After over a decade covering the hotel business, I now find myself learning about annuities, which got me thinking: Are there similarities between hotels and annuities?
At first glance, they appear to be completely different species. One is a bricks-and-mortar building and the other is a printed insurance policy.
Yet as I get deeper into the annuity business, I realize there are some likenesses. While both appear to be rather straightforward products that everyone has a general idea and opinion about, when one digs further into each the complexity and variations becomes apparent.
When you think of a hotel, you probably imagine the typical full-service hotel with a lobby where you check in, a room with a bed and a nice restaurant where you eat breakfast, lunch and dinner.
When you think of an annuity, you think of a client investing money into a policy and growing that investment. Then, at some specified date, they begin receiving a steady income from the annuity.
Simple, right?
Not really, for either annuities or lodging properties. As I discovered, the hotel industry has evolved over the years. When travelers balked at paying the high prices at full-service hotels for amenities they really didn't need and hotel restaurants stood empty as guests found nourishment elsewhere, the big companies like Hilton and Marriott changed their offerings to appeal to a broader market spectrum. Now, there are limited-service hotels where you get a nice room and a breakfast buffet. (Think of Hilton's Hampton Inns.) Some hotels do away with the front desk altogether and let you check in at an automated kiosk.
Of course, there are still the high-end full-service hotels, but even they have become more niche-market oriented. The prime example is Starwood's W Hotels, which squarely aims at the young hipster demographic.
OK, now back to annuities. It didn't take me long to realize how many variations there are for annuities. There are deferred and immediate, variable and fixed as well as indexedall with firmly entrenched proponents and opponents of each.
