Hotel property returns to LPs? And anyone have a good model?

[Anders Jax]

I may be rolling some money into an investment group for a hotel deal of about 100 room scale or less, but I'm pretty reluctant right now.  These airbnb properties my friend has up and running are returning 16-20% for LPs and +30% overall ROE.  The margins on the properties are huge.

Hotel margins look to be about 5%, levered returns of 15%, so probably 9-10% LP IRRs. With a lot of risk. Margins that small... if your vacancy rates are a bit off... management isn't performing right, a lawsuit or two, and you're in the red and getting a fat 0.

Am I wrong on that? This would be the GP's first hotel development and would be managing the project as well. I think at a minimum they not manage the first project. Operational risk is too great. Neither have worked hotel properties, just been residential STR owner and operators... which is way less complex than hotel management.

Anyone have some thoughts for me? Are there higher IRRs to be had?  Would you trust your $ with a first-time operator with only residential experience?

Thanks.