Hotel & Motel REITs
Hotel & Motel REITs, also known as Lodging REITs or Hospitality REITs, own and manage hotels, resorts, and other travel accommodations. Their customers can range from vacationing guests to business travelers, and the REITs work closely with other businesses in the hospitality industry (including food service, experiences, etc).
While investing in hotel & motel REITs can be highly profitable, they do have the notable drawback of seasonality. Since a great deal of income is brought on by tourism, profits are higher during the summer months and holiday weeks and sometimes considerably lower elsewhere. This can cause more volatile share prices than other similar investments.
While good hotel & motel REITs are adequately diversified to combat this instability — often done by investing in properties with substantial business trip and stakeholder meeting popularity — it can be a risk factor for newer investors or those more unfamiliar with REITs. Before investing in a REIT of this kind, investors should find patterns in the yearly price changes and be acutely aware of what kind of seasonal volatility they can expect.
There are 12 hotel & motel REITs on major US stock exchanges. To name a few larger ones, consider Apple Hospitality REIT, Inc. (NYSE: APLE), Host Hotels and Resorts, Inc. (NASDAQ: HST) and Sunstone Hotel Investors, Inc. (NYSE: SHO).