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If you had the chance to buy a hotel, or build one from the ground up in say, NYC, LA, or Chicago would you?
A co-worker pitched the idea to me about hotels in NYC. She said the rates in NYC are high. But I just looked at them. Unless it is the Mandarin Oriental, or Plaza, the rate is pretty much what they should be, and are not different than a decade ago it seems. I did an internship at a hotel then. So really no growth.
But what do you say? Of course if it is a good idea, then the price for one will already be out of reach. But what about developing one from ground up? If you would build something in a major city, will it be a hotel?
This is all just hypothetical. I do not have the money or means to do anything like this, but I like to dream.
Like anything else, IF you have sufficent knowledge, appropriate connections and some LUCK you can probably get a ROI that is close to the industry average. If you do not have the kind of experience that is needed it would be foolish to try running a hotel in one of the MOST competitive cities in the world...
Because I don't want to live in NYC, LA, or Chicago, I would not be interested.
However, it is just like any other business. You look at the books, run the figures, find figures independently of those the seller gives you and you run those.
Look at how much deferred maintenance there is and how much it will cost. Look at the neighborhood and find out whether it is going up or down.
Look to see whatever new competition is planned for the neighborhood.
If all the figures work out and the purchase returns enough for your investment, and if you want to run a hotel, then you buy,
Because I don't want to live in NYC, LA, or Chicago, I would not be interested.
However, it is just like any other business. You look at the books, run the figures, find figures independently of those the seller gives you and you run those.
Look at how much deferred maintenance there is and how much it will cost. Look at the neighborhood and find out whether it is going up or down.
Look to see whatever new competition is planned for the neighborhood.
If all the figures work out and the purchase returns enough for your investment, and if you want to run a hotel, then you buy,
People always think it's that easy. I can't tell you how many people I've encountered who thought that it was just a matter of having good accountants, performing a lot of due diligence, and pumping out a pro forma.
Then reality intrudes to their sorrow. Every kind of business requires a certain aptitude and experience. Personally, there are people who have spent years learning the hotel business. If the OP wants to buy one, then he needs to find a crackajack operations guy, pay him well, offer him a share of the profits, and then pay an accountant who understands hotels to watch the guy like a hawk.
Of course you guys are right about knowing how to run the business is most important.
I am asking as if, you have the knowledge and experience.
If you are someone who knows what they are doing, or you already have hotels nearby in the exurbs, would having a hotel in the big city near you be a goal for you?
I think maybe a mod can move this to the investing subforum.
Of course you guys are right about knowing how to run the business is most important.
I am asking as if, you have the knowledge and experience.
If you are someone who knows what they are doing, or you already have hotels nearby in the exurbs, would having a hotel in the big city near you be a goal for you?
I think maybe a mod can move this to the investing subforum.
Well, that's a different set of criteria than what you originally asked.
Well, that's a different set of criteria than what you originally asked.
Is it always desirable to have that location?
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