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Real Estate Opportunity Funds
Few industries were hit harder by the pandemic than hotels. Industry projections show values falling more than 30% in 2020 from 2018 levels, but rising thereafter. Revenue per available room (RevPAR) is projected to fall more than 50%, from $86.64 in 2019 to $40.47 in 2020. Industry forecasts call for a RevPAR rebound in 2021 and growth back to 2019 levels to occur between 2023 and 2025. These circumstances have created a window of opportunity to invest in certain types of hotels.
HPI Hotel Fund is targeting hotel investments that can operate profitably and potentially recover more quickly than the hotel industry in general. This includes upper-midscale and midscale limited service, select service and extended stay hotels. Brand examples include Courtyard by Marriott, Hilton Garden Inn, Holiday Inn Express and Residence Inn.
HPI Hotel Fund intends to acquire hotels in secondary markets that have a domestic base of demand and are not dependent on large gatherings such as conferences, weddings and corporate or trade group meetings. The hotels with lower overhead and a more variable cost structure appear to be positioned to outperform larger hotels with higher cost structures, more fixed costs, and lower profit margins.
Join South Coast online, Wednesday, March 31st, 12pm-1pm, as we discuss if the timing is right for hotel investments through real estate opportunity funds.