Raines Company’s Vice President, Investments, Kristen Myers, observes that many investors sitting on the sidelines expecting distressed property bargains as a result of the pandemic have been disappointed. While they need to find “homes” for their money, she says, they still need to be smart about where to put it. She therefore shared with LODGING some of her insights and advice for hotel investors eying opportunities as 2022 progresses.
1Don’t rush into anything.
Do your due diligence. Whether you’re looking to acquire a piece of property or a newly built hotel, Myers says, do your own research, rather than depend on advice from a prospecting contact. “We encourage everyone to work with the right partner and operator, someone you trust who has successfully navigated challenging times in the industry before,” she maintains.
2Focus on timeless—not trendy—real estate with established demand generators.
Myers observes that many investors—mainly those new to the industry—are focusing on new urban markets where a particular concept is happening; but she warns that it’s difficult to predict what the demand generators will be in the coming years. “We suggest going for properties that are timeless in established markets. For example, rather than chase after properties in Asheville, N.C., like everyone else, we just closed on what we regard as a timeless property with beautiful views and a great reputation that is located in a small town 35 minutes west of Asheville.”
3Choose an operator that can offer efficiencies to improve ROI.
Operators with a strong record in or near the property you’re considering can drive efficiencies, notes Myers. “By working with a company that can share the cost of staff—such as a chief engineer or sales executive—you can save on skyrocketing labor costs. You can also slash vendor costs by working with a company that has a programmatic schedule with vendors,” she adds.
4Generate demand and revenue by vamping up amenities.
Something else to consider, says Myers, is finding ways to add amenities that appeal to the lifestyle-oriented leisure travelers who continue to drive demand. A bar or restaurant that attracts locals as well as guests can be a differentiator and source of additional revenue.
5Have an established exit strategy.
Myers says her company starts with a goal for each property and seeks partners with that vision, but recognizes that the situation can change, as the pandemic illustrated. “While it’s important to have a clear strategy—we typically present clients with a programmatic schedule—ever-changing market conditions demand flexibility. That’s why we communicate with clients and re-evaluate year over year depending on the needs of the market.”