The Importance of Location in Hotel Real Estate Investments

  • September 5, 2024

Curious about the importance of location when considering your hotel real estate investments? As former hotel owners, we know firsthand that location is one of the most critical factors when investing in hotel real estate. The success of a hotel is often determined by where it’s situated, as location dictates demand, revenue potential, and long-term growth prospects. Here’s why location should be at the forefront of every hotel investor’s decision-making process.

1. Proximity to Tourist Attractions

Hotels near popular tourist attractions consistently perform well. Whether it’s a beach, national park, historic site, or entertainment district, properties located near high-traffic areas enjoy higher occupancy rates and premium pricing.

  • Urban Hotels: Hotels in city centers near landmarks, museums, and business hubs cater to both tourists and business travelers, offering year-round demand.
  • Resort Locations: Coastal regions, ski resorts, and nature retreats provide an appealing escape for travelers, making these ideal locations for vacation-oriented hotels.

2. Accessibility

Ease of access is key for attracting guests. Hotels near airports, train stations, and major highways are more convenient for travelers and often see higher bookings.

  • Transportation Hubs: Properties near airports or transit systems benefit from the constant flow of travelers, particularly for short stays or business travel.
  • Connectivity: Ensure your hotel is well-connected to major cities and tourist hotspots, as this increases its appeal to both domestic and international guests.

3. Emerging Markets

While established destinations are always safe bets, emerging markets present untapped potential for hotel investors. New areas experiencing growth in tourism or business activity offer lower entry costs and significant upside potential.

  • Undiscovered Gems: Emerging destinations may have fewer competitors, allowing new hotels to capture the market early.
  • Economic Growth Zones: Look for regions with government investment in infrastructure, as this often signals a future increase in tourism and business travel.

4. Local Demand

In addition to tourists, consider the local demand for your hotel. Conferences, events, and local tourism can drive consistent bookings, especially during off-peak seasons.

  • Corporate Travel: Hotels near business districts or event centers can capitalize on conferences and business trips.
  • Local Attractions: Properties close to sports arenas, universities, and cultural centers will attract guests attending local events and activities.

Conclusion

The location of your hotel is the foundation of its success. Whether you’re targeting an urban hotspot, a resort destination, or an emerging market, choosing the right location ensures consistent demand, premium rates, and long-term profitability. At NEHB, we specialize in helping hotel investors identify the most lucrative locations for their properties. Contact us today to learn more about our expert real estate services.

icon