Why Hospitality Commercial Real Estate is an Opportunity
While many of the other asset classes have experienced significant downturns over the past couple of years, not every class is facing the same hurdles. For example, industrial assets remain in strong demand due to reshoring and increased demand. Multifamily assets saw a strong surge over recent years as well. Hospitality commercial real estate is another asset class seeing strong interest and success.
While the hospitality industry saw some contraction at the end of Q2-23, RevPAR is still looking strong, and wage growth in the industry has grown by 5% recently. Despite this, hospitality commercial real estate remains an attractive option for firms and investors looking to expand their portfolios in the months and years ahead.
Here, we’ll explore a few key reasons why hospitality commercial real estate is seeing greater interest and why it’s standing out from other asset classes.
It’s Highly Relevant to Consumers
Unlike office commercial real estate assets, which have typically stayed stagnant, hospitality commercial real estate has always been consumer-facing. As a result, it’s on the cutting edge of what consumers want. Its business model has remained consumer-focused, adapting to the changing preferences of different generations.
It Supports Remote Work
Many workers today are using business travel as an opportunity for a mini-vacation. Gone are the days of the small, cramped “business center” work spaces — instead, hotels have made the majority of their space amenable to workers. From cafes and restaurants to lobbies, conference centers, and hotel room layouts themselves, virtually anyone can stay, work, and play as part of a single experience.
It Reinvents Itself Frequently
Whereas other asset classes have remained stagnant in terms of appearance, what their spaces offered, and what could be done in them, hospitality has not. Traditional hotels remain, but those leading the way have reinvented themselves to leverage local styles, cultures, and tastes — creating a space that allows patrons to experience the surrounding area, a lifestyle, or a time period.
It Supports a Desire for Community
One of the key defining attributes of most recent generations, particularly Generation Z, is a desire for community. People want to connect with others in their area, and hospitality assets create opportunities for people to engage in local experiences, dining, art and culture, and more. Additionally, community within the assets themselves is also growing, with companies creating communal spaces (as opposed to cube farms) and building out spaces that encourage greater collaboration and togetherness.
Accelerate Results and Value with the Right Technology Solution
If hotel and hospitality assets are currently within your portfolio, or if you’re looking to expand your portfolio with the addition of hospitality commercial real estate, utilizing a commercial real estate technology solution to streamline the many facets of your daily work will yield significant returns in the form of cost savings, value creation, and more.
At Covercy, we’ve built the first real estate syndication platform where banking meets investment management. Our platform enables GPs and their teams — as well as the investors they serve — to manage numerous processes, workflows, and tasks related to investor relations, fundraising, dealmaking, distributions, and banking in one system.