Mistakes New Hospitality Investors Make — And How to Avoid Them

Introduction:

Investing in hotels and hospitality properties can be a powerful wealth-building strategy — but only if done right. At The Sohi Group, we’ve helped countless clients navigate the complex world of hospitality real estate, and along the way, we’ve seen some common missteps that can cost investors both time and money.

Here are 5 of the most common mistakes new investors make — and how you can avoid them.

1. Underestimating Operational Complexity

Owning a hotel isn’t like owning a rental property. It's a 24/7 business with real-time customer service, staffing, brand standards, and performance metrics. Many investors assume the hotel will “run itself” — which leads to poor guest experiences and lost revenue.

✅ Our Advice: Work with an experienced management team or advisor who understands hospitality operations from the ground up.

2. Ignoring the Power of Franchises

A strong brand like Wyndham or Red Roof Inn adds more than just a logo — it brings in national marketing, reservation systems, and customer loyalty programs. Going independent might seem cost-effective, but it can mean missing out on major demand drivers.

✅ Our Advice: Let us help you evaluate the right franchise strategy for your market and asset type.

3. Skipping the Property Improvement Plan (PIP)

Every franchise agreement usually comes with a PIP — a set of upgrades or changes required to meet brand standards. Ignoring or delaying PIPs leads to non-compliance, penalties, or even losing your franchise.

✅ Our Advice: Include the PIP cost in your acquisition budget from day one. Our team offers tailored Capital Expenditure Solutions to keep your property compliant and competitive.

4. Poor Financing Decisions

Some investors jump into deals with expensive bridge loans or unsuitable financing terms, thinking they’ll “refinance later.” But in hospitality, cash flow is king — and poor financing can squeeze your margins.

✅ Our Advice: Use our Capital Markets & Financing Advisory to structure debt that fits your business plan, not just the bank’s.

5. Going It Alone

Hospitality real estate is not a solo sport. Investors often make the mistake of trying to handle everything — from due diligence to operations — on their own, without guidance or partnerships.

✅ Our Advice: Surround yourself with experts. From valuation and risk management to investment partnerships, The Sohi Group provides full-circle support at every stage.