Room For Returns

With strong demand for hotel space and limited supply, more profits may flow into shareholders' pockets

“Excluding the cost of acquiring the land, we have seen hotels carrying our brands such as Embassy Suites and Hampton Inns that required investments in the $4 million to $5 million range,” says Floyd Pitts, senior director of diversity programs for Hilton Hotels, who is based in Beverly Hills, California. Assuming 80% financing, hotel ownership might be possible with $800,000 to commit, and that sum could be shared among an investor group.

One entrepreneur backing hotels is Ken Fearn, managing partner of Integrated Capital, a Los Angeles-based real estate private equity group with a focus on hospitality. “The hotel business seems to have seven-year cycles,” he says, “and we’re not quite halfway through the current cycle. We might see continued growth in occupancy and room rates.”
If more people are willing to pay more to stay in hotels, more dollars are likely to find their way into investors’ pockets.

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