Hotels can be an excellent way to invest and make some income out of. They are good at building long term wealth, particularly for areas with good economies such as the UK. However, the hotel industry is unique in some way, and people who have never ventured in it before can find it hard to point out the ways they can make money. Note that you have a few options to choose from if you want to invest in a hotel and be sure to analyze them before settling on one that fits your investment plan. Here are the ways to invest in the hotel industry;
Buy A Hotel
This might scare many due to the amount needed to complete the investment, but it is one of the direct ways to make money from a hotel. It might be least practical to many. A hotel requires huge capital, and it is an active investment that you will have to be involved in daily. They come in different sizes, styles, and cost, and it is easy to pick one that suits your budget and specifications. Note that running a hotel is involving as you need to handle several things and hire people to help you out, and it is vital to assess whether you are prepared to do this before buying one.
Get Involved in a Crowdfunded Investment
This is a new way to invest in a hotel, and it is somewhat similar to crowdfunded real estate investments. In this investment, an experienced investor or developer identifies the opportunity, but they do not have the capital to fund it. Here, they opt to list deals on a crowdfunding platform and raise the money needed from several investors in exchange for some equity in the hotel. The investors are not actively involved in the day to day running of the hotel, but they benefit from the profits depending on the agreement. In some cases, crowdfunding might be required to buy a new hotel and repair it before selling a few years down the road for a higher price. Note that going this way means that your money is not liquid, and you cannot cash out unless you find someone willing to buy your stake in it.
Buy a REIT
Real estate investment trusts are companies that collect money from investors and then invest it into a portfolio of assets. You can find different types of REITs depending on the field they are investing in, and several of them that are specialized in hotels exist. Here, you invest your money, and the managers of the REIT run the investments. The advantage of investing in a REIT is that they pay out their income regularly to investors, and they are easy to buy and sell whenever you want on the stock exchange market.
Hotels are good investments in stable economies but note that they are very sensitive during recessions and tough periods. When you decide to invest here, try and diversify your portfolio, and spread the risks.