|What makes hotels a particularly attractive investment today?
It is the ability for hotels to rebound during times of economic downturn, and the specificities of today’s landscape that make this a prime time, especially for name-brand business select hotels. Simply put, business people, traveling sports teams, and families are planning summer trips for summer and beyond. Marriott (a select service brand we own properties by) reported a $377 million profit in the first three months of 2022, way up from the $11 million dollar loss during the same period last year. Estimated total U.S. hotel revenues and profits are close to 2019 levels, on a per-available-room basis, and all profitability key performance indexes for March 2022 were at their highest point since the pandemic started.
Perhaps that is why we are distributing dividends well over our 8% target!
(Get in before 5/30 for the next distribution)
Additionally, hotels are in a particularly prime position to fight inflation, due to their ability to adjust room rates. If demand due to the great travel resurgence of 2022 increases, the industry should be well-positioned to execute pricing power to offset inflationary costs. Hotels can price rooms continuously in response to occupancy levels. Marriott was able to raise its average daily rate from +3% in January 2022 to +12% in March 2022 (compared to the same month in 2019) to partially offset weakness in demand from business travel.
At Phoenix, we are not just hotel owners, we are hotel operators, meaning that price points are in our control, and we are able to adjust room rates to market demand. Our goal is to deliver an 8% preferred rate of return (paid monthly) to our investors, and since establishing this REIT we have more than delivered on this goal! We have distributed to our Investors a 12.7% annualized distributions for the six (6) months ending 3/31/22. As we aim to profit through this summer’s travel rebound, so would you. Our assurance, our investors are paid the 8% rate before Phoenix receives any return.
To invest with Phoenix, please visit our offering page where you can find our SEC-qualified Offering Circular.