Obviously hotel investment is investing in a hotel. This has traditionally meant buying a hotel or buying shares in a hotel, hotels or hotel investment companies. Now though, it is much more likely to mean buying into hotel investment funds, or, most popular hotel room investment.
What are Hotel Room Investments?
Hotel room investment is exactly what it says on the tin; investment in a hotel room. It is pretty similar to buy to let investment, or more accurately a French leaseback. Investors buy a hotel room and lease it back to become part of the hotel stock.
Sourcing Hotel Room Investment Deals
Hotel investments are growing, and many of the hotels currently being built around the world are offering up hotel room investments, it is simply a case of finding them. Look for an area with growing tourism, find a hotel that is being built in a good location and check out the deals on offer. The best hotel room investments will be under internationally recognised brands, if not the hotel itself then a management company.
What to Look for in a Good Hotel Investment Deal
In some hotel room investments you get the income from the room you buy into minus the management company's commission. In others, and these are the better ones, you get a share of the profits from all the rooms.
Free Servicing and Professional Management
One of the best things about a hotel room investment is that your property is fully serviced and managed as part of the hotel stock. This makes it a hands-free investment. However you should also be looking for a top dollar management company to ensure they maximise the occupancy on your investment.
Guaranteed Rental Income
The top hotels have solid occupancy, and are seeing that occupancy grow rapidly. There is no reason not to entice buyers with a guaranteed rental income, because everyone is getting a really good deal. The hotel or developer is getting the purchase price, plus a fair share of the profits; the buyers get a guaranteed rental income and none of the hassles of management or maintenance.
Guaranteed Buy Back
This is far from essential, but it really does make the investment as close to zero as any property investment can be. This is where the developer, hotel, or management company guarantees to buy back the room from its investors after a given period for a given profit, i.e. guaranteed 125% buy back after 5 years, or 150% buy back after 10 years.
*This page is provided for information purposes only and should not be construed as offering advice. IPIN is not licensed to give financial advice and all information provided by IPIN regarding real estate should never be treated as specific advice or regulations. This is standard practice with property investment companies as the purchase of property as an investment is not regulated by the UK or other Financial Services Authorities.