The Hotel Investment Decision That Matters Most: Acquisition
In hotel forums, much of the discussion understandably centers on operations, technology, and commercial performance. Yet, after years of working alongside owners and operators—through both favorable markets and more humbling cycles—I’ve come to believe that the acquisition phase is arguably the most consequential moment in the hotel investment life cycle.
Many of the challenges owners face years down the road—underperformance, capital strain, brand misalignment, or limited exit options—can often be traced back to decisions made at entry.
Buying the right hotel, in the right market, under the right structure, sets the ceiling for success.
The Market Comes First
No amount of operational excellence can fully overcome a structurally weak market. Demand drivers, supply pipelines, seasonality, rate elasticity, and long-term economic fundamentals must be understood deeply—not just at acquisition, but across cycles.
Hotels are highly sensitive to macro and micro shifts. Entering a market without a clear view of where demand is coming from—and how durable it is—introduces risk that is difficult to unwind later.
Brand Selection Is a Strategic Decision, Not a Logo Choice
Brand affiliation impacts far more than marketing. It influences capital requirements, operating costs, rate ceilings, guest mix, lender appetite, and exit liquidity.
Selecting the wrong brand for a market—or for an owner’s risk profile—can limit upside or create friction between ownership, operator, and brand. The right brand, properly aligned with the asset and market, becomes a value amplifier rather than a constraint.
The Operator Can Make or Break the Plan
Even the best underwriting assumptions fall apart without disciplined execution. Operator selection should never be an afterthought.
The right operator brings market intelligence, revenue discipline, cost control, talent management, and accountability. The wrong one can quietly erode value long before issues show up in the financials. Alignment between ownership objectives and operating philosophy is essential from day one.
Capital Structure Is the Shock Absorber
Markets will turn. Interest rates will move. Demand will soften at times.
A well-designed capital stack—appropriate leverage, realistic debt service coverage, reserves, and flexibility—creates resilience. Many distressed situations are not the result of bad hotels, but of capital structures that left no margin for error.
It All Comes Back to Underwriting and Early-Stage Guidance
Proper underwriting is not just a spreadsheet exercise. It demands informed judgment, forward-looking analysis, and operational insight to assess how an asset may perform across different market conditions.
This is where experienced hoteliers—those who have been in the trenches through multiple cycles—can add disproportionate value early in a project. At acquisition, assumptions are locked in, risks are priced (or missed), and long-term outcomes are largely set in motion.
Getting the entry right doesn’t guarantee success—but getting it wrong almost guarantees challenges.
In hotel investing, performance doesn’t begin on opening day—it begins at acquisition!.
About the author:
Haizar Baiz is a co-founder of Latitude Asset Management, where he leads cross-border hotel investment strategy and asset management across the Americas. He focuses on value creation, market analysis, and helping owners navigate complex hospitality markets. He can be reached at haizar@latitude-am.com.
