There was a time, not so very long ago, where investing in the hotel sector was a niche sport, practiced by those who had either money to burn or in-depth knowledge of thread counts or, hopefully, both.
The separation of assets and operations — or bricks and brains, depending on your tastes — attracted a wider pool of investors to the sector. News of their success spread, drawing hotels to, if not the mainstream as an asset class, then very close indeed.
Increased interest in the higher returns available compared to retail or offices drove more data and transparency and, for the right asset, bidding wars are commonplace. If you get the marriage of property and operations right, the glowing jewel of daily revenue and asset appreciation is yours.
For a while, the investment model was very much themed around "a bird in the hand is worth two in the bush." Trophy assets and established portfolios were the standard of every sector broker’s day and multiples climbed higher and higher. The market became dominated by investors for whom money seemed no object and valuation became a matter of dice rolling and adding a few zeros.
The arrival of the institutional investors heralded the next wave of professionalism what was now the hotel industry and with them came a shift in investment targets. Buyers no longer wanted somewhere they could store their money, show off to their friends and keep as a geopolitical bolt-hole. The asset also had to do some work. Private equity groups in particular had strict return expectations and they were not met by overpaying for hotels which had to be held longer than they’d like and possibly refurbished to boot.
Value-add has now been with us for a while, as the boom in transactions for leisure hotels around the Mediterranean has attested. Buyers want to be able to improve the property — and the operations — and see a clear route to their return without a generational hold. But those faded family-owned seaside hotels which just need a lick of paint and a competent GM are drying up. The next step for the motivated investor has been the platform play.
The institutions no longer want one property with growth potential, they want to be at the beginning of a growth story. Starting with one or two hotels, they want to see how this will form a profitable group, with geographic coverage and preferably a brand niche. They are very much motivated by "build it and they will come."
I experienced this when I was at Meininger and yes, the potential with a platform is so much greater than putting a spa and some new carpet into a resort hotel. The knowledge required to both build and scale a brand is also so much greater than just knowing an interior designer. You need an eye on what the guest wants and how to deliver it and generate that valuable lifetime loyalty, while also maximizing profitability.
At Meininger, this meant perfecting the hybrid model — where the flexibility of hostels is combined with amenities typically found in hotels — while evolving our thinking from having revenue per available room as a key performance indicator to the more useful revenue per available space.
Investors such as Brookfield and TPG aren't just buying buildings; they are buying platforms that can generate market-beating returns in tough cycles. At LyvInn, we opened our first hotel in Frankfurt in May 2023, where it has outperformed its competitors in the city. In 2025, its RGI of 135 placed it 35% above its rivals despite a cool market.
It’s now time for us to scale. We have the data from Frankfurt, we have the pipeline of conversions and adaptive-reuse projects and we have the leadership track record of scaling a major brand in this flexible, hybrid space.
Today’s investors look very different than 10 or even five years ago. It’s still true that none of us have a crystal ball, but we’re getting better at looking into the future.
Navneet Bali is founder and CEO of LyvInn Hotels.
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