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Hoteliers are always on the hunt for an edge in the hotel industry. The hotel industry can be difficult to break into, and it can be tough to decide where to invest in your first, or next, property. Secondary markets, in particular, are worth careful consideration. These secondary market hotels have a lot of potential for profit and success. Today in the Southeast International Hotel Brokers blog, we analyze why this is the case. 

What Is a Secondary Market?

Secondary hotel markets can be loosely defined as cities that are out of the way of the bigger city markets. These cities are outliers, but have a lot of potential for drawing in tourism. They’re smaller than the heavy hitters like Orlando, Chicago, Atlanta, etc, but their small size gives them some distinct advantages. Let’s take a look at some of these advantages. 

Why It Might Be a Profitable Venture

Here are some reasons that secondary market hotels might be good investments:

Expenses

First, let’s look at the most obvious benefit. Hotels in these markets are typically going to require less initial investment. Real estate is cheaper, staffing is cheaper, food and drink is cheaper. By avoiding the big cities, your overall cost is greatly reduced. However, having your expenses reduced doesn’t help much if you’re not bringing in enough revenue. Let’s look at some ways that these hotels can bring in profits.

Less Competition

Chances are, there aren’t too many hotels in most secondary markets. This means you have less competition and less pressure to set your hotel apart. In addition to reduced hotel competition, you’ll also be in a smaller market for home sharing companies like AirBnb, which tend to thrive in the primary markets. 

Price Adjustments

In secondary markets, it’s much easier to increase rates than it would be in larger markets. Since the cost of your rooms are inherently much less than they would be in a big city, a 10% rate increase would hardly be noticeable, whereas a big city hotel would likely lose business with a rate hike of that magnitude.

It’s Much Easier to Stand Out

Circling back to our point about not having a lot of competition, the competition you do have can be more easily outmaneuvered by a savvy hotelier. By creating a unique boutique hotel experience, you can draw in the customers. Plus, if your experience is exciting enough, you could potentially draw in customers that might not have otherwise visited your city.  

Choose Southeast International Hotel Brokers

If you’re in the market to buy or sell a hotel, choose Southeast International Hotel Brokers. We help you through every step of the buying and selling process, making everything as easy as possible. Contact us today for more information and speak with a member of our hospitality broker team.