How to Invest in Hotels and Resorts

Start Here: Ready to invest in hospitality real estate? Browse Hotel & Resort Opportunities or Learn About Resort Investing

Hospitality real estate—hotels, resorts, vacation rentals, and experiential properties—has historically been one of the most profitable and resilient asset classes in real estate. For decades, it was controlled by institutions, private equity firms, and ultra-wealthy investors.

Today, through fractional ownership platforms like Cytation, everyday investors can participate in this powerful asset class with minimums starting as low as $100.

This guide breaks down everything you need to know about investing in hotels and resorts, from how the economics work to what makes a strong deal.

Why Hotels and Resorts Stand Out as Investments

Unlike traditional real estate, hospitality properties combine:

Real estate ownership
Operating businesses
Brand value
Multiple revenue streams
Significant tax advantages
Strong appreciation potential

This hybrid structure creates opportunities for outsized returns that traditional rentals simply cannot match.

The Economics of Hospitality Real Estate

Hotels and resorts generate income through:

1. Room Revenue

Nightly rates that adjust based on demand, seasonality, and events. A single weekend can produce the equivalent of months of traditional rent.

2. Food & Beverage

Restaurants, bars, room service, and event catering add high-margin revenue.

3. Experiences and Amenities

Spas, golf, guided tours, wellness programs, day passes, and unique experiences all drive additional income.

4. Events and Weddings

Venue rentals, corporate retreats, and destination weddings produce premium revenue.

5. Ancillary Services

Retail, memberships, merchandise, and partnerships add further income streams.

This diversification reduces risk and creates multiple paths to profitability.

How Fractional Ownership Works

Instead of buying an entire hotel or resort, fractional ownership allows you to purchase a share of the property.

Here's how it works:

Cytation acquires and operates hotels, resorts, and vacation rentals
The property is structured through an LLC or similar entity
Investors purchase fractional ownership interests starting at $100
You receive pro-rata distributions from net operating income
You benefit from depreciation and other tax advantages
You participate in appreciation when the property is sold or refinanced (typically 3-5 years)

You own real equity in real assets—without the operational burden.

What Makes a Strong Hotel or Resort Investment

Not all hospitality properties are created equal. Strong investments typically have:

1. Location

Proximity to demand drivers: tourism, business travel, nature, attractions, or events.

2. Undervalued or Undermanaged Assets

Properties with strong bones but poor execution offer the most upside.

3. Multiple Revenue Streams

Diversified income reduces dependency on rooms alone.

4. Clear Value-Add Plan

Renovations, rebranding, improved marketing, and operational upgrades create measurable returns.

5. Experienced Operators

Professional management is everything in hospitality.

6. Realistic Exit Strategy

A clear plan for refinancing or selling within 3-5 years.

The Tax Advantages of Hospitality Investing

Hospitality real estate offers significant tax benefits:

Depreciation on buildings, furniture, fixtures, and equipment
Accelerated depreciation through cost segregation
Potential bonus depreciation (when applicable)
Pass-through deductions

These benefits can offset taxable income and in some cases eliminate taxes entirely on distributions.

Investors typically receive K-1s or 1099s reflecting their share of income, losses, and depreciation.

Key Metrics to Understand

When evaluating a hotel or resort deal, focus on:

ADR (Average Daily Rate): The average price charged per occupied room.

Occupancy Rate: Percentage of rooms filled.

RevPAR (Revenue Per Available Room): ADR × Occupancy Rate. The most important metric.

NOI (Net Operating Income): Income after operating expenses but before debt service.

Cap Rate: NOI ÷ Purchase Price. Measures yield.

Cash-on-Cash Return: Annual cash flow ÷ cash invested.

IRR (Internal Rate of Return): Total return including cash flow and appreciation over time.

These numbers tell you whether a deal makes sense.

What to Expect as an Investor

Distributions

Depending on the property, you may receive monthly, quarterly, or annual distributions from net operating income.

Transparency

Access to financial reports, property performance dashboards, and regular updates.

Hold Period

Most hospitality investments are structured for 3-5 year holds, though this varies by deal.

Liquidity

These are illiquid investments. Your capital is typically tied up until the property is sold or refinanced. Some platforms are developing secondary markets, but liquidity is not guaranteed.

Risks

Hospitality is operationally intense. Performance depends on occupancy, management, market conditions, and external factors like weather, economic downturns, or disasters. Always review risk disclosures carefully.

Why Cytation

Cytation simplifies hospitality investing by handling:

Deal sourcing and underwriting
Acquisition and financing
Renovations and repositioning
Professional operations and branding
Financial reporting and investor relations
Exit strategy execution

You invest. We operate. You earn.

The Bottom Line

Investing in hotels and resorts is no longer reserved for the ultra-wealthy. Through fractional ownership, everyday investors can access one of the most lucrative asset classes in real estate—professionally managed, transparent, and structured for cash flow and appreciation.

If you are ready to diversify beyond stocks and traditional rentals, hospitality real estate may be the most compelling opportunity available today.