Abstract
This paper reviews the performance of five real estate subsectors (office, retail, industrial, apartment and hotel) covering a 20-year (historical) period in order to assess the impact the hotel subsector would have when constructing a multi-property investment portfolio. The research was built on the foundation of modern portfolio theory, and the data were analysed using several statistical and investment analysis tools such as correlation analysis, Sharpe ratio and a portfolio optimiser. The results suggest that hotels can play a valuable role in a multi-property commercial real estate portfolio. This might encourage the industry to develop adequate databases such that performance and investment statistics' benchmarks can be offered for investors, to thus position the hotel subsector as a viable asset alongside the other real estate subsectors in a property investment portfolio.
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