When it launched five years ago, crowdfunding for real estate development was a hot topic, especially among hotel developers seeking new ways to pay for their projects.
Though it’s not creating the same level of buzz as it did when it first became a federally sanctioned option in 2014, crowdfunding remains a viable tool in attracting a wide range of investors and sourcing new streams of cash.
Basically, crowdfunding is a campaign for small amounts of money from a large number of people. It is friends and family financing gone viral.
We talk to hotel developers who are using the alternative financing method to raise cash for their projects.
The projects are vastly different, as are the fundraisers’ goals, and target investors.
One is a boutique property in a resort market, and the developer plans to raise the entire construction cost via crowdfunding. The other is a midscale branded hotel in a technology park, and the firm is selling shares to close a funding gap.
Featured in today’s report is Nathan Kivi, founder of HotelierCo, an online fundraising company targeting hotel development; and Bhavik Dani, founder of EquityRoots, another fintech venture that’s raising capital for one project while about to break ground on another.
We also explain the evolution of crowdfunding, and why the federal government gave the technology its nod of approval as part of a national economic recovery program.
Anyone considering raising money for a project over the internet, or investing money via an online program, should first consult a professional adviser.
Resources and Links
For more information on crowdfunding visit:
The SEC study mentioned in this report is titled “Capital Raising in the U.S.: An Analysis of the Market for Unregistered Securities Offerings, 2009‐2017” and can be accessed here.
Hotel owners and operators who believed they could go it alone before the coronavirus pandemic devastated the hotel industry are having another think and turning to third-party managers to work their way back to profitability in the post-pandemic recovery. Another trend contributing to the growth in third-party managers’ business is more commercial real estate investors armed with cash entering the hotel sector and in need of an experienced operations team. Episode 321 of Lodging Leaders podcast explores the growth of third-party management companies over the past 12 months. This report is part of Lodging Leaders’ coverage of the coronavirus crisis and its impact on the hospitality industry.
The Ever Given container ship running aground on March 23 in the Suez Canal got worldwide attention, but it is just one of many reasons for the breaks in the global supply chain that are impacting the U.S. hotel industry’s post-pandemic revival plans. Shipping companies in Asia and Europe are contending with a boatload of challenges, including a lack of containers, traffic jams at West Coast ports and increased costs. Long Live Lodging explores what the problems mean to hotel owners and developers eager to refresh their properties and welcome guests back.