Irvine is one of Orange County’s wealthiest cities. As a planned city in California, it was first developed in the 1960s by the Irvine Company. It was incorporated in 1971 and, according to the 2010 U.S. Census, it had a population of 258,386 at that point in time. In 2016, Irvine was officially named as the city in the country with the largest Asian American plurality, having approximately 45% of its population made up of Asian Americans. Irvine has various industries, including those in the semiconductor and technology fields.
Irvine Hotel & Motel Property for Sale & Lease – Pros and Cons
There are pros and cons to both leasing and buying hotels and motels. As an investment, whether you purchase or lease the property, and whether you look into an entire hotel or motel or a single room only, the advantages include:
- A low requirement for capital investment (if you purchase a single room), while ensuring a high return, particularly if you invest in a hotel room in Irvine, where demand is high.
- The option of having a fixed rate of return, which is available for both buyers and lessees, without having to take on any of the problems of hotel management. This means that if there are customer complaints or breakages, the responsibility lies with the hotel manager.
- Having a steady return available to you, particularly in Irvine, with high average daily rates.
- Being able to use the hotel or room for your own personal use as well, although this means that you will not earn an income at that time.
Essentially, hotel & motel properties offer investors a profitable, low risk method of having a diverse investment portfolio.
However, downsides exist with investing in hotel & motel property as well:
- Income tax returns can be incredibly complex in terms of jurisdiction and taxes.
- Not having any influence on the marketing policy of the hotel, or of its management strategy, unless you purchase the entire operation.
- You need to have adequate knowledge about the hotel and motel industry in order to ensure that you are doing things right.
- There is some seasonality involved in hotels, which means you won’t always have a good or predictable month per month income.
- Competition to make a single room purchase in particular is incredibly strong, including with foreign investors vying for any room that becomes available.
To help decide whether to purchase or lease, being aware of the trends and statistics in terms of prices, supply, and demand, can be very beneficial.
Irvine Hotel & Motel Property for Sale – Trends and Statistics
The last time research was done on the market for Irvine hotel and motel property was in 2013. At that point, it was demonstrated that there was going to be a very strong increase in the supply of hotel rooms, which set Irvine apart from many other areas in Orange County. In 2014, some 800 new hotel rooms were being constructed. Once completed, they will increase the supply of hotel rooms in Irvine by 25%. Additionally, those rooms were the first to be opened in the areas since 2009. Two of the hotel projects, which were the Hilton Garden Inn, and the Courtyard by Marriott at the Spectrum, were fastest in completing their projects.
Irvine is pushing for an improvement in the overall supply line in the county, and it seems other parts are starting to pay attention and trying to follow suit. It is anticipated that some growth will continue to be experienced in the hotel and motel industry. However, overall, supply seems to be never be enough to meet the demand, with incredibly high occupancy rates due to strong tourism and business travel. Although a logical conclusion would be that there should be a stronger push towards new developments, the additional need is currently being met by private holiday villa owners, which means many hotels have been reluctant to increase their rooms for fear of not being able to fill it.
Irvine Hotel & Motel Property for Lease – Trends and Statistics
There are currently no hotel & motel properties for lease in Irvine. These buildings are usually owned through mortgage or outright purchase. However, as the statistics above have demonstrated, deciding to invest in hotel & motel properties is a good financial decision with high yields and low risks. The hospitality industry as a whole in Irvine is incredibly strong and certainly one to build on. That said, the reality is also that there is strong competition with the privately owned holiday villa industry, which is particularly popular with tourists from the United Kingdom. It is unlikely that additional hotel construction would be able to compete with this particular supply in a way that is very profitable.