There are lots of reasons why people might look at hotel property investment and there are a lot of properties being touted of which investors would be wise to steer clear.
You may be making a decision based on logical thinking. You scrutinise the numbers, you do due diligence on the offering, the developers have a great track record, you like the vendors, you gather information on the location and it all stacks up.
But what about the emotional side? Actually a better question is what about the emotions of those who will stay there? Any analysis of a property has to factor in a wide range of emotional intelligence gathering about the perception the potential market has or will have about the product.
At the start you may be more interested in the numbers on the spread sheet but another number you should look at is the list of things that will 'sell' the investment to others. When you put your money into a hotel property you are banking on the viability of the brand, location, amenities, political stability, history etc to bring an audience to its door while increasing the value of your investment over time. At IQ we often ask clients to think of a future point in time, say 5 years from now, and try to imagine how many 'for sale' signs they might envisage appearing around the property in which they are considering investing. The spread sheet won't tell you that but you can add that dimension to your calculations. There is a tipping point for an investment where availability overtakes demand, if you can imagine that happening in your predicted investment life-cycle, don't get involved.
If you can see that the property stands in its own grounds, in the middle of magnificent countryside, within easy reach for transport, is of outstanding historical interest with a limited number of rooms and some of the best amenities for miles and, oh yes, Queen Victoria honeymooned there, you are definitely adding a column of emotional attractions to your numbers… welcome to Taymouth Castle. Letting the emotions rule your investment decision is fraught with difficulty, but ignoring the emotions in those who will help the property increase in value is missing a trick.