international hotel investment

One Of The Best Emerging Investment Area : International Hotel Investment

Keeping up with the latest developments and innovative solutions in hotel distribution and travel marketing as well as investment is a challenging task to perform. There are number of factors which are responsible for success of Hotel Investment at International Level. As there is shrinking of territorial boundaries there is increase in tendency of travelers to travel abroad. Here are some key factors that should be kept in mind before international hotel investment.  

Small Markets:

international hotel investment

Source : achieveproperty.com

The transactions in smaller market have increased on a large scale with development of the cities and countries. Specifically, the Northwest, Southwest and the Carolinas investment opportunities are growing more than 20 percent in each region. Strong demand here is likely to attract the investors to invest in these areas and also the tourist are travelling at these areas increasing the demand and also generating revenue.

Also Read : Derivative Investment : One Of The Best Alternative Investments Option

Supply Factor:

international hotel investment

Source : tranlingo.com

But growth in supply could begin to affect occupancy—which has hit a 30-year high in the U.S.—in some markets. Thus it means that average daily rate and revenue per available room would start to slow in those markets. For example, if any city or country has increased its supply more than 3,500 rooms during the past 12 months ending in the second quarter. Demand anyhow has not increased causing occupancy to decrease 120 basis points to 79.5 percent in June. The markets which are increasing the supply would have the same returns and issues and would be on the same page. All in all, hotel construction is increasing 2 percent year over year with almost 180,000 new rooms in the works.

Capital Availability:

international hotel investment

Source : blog.examin.co.in

Capital is abundant now, but lending could tighten quickly if interest rates rise fast. For example, in late 2016 the 10-year Treasury increased more than 80 basis points in 60 days and then it jumped 60 basis points in the initial months of 2018. Because these rapid gains happened twice in the last two years, it could be that borrowers will benefit from taking a guarded approach and locking in financing quickly with their lenders.

Change in Government and Tax Structure:

international hotel investment

Source : flagtheory.com

The new tax laws have helped to bolster the industry. The reform did keep three of the most important rules for real estate investors: tax-deferred exchanges, real estate depreciation and the mortgage interest deduction. Investors not only know the rules but also have the eye on potential changes and should try to be proactive instead of reactive.

At an international level, traditional real estate investment strategies may appear to be not so charming in certain conditions. The benefit here is that a hotel welcomes new guests every day and this allows the investors to react much faster in comparison to other investments. Also it can be lucrative to invest in hotels at international levels, but some points such as market cycle inconsistency, types of people to deal with, cost overruns etc. should also be dealt with.