Accommodation Properties Offer Stable Income
It’s the ability to offer stable residual income that attracts investors to hotels, motels and bed-and-breakfasts (B&Bs).
But all accommodation properties have their pros and cons. It’s important for you to select an investment vehicle that will pay returns well into the future.
These tips may help:
The majority of motels are privately owned, allowing more flexibility with your business model. Although there are advantages to having a franchised motel in certain markets, many owners find that mom-and-pop operations work well in areas that rely heavily on tourists for income.
Small motel properties are a good choice for an investor looking to start out in the accommodation business; many are run by families, keeping operating costs to a minimum. Unfortunately, smaller properties are often bypassed by new highways and the communities that grow up around them, making the investment problematic.
Travelers like the ease of access and the fact that everything is in one place in a destination hotel. Franchises offer vacationers the same quality of service and amenities across the country for which they are willing to pay a premium.
The benefits of higher room rates, lower vacancy rates and the year-round nature of the business can outweigh the franchise fees, rules and regulations. For the experienced investor with the upfront capital to buy into a franchise, a destination hotel is a good choice.
Luxury Country Inns
These smaller establishments are often located in historically significant areas with surrounding attractions that have historical appeal. A higher caliber of staff is required; however, inns are smaller and only a few key people are needed to operate the inns effectively. Luxury inns often offer on-site dining, entertainment and private accommodation.
B&Bs are typically historic homes or houses with architectural appeal. This type of accommodation property is dependent on word-of-mouth advertising and unique features to attract guests.
Running a B&B is a lifestyle choice for owners; they live on-site with their guests and become part of the guest experience. It takes special owners to share their home with strangers, even in a limited way.
For those inexperienced in running accommodation properties, becoming B&B owners allows them to build their customer service skills while earning a small income.
Seasonal Accommodation Properties
Seasonal accommodation properties, such as campgrounds and cottages, offer a rustic guest experience. They are often lake or waterfront properties with small convenience stores and gas stations on-site. Rates vary depending on the amenities available. RV sites with hydro and sewage services often come at a premium, while smaller tent trailer sites with fewer services are more affordable.
Cottage properties can be retrofitted with heating and plumbing to extend into the winter season. This type of property attracts outdoor enthusiasts and would be best run by like-minded investors.
If accommodation properties are of interest to you, your commercial agent will help you decide which type is best.
Picture Credit: Flickr
Link LeGrand, CCIM 210-789-5465
Luke LeGrand, ePRO 210-843-5853