'Not For The Faint Of Heart': How Sophisticated Investors Can Find Real Opportunity In Hospitality Now

Few asset classes have the inherent resilience of hospitality. People have always traveled — for business, leisure, milestones and experiences — and that isn’t changing. The question for today’s investors isn’t whether the opportunity exists. It’s how to find it.

The U.S. hospitality market has been on a roller coaster since the pandemic. After experiencing significant losses, the industry has rebounded in the last few years. Yet the U.S. market today tells two distinct stories. While some cities saw impressive revenue per available room growth in the first quarter, others recorded notable losses — a split with no single explanation, as the forces at play varied widely by market.

According to Eric Jacobs, chief global growth officer for Aimbridge Hospitality, the world’s leading third-party hotel management company, that divergence is exactly where opportunity lives.

“It’s not for the faint of heart,” Jacobs said. “You need to be a sophisticated investor, willing to dive into how the hotel industry works, the drivers of that business, the ups and downs of this business and the current environment. But for investors who understand this business and know where to look, the opportunities are significant."

Jacobs is clear-eyed about today’s headwinds: Food and labor costs are growing faster than revenues, putting pressure on net operating income across the industry. And as the U.S. prepares to host major international events, including the FIFA World Cup, obtaining a travel visa remains a hurdle for international travelers.

Despite these challenges, there are significant hospitality opportunities for smart investors, he said. More distressed properties are coming to the market, which is creating an opportunity to buy hotels at a discounted value. Jacobs has seen people become hard money lenders, he said, buying debt that public and private lenders are looking to get off their books.

Also, if investors are willing to take a longer-term view, there are some opportunistic buys among hospitality markets that are facing headwinds, he said. He added that some markets are experiencing slowdowns because companies are leaving them for cities with more favorable business climates, and it is important that investors look at where those companies are going, because that is where the hospitality demand will grow.

Jacobs cautioned that commercial real estate as a whole is complicated, and hospitality is a uniquely complicated facet of the industry. While a commercial real estate owner can execute a long-term lease and count on steady income, a hotel must put “heads in beds” every night. Revenue doesn't renew itself — it has to be earned continuously through disciplined operations and commercial execution, making hospitality a fundamentally more dynamic and demanding investment. This is why investors need a strong, experienced operator who acts as a trusted partner and can drive the profitable returns they want.

“Savvy investors need to be working with a sophisticated operator that has the ability, the scale and the systems to identify and assess opportunities, execute at the property level, and drive both top-line revenue and profitable returns,” Jacobs said. 

Aimbridge has been operating hotels for more than 30 years and is constantly underwriting different markets, hotels and investment theses, analyzing more than 700 deals per year through its dedicated feasibility team. That depth of deal experience means owners don't just get an operator — they get a partner who can help them evaluate investments they are considering or identify opportunities they haven't found yet. It has also allowed Aimbridge to build a vast proprietary database that it draws on for deeper insight into market trends and dynamics.

“Because of our size and scale, owners know that they can come to us as they're looking for investments — for example, coming out of a 1031 exchange or selling their asset — and we can help pair them with potential buyers or sellers,” he said. 

Aimbridge operates nearly 1,000 hotels with a singular focus on the owners who entrust them with their assets.

“Owners give us the privilege to welcome guests into their hotels, but at Aimbridge, our primary ‘guests’ are the owners themselves,” he said. “We deliver for them through the strength of our people, the depth of our data and a disciplined approach to operations — and we pride ourselves on helping owners navigate market challenges and capitalize on opportunities to maximize the performance of their assets.”

Once an asset is in hand, Aimbridge leverages its proprietary cross-market, cross-vertical data — which Jacobs said is unmatched in the industry — to power an integrated commercial platform that unites sales, marketing, revenue management and national sales to drive performance from Day 1.

Underpinning all of this is a straightforward conviction: the long-term fundamentals of hospitality are strong, and with the right operator partner, the returns can be meaningful. 

“There are opportunities in both the ups and the downsides of the market. You just have to be a strategic investor,” he said. “Long-term, the fundamentals of this business are incredibly strong, because at the end of the day, we all love to travel, and that will never change.”

This article was produced in collaboration between Aimbridge Hospitality and Studio B. Bisnow news staff was not involved in the production of this content.

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