Why Hotels?

Hey everyone,

I have a meeting with an analyst working in the hotel group of a D/E placement firm, think HFF, CBRE, etc. I got set up with this person through networking and have not exactly had a ton of interest in hotels in the past, mostly because I didn't know anything about the asset class/the hospitality industry, although hotel deals definitely seem like they could be very interesting.

I'm currently looking for full-time roles and want to express interest in the hotel group, I wanted to see if anyone could tell me a little bit more about why hotels are an interesting asset class to work in so I could have some talking points for when I meet with the analyst. I did an office tour via a school club with a developer building a hotel last spring so I'm definitely going to mention how I found that interesting but I would love some other info if anyone has anything.

Thanks.

 

When I was interviewing for an internship with a hotel/hospitality REIT, I mentioned that one of my main interests in hotels was the sheer variety of properties- difference brands/flags, style differences, levels of service, etc. Hotels are a very operations-intensive asset class and the cost of operations varies heavily between a basic hotel (Motel 6) and a full-service hotel (Omni, Embassy Suites, etc). Any other questions and I'll do my best to help.

"There are only two opinions in this world: Mine and the wrong one." -Jeremy Clarkson
 

Because they're sexy. No other asset class (other than spec homes) can you fly in a piece of marble and a sculptor from Italy to hand chip the marble in the lobby for a completely custom look (true story btw).

“The three most harmful addictions are heroin, carbohydrates, and a monthly salary.” - Nassim Taleb
 

This is definitely a big reason why I'm interested in the group. The office I visited a few months back was constructing a very luxurious hotel in a major city, doesn't get much better than that

 
Malta Monkey:
Because they're sexy. No other asset class (other than spec homes) can you fly in a piece of marble and a sculptor from Italy to hand chip the marble in the lobby for a completely custom look (true story btw).

Point taken, but try working on a luxury apartment building in NYC. That shit happens more than you think

 

Ah, that's the shit I want to do. I built a nice lobby in my construction days, but the other team in my division was doing a banks HQ and they flew to Italy to hand-pick each marble slab and arrange it with a crane. Each piece was marked for a specific location so they basically configured the lobby floor in Italy and made sure it was perfect before shipping it all stateside.

 

The luxry hotel business is so shitty this is literally 90% of the reason why people are in that business. Its sexy, exciting, you hobnob with wealthy people, your peers are "artsy" rather than stale and boring like other RE guys.

But at the end of the day you're basically running a restaurant people sleep at, your employees steal from you, they leave on a drop of a dime and the post capital returns are so much better elsewhere for less work.

We have luxury hotels in NYC that are making the same NOI as they were 15 years ago.

 

The hotel asset class holds one of the widest yield spectrums. Select-service hotels routinely trade at cap-rates in the low-teens while trophy assets with under-market rents can trade for sub-6% cap-rates. Hotels are also ubiquitous across all markets, primary, secondary, tertiary, etc... The small east Texas town of 15,000 people may have a Motel 6 just like downtown Austin has the W Hotel.

 

Why wouldn’t more people be buying select service if the return profile is much larger than a full service and better holds up in a downturn? What am I missing besides the security of the trophy asset? Are the cash flows at a full service that much less volatile? Why so? Seems the opposite.

 
Most Helpful

Some additional thoughts on hotels:

1) Hotel occupancy can be driven by factors much different than any other asset class. One example of this is (at least in major cities) is convention schedules. The cancelling of major conference or a center going offline for renovations (see the Moscone Center in SF as an example) Owners with heavy Bay Area exposure took short-term hits here due how much the convention schedule changed during this time.

2) It might seem contradictory at first, but high-end hotels/resorts tend to be more resilient during downturns than select or limited-service hotels. One reason for this is that the premium properties serve base that tends to be less affected by economic downturns than the lower-end hotels. So when the economy slows down, the Holiday Inn Express off of I-75 that services middle class families going to and from Florida can see a bigger hit to occupancy than a high-end resort hotel.

"There are only two opinions in this world: Mine and the wrong one." -Jeremy Clarkson
 

Why hotel? It's the most volatile of the real estate asset classes. And therefore presents unique challenges which necessities the need for savvy analysts.

Also...you might want to refer to it as hospitality or the accommodations industry instead of hotel. Others would be better suited to verify this aspect.

Consider being prepared to discuss your thoughts on the recent trend of duel-branded assets. It's just something to perhaps show you've done some background homework. You could find a way to introduce this trend/topic as one reason that you find the industry interesting.

 
Funniest

Deserunt sapiente nostrum a id necessitatibus repellendus. Et cupiditate nostrum dolorem quibusdam porro voluptatum. Molestias eligendi reiciendis enim quia occaecati expedita sit. Ratione architecto consequatur ut eum. Dolorum ipsa et porro repellendus accusamus aut quos. Id nostrum eligendi animi sunt.

Rerum quam sapiente laborum magnam incidunt reiciendis ut. Ut laudantium veritatis tempore qui aliquam nulla deserunt quia. Eligendi corrupti sed debitis sequi voluptatum temporibus autem. Aut rerum fugit et in enim recusandae. Corrupti molestias molestias totam voluptate aspernatur. Alias rerum consequatur et officia.

Magnam sequi libero laboriosam sint eveniet quod. Dignissimos necessitatibus perferendis culpa consequatur impedit saepe.

 

Consequuntur praesentium autem laboriosam iusto blanditiis assumenda. Et est qui omnis modi itaque distinctio voluptates. Soluta non incidunt eos debitis. Molestiae tempora quia soluta cumque. Doloremque voluptatem explicabo magni qui nam nostrum. Aperiam praesentium molestiae explicabo ut laudantium debitis eum.

Tempore dolores non quaerat est pariatur cum. Iusto ut reprehenderit eos eius rerum nesciunt ut est. Et vero architecto quia incidunt.

Dignissimos sed facilis dolores reiciendis qui dolores necessitatibus. Corrupti enim accusamus molestiae dolor quis qui.

Eum consequatur quidem voluptas esse. Et voluptatem quibusdam hic dolorum. Aspernatur delectus reiciendis velit.

Career Advancement Opportunities

March 2024 Investment Banking

  • Jefferies & Company 02 99.4%
  • Goldman Sachs 19 98.8%
  • Harris Williams & Co. (++) 98.3%
  • Lazard Freres 02 97.7%
  • JPMorgan Chase 03 97.1%

Overall Employee Satisfaction

March 2024 Investment Banking

  • Harris Williams & Co. 18 99.4%
  • JPMorgan Chase 10 98.8%
  • Lazard Freres 05 98.3%
  • Morgan Stanley 07 97.7%
  • William Blair 03 97.1%

Professional Growth Opportunities

March 2024 Investment Banking

  • Lazard Freres 01 99.4%
  • Jefferies & Company 02 98.8%
  • Goldman Sachs 17 98.3%
  • Moelis & Company 07 97.7%
  • JPMorgan Chase 05 97.1%

Total Avg Compensation

March 2024 Investment Banking

  • Director/MD (5) $648
  • Vice President (19) $385
  • Associates (86) $261
  • 3rd+ Year Analyst (13) $181
  • Intern/Summer Associate (33) $170
  • 2nd Year Analyst (66) $168
  • 1st Year Analyst (202) $159
  • Intern/Summer Analyst (144) $101
notes
16 IB Interviews Notes

“... there’s no excuse to not take advantage of the resources out there available to you. Best value for your $ are the...”

Leaderboard

1
redever's picture
redever
99.2
2
BankonBanking's picture
BankonBanking
99.0
3
Betsy Massar's picture
Betsy Massar
99.0
4
Secyh62's picture
Secyh62
99.0
5
GameTheory's picture
GameTheory
98.9
6
dosk17's picture
dosk17
98.9
7
DrApeman's picture
DrApeman
98.9
8
CompBanker's picture
CompBanker
98.9
9
kanon's picture
kanon
98.9
10
numi's picture
numi
98.8
success
From 10 rejections to 1 dream investment banking internship

“... I believe it was the single biggest reason why I ended up with an offer...”