Is Investing in Hotels Still Profitable? Pros and Cons Explained
- Nate Jones, CPCU, ARM, CLCS, AU
- Oct 15
- 2 min read
The hospitality industry has seen major shifts over the past few years, but in 2025, hotel investments are regaining momentum. With travel demand rising and new business models emerging, many investors are asking: Is investing in hotels still profitable?
Let’s explore the advantages, disadvantages, and insurance essentials for hotel owners and investors.
Pros of Investing in Hotels
1. High Income Potential
Hotels generate revenue from multiple streams—room bookings, dining, events, and amenities. Unlike long-term leases, hotel rates can be adjusted daily, allowing for dynamic pricing based on demand.
2. Tax Benefits and Depreciation
Hotel owners can take advantage of cost segregation and depreciation strategies, reduce taxable income and improve cash flow.
3. Value-Add Opportunities
Distressed or underperforming hotels can be repositioned into boutique or luxury properties, unlocking hidden value.
4. Diversification
Hotels offer a unique asset class that diversifies a real estate portfolio, especially when combined with other commercial properties.
Cons of Investing in Hotels
1. Operational Complexity
Hotels require active management, staffing, and customer service. Unlike passive investments, they demand hands-on oversight.
2. Market Sensitivity
Hotel performance is closely tied to economic cycles, travel trends, and seasonal demand. A downturn in tourism or business travel can impact revenue.
3. High Operating Costs
Labor, insurance, and maintenance costs are rising. Investors must account for these expenses when evaluating ROI.
4. Short-Term Tenancy Risk
Unlike multifamily or office leases, hotel “leases” are often just one night. This creates volatility in occupancy and revenue.
Protect Your Investment with Wexford Insurance
Hotels face unique risks—from guest injuries to cyber threats and liquor liability. That’s why Wexford Insurance offers specialized coverage for hotel and motel owners, including:
General Liability Insurance for accidents and property damage
Employment Practices Liability (EPLI) for staff-related claims
Business Interruption Coverage for revenue loss during closures
Cyber Liability Insurance for data breaches
Liquor Liability for properties serving alcohol
Whether you own a boutique hotel, resort, or extended-stay property, Wexford Insurance provides tailored protection to keep your investment secure.
Final Thoughts
Hotel investing in 2025 offers high upside—but also requires strategic planning and risk management. With the right location, operations, and insurance partner, hotels can be a profitable addition to your portfolio. Contact Wexford Insurance today to protect your investment and ensure long-term profitability.
FAQs
1. Are hotels a good investment in 2025?
Yes—especially in urban and resort markets with strong travel demand and limited new supply.
2. What type of insurance do hotel owners need?
General liability, business interruption, cyber liability, and EPLI are essential for hotel operations.
3. Can Wexford Insurance cover multiple hotel properties?
Yes, Wexford offers bundled policies for hotel portfolios and multi-location businesses. provides bundled coverage for mixed-use and multi-property portfolios.