Why Hotels?

Jab545's picture
Rank: Baboon | 129

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.

Comments (14)

Most Helpful
Aug 12, 2019

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.

    • 3
Aug 12, 2019

I'll definitely be sure to bring that up, if this goes anywhere I'll be sure to PM you

Aug 12, 2019

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).

    • 2
Aug 12, 2019

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

Aug 13, 2019
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

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Aug 13, 2019

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.

Aug 13, 2019

Trophy office can get pretty sexy too. I've seen some ridiculous lobbies.

Aug 12, 2019

It's one of the easier asset classes to put yourself in the shoes of the end-user. You can do the same for multi-family obviously, but I find it easiest and most enjoyable with hotels.

    • 1
Aug 13, 2019

Hi @Jab545 ,
I appreciate your interest on working at hotel groups. They have got lot of excellent roles there. For instance, you can freelance hotels to reduce the commercial property tax by tying up with bigger concerns. A big start is waiting for you when you find the right job role.

Aug 13, 2019

Wut?

Aug 13, 2019

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.

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Aug 13, 2019

I don't have a lot of experience with hotels, just a summer internship at a PE firm that had a hotel deal I worked on... I really enjoyed that the drivers for our models were totally different than any other model I had seen previously. There are several approaches you can take to valuation (just like any other model), but the drivers such as occupancy and RevPar are unique. A whole new animal.

Aug 13, 2019

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.

    • 1
Aug 13, 2019
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