Daniel Marre was quoted in the National Real Estate Investor article, “HNW Investors Find an Attractive Niche in Secondary Market Hotels,” regarding HNW investors are snapping up more modest hotels in secondary and tertiary markets.

Marre uses a baseball analogy to describe the trophy-or-no-trophy approach to hospitality investing for HNW investors. “If you want to swing for the fences, that’s fine, but also understand that you have more of a likelihood of striking out,” he says. “If you want steady stats, just go for the singles and doubles.”

“If a high-net-worth investor is looking for some capital appreciation and income, there’s nothing wrong with investing in a branded select-service hotel in a secondary or tertiary market,” Marre notes. “You can get nice returns off those.”

Aside from the burden of running a hotel, Marre stresses that the financial success of lodging assets is less predictable than that of, say, office or industrial properties. Thanks to the prevalence of long-term leases for office and industrial buildings, forecasting income and expenses is simpler than it is for hotels, whose occupants are more transient and whose fortunes are closely tied to the economy.

“Hotels are such a different asset than any other class of real estate,” Marre says. “With hotels, you have to price every single room every single night. That’s the nature of hotels; it’s a roller coaster ride. It’s almost like the canary in the coal mine for the economy.”