer franchises spanning a variety of price points and amenities.

Sunil Wadhwani of McAllen,Texas owns eight properties throughout the Rio Grande Valley and San Antonio. His portfolio includes La Quinta Inns, Motel 6’s, and one Marriott TownePlace Suites; his largest property has 109 rooms. After more than 20 years in business, Sunil Wadhwani has built his annual sales to over $8.5 million, proving that small markets and budget hotels still provide opportunities for economic success.

Oftentimes, the best way to get started in the hotel business is to start small. Especially as you’re learning the ins and outs of the industry, nothing can replace hands-on experience. By managing a small inn or motel yourself, you can familiarize yourself with daily operations and expectations. Working within the framework of a franchise offers you guidance and basic standards to meet and maintain, as well as marketing support.

As with any business, staying involved as you grow is critical to achieving high levels of success. For Sunil Wadhwani, that means continuing to visit each of his hotels on a daily basis, and prioritizing meeting with and training his management staff. His involvement and insistence on adhering to high standards have earned him Franchise of the Year and other awards throughout his more than two-decade-long career. It has also afforded him the opportunity to partner with more prestigious brands, such as Marriott, bolstering his portfolio and increasing his average room rate.

The hotel industry itself has undergone many transformations over the years as the habits and expectations of travelers have changed. Business travel has increased, the options for luxury travel have become more numerous, and the types of amenities offered have become more varied. The Covid pandemic may have set the industry back temporarily, but the lack of travel has spurred additional growth in the past year.

As the hospitality industry looks forward, there are other new trends to be aware of: contactless check-in, increased remote workspaces, the merging of business and leisure travel, further personalization for loyalty program members, eco-friendly and sustainable business practices, pet-friendly accommodations, holistic and healing hospitality, increased solo travel, and multi-functional spaces. All of these may influence future design plans, amenities, and locations.

Overall, investing in hotels continues to be highly recommended both as a way to generate income and for building long-term wealth. As a category of real estate, hotels retain their value very well.

Continue Reading
Click to comment

Leave a Reply

Your email address will not be published.