The travel and tourism industry took a hard-hit during the Covid pandemic shut downs. Things began looking up for two hotel operators in the summer of 2021 until the fourth wave of viral infection hit and took hold across much of the country. Hotels already on shaky ground trying to recover from last year’s long periods of shut down are facing an uncertain future even with the proposed American rescue plan.
What will happen with these hotels if they do not make it through a new cycle of scaling back operations and ramping up again only to scale operations back again as the pandemic continues? Some of these hotels are filing bankruptcy to protect assets that they have or are selling hotel buildings off in a market that is not best for opening a new hotel operation.
Who is currently buying empty hotels right now?
There are some potential investors looking to purchase a hotel of their own and continue to keep it a hotel while there are also developers and investors buying hotel buildings to convert them into permanent dwellings. Many investors are seeing the potential of hotel buildings becoming tiny condos and apartments as there is a large need for more affordable housing in several areas across the country. These buildings have much potential as they already have pools, gyms, office spaces, plenty of parking, and are most often well located close to modern amenities and within walkable distances of city hubs.
With the large housing shortage creating a concerning lack of affordable housing hotel closings were almost begging to become other types of multi-unit housing to help solve this problem. For developers, the right hotel building has possibility for an almost overnight conversion into housing, especially those with extended stay rooms that contain kitchenettes, wide hallways, tall ceilings, and climate control systems in each room.
Many hotel buildings are being purchased for pennies on the dollar and require very little renovation to convert them into permanent dwelling spaces. The largest effort and time consumer is getting the structure zoning changed from a hotel to residential.
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Other potential uses for former hotel buildings
Apartments and condos are pretty much an obvious conversion for a former hotel, but developers are also looking into changing hotels into other useful investments. Some developers are interested and repurposing old hotels into places like office space where there is significant demand lingering in some areas. Some developers are looking into the possibility of turning hotels into senior living facilities. Some hotels with the right kind of floorplan and flow could easily and quickly be turned into independent senior housing where nursing staff could still be available nearby.
Hotel conversions could be the next hot thing in commercial real estate investing. With the right hotel in a place where a zoning change would not be a headache, it could be a very lucrative conversion into multifamily housing or other types of residential property like senior living. Old hotels could be a good return on your investment dollar.
Other Buildings That Can Offer Great Potential
In addition to hotels, older schools and historical buildings can offer great investments for those looking to revitalize a community or neighborhood. McMenamins based out of Portland does a great job on this idea turning schools into breweries, restaurants, and even hotels themselves. Places like the Kennedy School in Portland and Anderson School in Bothell Washington offer guests access to the school’s pool, now turned athletic center, 3 on-site restaurants, a whisky cabin, movie theater, and the dorms of the former school are now a hotel.
Whether you’re fixing up an old hotel or school, the investment opportunities are out there if you’re willing to do the research and think outside the box.