By Diogo Canteras, Founding Partner HotelInvest

The hospitality sector is dynamic, shaped by economic cycles, competition, and evolving consumer preferences. Successful hotel investment requires strategic planning, active management, and a deep understanding of the variables that impact profitability. Success depends on acquiring assets at the right moment and maintaining a balanced capital structure, avoiding excessive leverage that heightens risks during periods of low demand. Development decisions must align with economic cycles to prevent market oversaturation.

Investment evaluation should not rely solely on the capitalization rate (cap rate), as it reflects market conditions and interest rates. Asset liquidity varies depending on location and hotel type. The growing dominance of major hotel chains has led to increased operational costs and reduced owner autonomy. Loyalty programs and digital platforms, such as OTAs, drive up customer acquisition costs, putting additional pressure on profitability.

Technology and shifting traveler demographics are reshaping the industry. Millennials and Gen Z seek authentic, sustainable experiences, while the number of female business travelers continues to grow. Alternative accommodations, such as Airbnb, add to the competitive landscape. The sector faces consolidation, high labor costs, and rising interest rates. To secure sustainable returns, investors must stay ahead of trends, optimize operations, and implement adaptable strategies.