Diogo Canteras, Founding Partner - HotelInvest

Investing in hotels can be an excellent opportunity for profitability with controlled risk, as long as some fundamental premises are respected. The starting point is to choose solid assets: well-located hotels, in markets with good demand and low barriers to entry, operated by recognized brands, and with efficient management. It's also essential to understand the current state of the hotel cycle. The hotel industry is cyclical and alternates between growth and decline. The ideal time to invest is when occupancy rates and average daily rates begin to rise, but the pace of new developments is still low.

Another determining factor is the acquisition price. A hotel's operating result is independent of the price paid for it, so the lower the purchase price, the greater the potential return. Furthermore, it's recommended to prioritize hotels already in operation, which generate revenue from day one, rather than venturing into projects under development, which tend to take time to mature and carry additional risks.

Following these rules, a hotel investment tends to yield interesting results. However, identifying the right asset, at the right time, and at the right price requires experience and market knowledge—something not all investors possess. Therefore, interest is growing in a more practical and diversified alternative: investing in hotel portfolios, typically structured through Real Estate Investment Funds (REITs).

Investing in a hotel portfolio offers several advantages over investing directly in a single asset. The first is risk dilution. In a portfolio, the performance of a hotel with potential problems tends to be offset by the positive results of others, reducing the impact of unforeseen events. Another important benefit is tax: in Brazil, individual investors who invest in REITs with more than one hundred shareholders and hold less than 10% of the shares are exempt from income tax on their earnings. This is a significant incentive, which should be maintained even after the ongoing tax reform.

There is also the security provided by a clear investment thesis, developed by the fund managers. This thesis defines the hotel selection criteria and guides strategic decisions, ensuring consistency and alignment with market trends. Furthermore, professional management is a key differentiator. Unlike individual investors, fund managers are industry experts, have access to market data, and have a broad perspective, allowing them to make informed and agile decisions.

Finally, there is the issue of liquidity. Selling a hotel is a complex, time-consuming, and expensive process. Investment fund shares, on the other hand, can be traded on the stock exchange quickly and at low cost, offering investors a flexibility rare in real estate assets.

For all these reasons, hotel portfolios—especially those structured as Real Estate Funds—have been consolidating themselves as one of the main entry points for investors interested in the hotel sector.