Tired of Overpriced Real Estate? Try the hotel industry!

How I Lost $1.8 Million on a “Paradise” Hotel Deal (And the Hard Lessons That Made Me a Successful Hospitality Investor)

Four years ago, I thought I’d found the perfect hotel properties investment opportunity. The listing showed a stunning 24-room boutique property on the Caribbean island of Grenada – white sand beaches, crystal-clear water, and what appeared to be a thriving hospitality business generating $2.4 million in annual revenue. The asking price was $8.5 million, which seemed reasonable given the property’s prime beachfront location and impressive occupancy rates of 85% year-round.

The financials looked incredible. The broker’s package showed consistent revenue growth over five years, with average daily rates of $350 and strong repeat customer loyalty. TripAdvisor reviews were overwhelmingly positive, and the property had received several hospitality awards. Everything about this investment screamed “tropical paradise meets profitable business opportunity.”

I was so enchanted by the idea of owning a Caribbean hotel that I rushed through due diligence, focusing mainly on the financial statements and property condition while glossing over operational details and local market dynamics. The seller was motivated, offering attractive financing terms, and I was convinced I’d discovered a hidden gem before other investors caught on.

Within six months of closing, I realized I’d made a catastrophic mistake. The “year-round” occupancy rates were artificially inflated by including non-revenue generating stays like staff accommodations and comp rooms for VIPs. The actual paying customer occupancy averaged 58%, with devastating seasonal drops during hurricane season and summer months when few tourists visited the region.