5 Reasons Why You Should Invest in Hotels Now
Investing in commercial real estate is one way to earn large profits in a shorter time frame. This is particularly true for hotels considering it’s always in demand not just from locals but to tourists as well. While building your own hotel from the ground up could be daunting, there are a lot more benefits that you can take advantage of once you own your own hotel in Cambodia.
Before diving in and checking construction plans as well as key location areas, make sure you know everything about the advantages you will have once you invest in a hotel. We’ve curated all the perks you can have so read about it below.
High potential investment yields
In general, investing in the real estate market can guarantee ideal returns. However, the profitability of commercial real estate, particularly the hotel sector, goes across the board. Considering it’s the first line of accommodation for tourists, guests, locals who want to have a staycation and more, the potential for its investment yields is higher compared to other commercial real estates.
A higher annual yield already includes the potential risk of investing in a hotel wherein it was largely affected when the economy took a downturn in the previous years due to the global pandemic. While gains slowed briefly at the beginning, CREs like hotels continued their price increase momentum.
As reported by realestate.com.kh in their research, price trends for all CREs only skyrocketed. Back in May 2021, the reported price value for CREs was $600,000 and as of writing in May 2022, the price has risen to $1,327,000. This only proves the profitability and value that CREs like hotels have to making the economy better. Furthermore, knowing its high profitability ahead of time is necessary to get higher yields before other investors jump on the bandwagon.
Different areas to increase value
In residential real estate, you can force appreciation only by renovating the house and decorating it according to recent trends. While this is good and can increase value quickly, these are only two factors which limit your hand in forcing appreciation. This isn’t the case though when you invest in hotels since there’s a number of factors that will allow you to increase its value in a shorter time. Some of them are below:
- Operations → All hotel operations are flexible, in terms of hours, manpower, services and more which makes it the biggest player in increasing a hotel’s value. After all, the customers are the priority in hotels so once hotel operations continuously adapt to what their customers desire, then the value and profitability is guaranteed to increase.
- Renovations → When you have a hotel, its structure and design doesn’t stop the moment the constructions are done in your first year in business. Considering architectural, interior design, and more trends change annually, renovations can help force appreciation for your hotel. This is especially true if the right structures and features are added to your business that your customers demand.
- Capitalization → You need to properly allocate your hotel investment funds in key areas of the business to ensure you have high yields.
- Contract Positioning → A big part in this business are the contracts you have with particular services and sales. If you have great contracts with major businesses, it will guarantee higher chances of increasing your profitability.
Beneficial to the community
Besides the fact that investing in hotels is great for your portfolio, it’s also helpful to the community. Not only will your hotel bring more jobs to the locals but it can help increase the tourism and the reputation of the local community.
One of the best things you can take advantage of when you invest in a hotel is that you can directly experience its services. In other residential real estates, this is not always possible since you’re leasing the home to another person so you can’t drop by anytime you want. For other commercial real estate properties, all you can do is visit the store, parking or more while in a hotel, you can get a first hand experience of everything your business has to offer Whether you build a hotel from the group up or buy a hotel, experiencing it first hand is a good idea.
Competitive & challenging
When you invest in a hotel, one thing you can look forward to is that it’s challenging. While other commercial and residential real estate properties come with its own obstacles, managing a hotel has a number of probable problems that can occur. Keeping to current management and operation strategies will not help your business get ahead of the competition so you always need to think ahead.
Moreover, while the hotel industry in Cambodia isn’t as innumerable as other countries, there are still strong competitors you have to consider. This means hotel analysis and ways you can increase the value and desirability of your business to customers will help make your customers keep coming back.
Browse through our hotel listings in Cambodia to add to your investment portfolio!