Hotel Real Estate Investments on the Rise During Slumping Economy
Thursday, August 27th, 2009
Even though most people are postponing travel plans and luxury vacations until the economic climate improves, there is one segment of the hotel and travel industry that is able to turn a healthy profit. The hotel real estate investment industry is experiencing a significant boom as prices on properties and condos continue to dwindle at a record pace. According to a recent report by the National Association of Real Estate Investment Trusts, hotel real estate investments are up 30% since January 2009.
Hospitality market research firms are still forecasting a significant drop in demand for hotel rooms through the end of 2009 and into the early half of 2010, but analysts say that profits may still run strong in the hotel real estate investment market for several months. Stock investments are expected to generate a high rate of returns through 2010, and may only drop slightly because of the economic climate in the oncoming months.
Major hotel groups have been taking steps to cut costs in order to keep profits running strong as the economy stabilizes. Companies such as Hilton Hotels, Starwood Hotels & Resorts and Marriot International, Inc. all run their own vacation property ownership programs that have also taken a modest hit because of the economy. However, there is still strong interest for independent investors to invest in condos and vacation homes by the major hotel brands, and this trend is expected to continue through 2010.
Still, skeptics say that this 'bull run' may not be an indication of a positive trend in the near future, and that stocks may also experience a downward spiral. There is no guarantee that this trend will remain strong through 2010, but as occupancy levels stabilize and more people reconsider their budgets for the oncoming year, there may be an opportunity for recovery by major hotel chains and their real estate investment properties.