The most viable hotel investment in today’s economy is the small, independent (non-flag) and mixed-use hotel. How does the small hotel investor participate in such a venture? The quest for a workable and profitable venture is to create a pool of entrepreneurs to secure funds that will leverage the new asset.
The reality is that we are presently facing tumultuous economic times in the hotel investment market. Stock portfolios, IRA accounts, and other financial instruments do not lend themselves to the healthy returns of the past, nor do they provide a safety net that is worth our time and money. In today’s financial environment, the pooling of liquid cash is KING, and it will bring a healthier return on your investment.
What will this self-leveraging pool of small hotel investors contain?
1. Investment regulations
2. It will have a secured flex plan of repayment that fits the pool as a whole.
3. There will be a controlled risk of financial personal ratings.
4. The small to medium sized hotel investors will have an investment opportunity that would not otherwise be available or affordable. Investors (likely, not more than five per pool) with capital funds from $100K to $1MM would be the ideal size of the pool. Each investor would contribute a diversity of viewpoints and a sense of direction to the pool.
5. Hotel Investors will have parity independent of the funds placed in the pool. That is not to say that if an individual invests $50K, he will have the same return than someone that invests $500K. But it does imply that ideas from both investors will hold equal weight and support by the pool members.
Because the cash model is utilized for the purchase, borrowed capital will not take any place in this model. The rationale for this model is that it allows for free hotel investment fluidity and is not controlled by any third party debt.
Latin America is an example of a fertile ground for the small hotel investor, as we implement this self-leveraging model.
There are many other factors that will need to be explored, as we develop the investment pool into a successful and profitable journey. The reality of today’s economic times is that we must come together in the small world of investors.
It will be critical to secure the direction, counseling, and managing consultancy of a small, well-rounded and experienced company that will partner with the pool by providing service excellence and successful management of the asset. Hospitality Makers, a branch of International Hospitality Recruiting, is now aggressively pursuing pools of small to medium sized hotel investors, especially in Latin America. We will go hand-in-hand with you in securing the success of the pool and assuring a competitive edge in the local marketplace.