01

Hotels sell their rooms by the night. Each night represents another opportunity to increase revenue. The challenge comes in optimizing the net income from each additional room night sold.

Les ventes et le marketing sont la clé du succès technique d'un hôtel. Il est facile de vendre au bon public ou de placer des publicités aux bons endroits. Cependant, les éléments intangibles, comme la fidélité et la culture de l'établissement, sont les plus importants pour créer un flux de revenus fiable.

The spirit of the property spreads by word-of-mouth, and that is where you can extract the greatest value from a nightly lease.

Cette classe d’actifs se remet rapidement d’une crise, mais elle est la première à souffrir lorsque l’économie évolue dans la direction opposée. Une transaction basée sur des fondamentaux économiques solides garantit que l’hôtel pourra résister à une baisse d’activité et en sortir victorieux.

02

The USALI standard hotel financial statement separates expenses into three categories – Departmental, Undistributed, and Fixed. The profit lines that follow each of these represent varying levels of control over these expenses. Departmental expenses are the cost of goods sold. This is what it takes to service the rooms, food & beverage, and other departmental sales. Much of these expenses are related to labor and a good portion is goods and services. Undistributed expenses are related to the cost of operating the hotel. 

Management, maintenance, and sales-related expenses fall into this category. These expenses relate to outside goods and services more than labor. Fixed expenses are exactly as the name implies. The hotel incurs these charges regardless of occupancy and revenue. As you can probably tell, these expenses become more fixed as you move down the financial statement. Some expenses are very sticky and set by outside market forces, like wages and utilities, but most are open for negotiation. This is one of the greatest reasons to invest in hotels.

You can negotiate a great deal with suppliers that keeps expenses at one price level, while revenue increases on a separate track. As revenue improves, the cost to service the hotel doesn’t increase dramatically. This provides for a healthy increasing profit.

03

High yield is one of the biggest reasons to invest in hotels for experienced real estate investors. The statistics are clear that hotels trade at higher cap rates than the Big Four CRE asset classes across the board. However, they are associated with more risk to manage. A high-alpha investment manager understands the risks and constantly seeks to protect the downside while optimizing the upside. The best hotel investment managers either have experience in hotel operations or hotel asset management. They understand the needs of the real estate and the operations.

04

La propriété immobilière directe est l’un des investissements les plus efficaces sur le plan fiscal de votre portefeuille. L’amortissement, la croissance des capitaux propres et l’échange en franchise d’impôt sont les trois principaux avantages de l’investissement immobilier. Cela s’applique à tous les investissements immobiliers directs, mais les hôtels portent chacun de ces avantages à un autre niveau. L’immobilier perd de la valeur au fil du temps en raison de l’usure et de l’obsolescence fonctionnelle. La législation fiscale américaine vous permet de réduire votre revenu imposable en appliquant un barème de dépenses d’amortissement sur une période définie. Les investissements hôteliers comportent une variété de biens immobiliers, personnels et incorporels.

Therefore, they benefit from more tax laws that may accelerate the depreciation. Equity growth is important for a variety of reasons, but the most significant tax benefit comes in recapitalizing your investment. Cash equity pulled out from a debt refinance is not subject to federal income tax. Small tweaks to a hotel’s operations can boost cash flow and add tremendous value, which is accessible tax-free in this way. Finally, the tax-free exchange is the hallmark of all great real estate empires. Flip four green houses to build a red hotel on your lot. 

This amplifies your income potential while consolidating operations into a single, large-scale property.

05

Hotel investments consist of three major tax categories – building, FF&E, and goodwill. The first two – building and FF&E – are physical assets. Goodwill is the intangible value ascribed to customer loyalty, employee relations, and other intangible factors that make the hotel successful.

Each of the physical assets have different depreciation schedules. Some sub-categories even have their own depreciation schedules depending on government policy aimed at increasing specific investments. A hotel’s operational and capital-intensive nature allow them to take advantage of many bonus depreciation policies not available to other Big Four CRE assets.

Cost segregation is an important aspect of increasing after-tax income. However, it can also have an important impact on transfer and property taxes.

Many states require real estate investors to pay a doc stamp tax based on the value of the real estate sold. In many cases, you can separate the value of the land and intangible assets from the real and personal property.

Note 1: Be sure the purchase price allocation and cost segregation values align in your overall tax strategy. A single, clean balance sheet will avoid potential problems among taxing entities.

Note 2: Don’t try to wing it. Go to a professional for purchase price allocation and cost segregation. This is an advanced asset management technique that requires professional certification.

06

Hotels derive a big portion of their value from operations. This flexibility is one of the great reasons to invest in hotels. However, so many other areas come into play when impacting the ultimate investment value.

Les quatre domaines de valorisation d'un hôtel sont :

• Capitalisation – Vous gagnez de l’argent lorsque vous achetez, mais vous devez également structurer la structure du capital de manière appropriée pour fournir efficacement la valeur sur votre compte bancaire.
• Renovation – Guest expectations for the built environment are constantly changing. In many cases, these are stylistic changes, but staying current will ensure a healthy revenue stream for the duration of your ownership.
• Opérations – L’exploitation d’un hôtel est une affaire de personnes. La fidélité des clients et l’engagement des employés ont un impact considérable sur votre capacité à optimiser vos revenus et à minimiser vos dépenses. Bon nombre de ces améliorations sont gratuites ou très abordables.
• Contract Positioning – Hotels operate with a variety of sales and service contracts. Terms of the brand licensing agreement and certain major maintenance agreements can have a material impact on revenue and profitability.



Un gestionnaire d’investissement à haut alpha équilibre son impact entre chacun de ces éléments et identifie les domaines dans lesquels chaque hôtel a le plus besoin d’attention. Les multiples de flux de trésorerie amplifient même les plus petites améliorations de revenus, il est donc utile d’avoir plusieurs domaines pour augmenter les revenus.

07

Près de la moitié des dépenses d'exploitation d'un hôtel sont liées à la main-d'œuvre. Le fonctionnement d'un hôtel nécessite beaucoup de main-d'œuvre. Cela a toujours un impact considérable sur l'emploi au sein de la communauté. Les hôtels fournissent un service important à la communauté au-delà d'un simple lieu de travail. En tant que solution de logement temporaire, ils offrent un abri aux familles, aux associés d'affaires et aux résidents dans le besoin. Les hôtels à service complet offrent même un lieu d'événements pour les événements sociaux et professionnels.

Ils constituent un lieu de détente et de renouement avec ceux que vous aimez. Les hôteliers les plus performants étendent leur hospitalité au-delà des murs de leurs locaux. Ils s'engagent activement dans la construction d'une communauté qui correspond aux valeurs de leur entreprise et à celles de leurs clients.

08

The financial benefits of owning a hotel are clear, but the ability to experience it is unmatched in any other real estate investment. Even the simplest limited service hotel provides a space for you to move around with very few impediments. You can get into rooms, public spaces, and back of the house with ease. Add a restaurant, meeting space, or a gym to that, and you’re in a new category of experience. Financial investments, like stocks, bonds, and even commodities, have very little tangible value. Even many real estate investments are hollow beyond their ability to deliver cash flow and tax benefits. 

A hotel, though, is unique in its nature as a public environment for your enjoyment.

09

Money is not the biggest reason for investing in real estate. There are so many easier and less risky ways to make money than investing in real estate. Most investors do it for the love of the game. Hotels represent one of the most challenging asset classes for a real estate investor. Every level of investment in hotels – passive to active – requires tremendous deal diligence and understanding of the industry. Investors must scrutinize and scrub all factors that impact the operation, especially external, market-related factors. 

As big as the hotel investment industry is, it still represents less than three percent of the total CRE square footage in the United States. The major players all know and respect each other because they understand how difficult it is to consistently perform at the top of their game.

10

The best reason to do anything is because you love it. But if you can look good while doing it, that’s just a big bonus. Plainly stated, investing in hotels is cool. This is mostly for all the reasons explained here. It’s a high-profile investment that takes more energy to break into and execute at a high level. Big Four CRE investors have respect for hotel investors that continually pump out great investment returns. The ability to welcome your family and friends into a hospitality environment is also very rewarding. 

You spend so much time and money making a special place, and you want to share it with the people you love. That is difficult in many investments, but a hotel is a public space built for just that – sharing.