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Why are hotel businesses currently so popular?

From research I've done, I've noticed that hotels and motels are popular amongst investors. Does anyone have any insight into why this is the case. I just wouldn't expect that business to be that lucrative at the moment.

Michael Kirkland

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Answers (4)
Steven St
World Business Partners, Inc
Los Angeles County, CA

I would question where you are getting the information from (i.e. broker or sales person) I'm not sure that Hotel/Motel are fairing any better in this market than real estate in general.

I have some investor friends who are in those markets and they for the most part seem to be on the sidelines.

Financing is still the key in these markets and that is still harder to get than it was even two years ago. Even investors I know who have solid track records are having a hard time putting together good deals.

But like Don said, every market is different and there are even niches in small markets that are doing well. So, it's no longer location, location, location. It's financing, financing, financing.

But I could be very wrong. Please post where you have found some of this information. I would like to pass it on.

Thanks

Apr 25, 2009
W Baker
Saint Lawrence County, NY

I have heard that due to the recession, many near homeless families have been forced to live day-by-day in motels. Quite sad actually, but with demand up, could be a small reason for the investor interest.

Apr 17, 2009
W Baker
Saint Lawrence County, NY

I have heard that due to the recession, many near homeless families have been forced to live day-by-day in motels. Quite sad actually, but with demand up, could be a small reason for the investor interest.

Apr 17, 2009
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The BAF Group LLC
MD

It depends on the location, local land costs, competition, the surrounding industries, whether it is a tourist area or more business-oriented as to how much in demand it is. The fact that it's value is related to Real Estate helps. Even though the Real Estate market is down, it ain't going anywhere, so there is still an intrinsic value in it. And there are many cultural groups that have difficulty with buying businesses if there is not Property involved. They don't see the value of Cash Flow, unless it is attached specifically to the Real Estate. We do a fair amount of Motel business. There are ups and downs to them, and knowing the local Cost per Room, the Daily Occupancy and Rate, whether it is flagged or not and how much the "punch list" will cause you to input money into a flagged facility you just bought, are all typical industry-related questions you need to know, in order to understand a good buy.

Apr 17, 2009

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