Hotels are deceptively simple. It’s a home you pay to access while you’re on the road and what’s hard about that? A bed, a shower, throw in a croissant and off you trot. Just like your house, but someone else picks up the towels.
This deception has burned many investors and is one of the reasons hotels are often left on the periphery as an asset class. Hotels are operationally more complex than a storage unit, with a product that needs to be sold afresh every single day.
The global brand trend is toward increasingly specialised offerings, targeting guest niches that command a premium when effective, but carry a heavy downside risk, often affected by geopolitical events outside your control.
And for a growing number of investors, the hunt for attractive returns is encouraging them to take a look at hotels. They are moving from a sliver of a hedge for broad-spectrum fund managers and into the mainstream. There is a growing professionalism in the market. The days of "no room at the inn" are long behind us, and you’re no longer likely to find the person who checked you in at night serving up your morning muesli.
That means that hotel operations now attract specialists, supported by data that has opened the sector up to rigour. This was reflected in the latest Global Hotel Investment Outlook from JLL: Hotels accounted for approximately 8% of global investment volumes in 2025, surpassing the long-term average and demonstrating the sector's appeal to institutional investors.
Demand from travellers is strong and debt markets have strengthened globally with increased lender appetite and better pricing, while equity capital remains abundant, supporting increased transaction activity.
Will Duffey, CEO, EMEA, JLL Hotels & Hospitality Group, said: “With hotels consolidating a larger share of European real estate investment and a muted construction pipeline supporting values, a compelling window has opened for investors to act.”
As the sector has become more sophisticated, so too have investors. No hotel is quite like another and it is in knowing where the points of difference lie that those appetising returns can be found. Hotels are capable of outperforming traditional real estate sectors — particularly under-pressure office and retail — due to strong cash flow and the ability to change the rental rate every night. What was a weakness is now a strength. And the cinnamon on your matcha? Value uplift for your asset when you come to sell.
I have found that the core of a successful hotel investment is flexibility, a model we hone at LyvInn. This micro-hotel hybrid brand offers guests rooms that flex between private and shared, vibrant communal space and a 24/7 food-and-beverage concept that streamlines operations. We're flexible on the types of buildings we will occupy, and our focus is on a yield-per-square-meter mindset.
Navneet Bali is founder and CEO of LyvInn Hotels.
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