Question

List and describe 3 sources of equity capital in the hotel real estate market.

Answer 1

The three sources of equity capital in the hotel real estate market are

1) Venture Capital - Equity Capital can be raised by from venture capital firms by selling equity shares. Few venture capital firms specialize in investing in the real estate market or hospitality sectors. These firms have people with industry knowledge and expertise to analyse investment opportunities.

2)Investment Funds- Private investment can also invest in a company through equity capital infusion. Many funds have excess cash with them for investment and if they see an opportunity to earn good returns, they will invest their money.

3)IPO- Funds can be raised through IPO by listing a companies share on the stock exchanges. Raising capital through IPO is fairly easy but it is better for the firm to be established in market before raising funds as this will provide them with more value. People will be hesitant to invest in an unknown firm.