Hospitality Real Estate Outlook: What You Need to Know to Enhance Your Investments

As the world continues to stabilize after recent pandemic disruption, economic uncertainty, and political unrest, certain industries have begun to experience rapid growth. One such industry is hospitality, which has seen increasing consumer spending trends towards travel and recreation, leading to a boom in hotel and hospitality real estate.

The hospitality industry is projected to return to pre-Covid levels, with it expected to reach $0.63 trillion by 2025 and growing at a CAGR of over 14% to reach $1.4 trillion by 2030. What should you be aware of as you consider hospitality real estate investments? Let’s take a closer look.

Are you looking for even more information about hospitality commercial real estate? Take a look at our recent article here, 3 Reasons for Hospitality Commercial Real Estate, and learn about the exciting advantages of investing in this sphere. 

Hospitality Real Estate Investing 101

The hospitality sector is experiencing an increase because business travel has grown, returning to pre-Covid levels, and hotels, especially in urban areas, benefit from this growth. There are several U.S. locations to watch if you’re looking for a quality hospitality real estate investment.

For instance, the New York hotel market should see an increase in visitors as the state continues placing more restrictions on short-term rentals. The Boston hotel market should experience strong demand because of the universities nearby that experience many visitors each year. Other cities, like Las Vegas, Houston, and Washington, DC, are projected to see increased hotel occupancy rates as business travel continues to rise.

Leisure is making a comeback as well. This is because some consumers are extending their business trips for leisure purposes. While international travel to the U.S. has not yet reached pre-pandemic levels, the statistics are promising and should continue to recover, with the U.S. Travel Association projecting international inbound travel to the U.S. to reach 98% of 2019 levels, compared to 84% in 2023.

Additionally, with continued supply chain challenges and rising interest rates, hospitality construction has seen a slowdown recently. That means existing hospitality properties are poised to be in even higher demand as competition decreases. Many cities are also seeing increasingly stringent regulations on short-term rentals. For instance, New York City passed a new law in 2021 curbing short-term rentals, such as Airbnb, leading to reduced listings by over 80%. With new hospitality establishments in limited supply, it would be wise to invest in existing real estate properties to take advantage of this competitive edge.

As more and more consumers are turning to travel and leisure, you would be wise to take advantage of these promising opportunities in the hospitality sphere. But how can you ensure the success of your transaction? By streamlining your investment management processes so you can focus on what you do best — boosting your revenue.

Covercy Can Help Accelerate Results with Our Comprehensive Platform

It’s essential that you have an intuitive investment management platform that can help you streamline your processes so you can organize the important assets you need for your hospitality real estate transaction. For instance, distribution payments can be one of the most complex aspects of a CRE deal. Navigating waterfall distributions and multiple investors can be difficult and time-consuming. With Covercy, we have a platform that allows you to simplify your payments and easily conduct transfers.

Keep your investors informed and engaged with our investor portal. Enhancing communication is important, and with Covercy’s portal, we emphasize transparency every step of the way. With our integrated banking features, uncalled capital can also earn interest, giving you and your investors more opportunities to earn revenue.

At Covercy, we understand the importance of staying at the forefront of the commercial real estate industry, and it’s clear that there are several lucrative emerging opportunities in hospitality real estate. To see how Covercy can work for you and your CRE firm, book a free demo with us today.