Hotel REIT shares versus a limited partnership in one hotel, same exposure or not

They aren't the same exposure. The REIT gives you travel demand plus the mood of the stock market on top, and the two don't move together. The single asset LP gives you one property's demand drivers and one sponsor's competence, with your money stuck for the term. If your reason for going in is that your residential holdings all move together, then the REIT is the honest diversifier, because you can actually rebalance it. Land taught me that illiquidity is only worth paying for when it buys you something specific.

RevPAR means revenue per available room, occupancy times average rate, in case anyone else here needed to look it up like I did. Which I think is the thing thicket is really asking about. In a REIT you never see one property's RevPAR, you see a company average across hundreds. In the LP you see the one number that decides whether you get paid.

On the operating end, the single asset LP puts an investor behind one general manager. It is common to see the same building, same rooms, same rate card, go from full to half empty inside a year purely on a management change, and nothing in the deck warns anyone about that. A REIT spreads that risk across a lot of managers, and there's no way to know which ones are weak, which is either comforting or not depending on temperament.

Income without a second job is the goal for a lot of people in this position, and the part of thicket's post worth sitting with is the fee stack. In the LP there's an acquisition fee, an asset management fee, the hotel management fee, sometimes a franchise services fee, and the preferred return sits behind all of it. A REIT has costs too but they're inside a reported number that can be compared against other REITs. There isn't a good way to compare one sponsor's fee load against another's, and that alone tips it toward the REIT.

Orchard's point about illiquidity is the one to sit with. Money should only get locked up when the lock is buying access to something that can't be had on a screen. A single well located hotel with a genuine demand driver might be that. A generic limited service box in an oversupplied interstate market is not, and there's a lot more of the second than the first.

Question I would have been embarrassed to ask: if the REIT is publicly traded, is the price I pay related to the value of the hotels at all? Because it sounds like people buy and sell those shares based on interest rate news and recession headlines. If I'm getting travel demand exposure wrapped in a bunch of macro noise, I'm not sure I got the thing I wanted. Juniper's point about never seeing one property's numbers bothers me more the longer I think about it.

Compass, share prices and property values do connect, but loosely and with a lag, and the gap between them can stay wide for years. That's the tradeoff you accept for daily liquidity.

Thicket, the fund option gets skipped in this thread and I think it's the interesting one. You get several properties, so no single general manager decides your outcome, and you still get to read actual property level reporting instead of a company average. The cost is another fee layer and a term you can't exit. What I'd ask a fund sponsor is how many segments they hold. Extended stay, business transient and leisure destination behave differently in a slow economy, and a fund holding four hotels that all serve the same kind of traveler in the same region is one bet wearing a diversification label.