How Can Hotels Help Local Investors?
By Paul Esajian on July 24, 2015
How can investors use information from hotels to help their local real estate business?
Due diligence is critical when investing in real estate. It can be difficult to tear through all the hype and misinformation online. Real estate investors need to know the real deal, and they need to get a handle on the facts. There is a lot of data out there, but this overlooked angle can be a great way to get incredible insight into any market quickly.
So how can hotel information help real estate investors get the 411 on any real estate market? How can it be used to make the best moves for flipping houses, investing in single-family homes, and commercial real estate?
Online Reviews & the Power of Expectations
Recent research shows that many of the higher-end hotel brands receive the worst online reviews. Many of the lower and middle range brands received higher reviews. This probably isn’t about the amount of amenities, cleanliness, or appearance. It is more likely to do with expectations. Look for ways to over-deliver, not over-promise.
Demand & Occupancy Rates
Surf hotel sites like Expedia and you’ll quickly see how much availability there is for hotel rooms, how many people are looking for rooms, and how many people have booked in the last couple of days. That will tell real estate investors a lot about demand for properties. This may change over time, depending on local season, and annual events, but holds true for the most part. If hotels have a massive surplus of rooms, and few are looking for them, then demand for rental properties, and even homes for sale may be low too. This can spill over and impact local retail property performance too.
Rates & Values
How expensive or cheap are hotel rates in a given area? Are highly reviewed three star hotels going for fire sale prices at $60 a night? Or are you lucky to find a room that is worth staying in for $300 a night? High hotel room rates are normally a direct reflection on local rental rates. Rental income potential directly impacts property values and prices. So where are room rates? What value does that give local rental properties? Given local asking prices; what types of returns are available on properties for sale?
Best Rehabbing Strategies
Hotel chains invest many millions in researching the best interior and exterior designs. It’s a full time project. They should have some very good reasons for the way they design things they way they do. By viewing photos online, real estate investors can quickly get a great sense for what’s hot, what’s not, and what’s acceptable. Next to reviews, images likely have one of the biggest impacts on the properties people choose. So what is drawing them to specific hotels and rooms? What design looks, colors, and layouts are most likely to land more renters and buyers in the neighborhoods you want to invest in?
Features & Amenities
What features and amenities are hotels and booking sites promoting? Which features and amenities are the most booked, and most pricey hotels offering? Is it gyms, pools, free breakfast, spa treatments, airport shuttles, or something else? How can you build that into your retail shopping mall, multifamily apartments, vacation rentals, or homes being flipped? Do you need a spa or coffee shop tenant that is open for breakfast? Should you stage a room as a gym? Put in a pool? Include shuttle service? By collaborating with other local businesses, real estate investors may find that they can pack in a lot of value, and make their properties truly stand out.
How to Market & Sell Real Estate Online
All of these things can help real estate investors in their marketing efforts online. Some of the takeaways from this article alone may include featuring more photos, soliciting good reviews, highlighting special features, creating urgency, and the value of staging.
Real Estate Branding
When it comes to hotels, sometimes branding matters, other times it doesn’t. However, when people are looking for a place to stay, they will often look at brands. When they are stuck, they will look up specific brand websites. Brands hold a lot of weight, and are definitely linked to the value people place on real estate.