INVESTING IN HOTELS

Alongside the rise in exotic forms of holiday home ownership, like fractional and leaseback, over the past decade has been growing interest in hotel room investment. Guest rooms and apartments can be purchased at apart-hotels, which are also known as condo-hotels.

A guest room or apartment owned by an investor at an apart-hotel is let out to visitors, cleaned and maintained in the same way as a guest room at a conventional hotel. The apart-hotel and investor share the proceeds of letting out these rooms, and, in some cases, rental returns are guaranteed for a period. An investor can use their guest room for part of the year, although a hotel operator may charge for this.

Conjured up in the United States, the apart-hotel concept has spread across the world. Apart-hotels are found in cities and holiday resorts.

Lucy Russell, managing director of buyer agency, Quintessentially Estates, said
apart-hotel investment was strongest in financial centres like London, Hong Kong and New York where it appealed to visiting businessmen.

“If you are in a city on a regular basis and you would normally be in a hotel room I think it works out quite well and is financially viable,” she said, “If you are looking at it as a long term investment, then I am not sure if it is the best route to take. You may be better off buying an individual unit somewhere.”

However, hotel rooms and apartments could be less expensive to buy than a one bedroom flat, so they attracted some investors she said.

“I think also people are much more transient than they used to be,” she added, “so things like hotel investments are more popular than they would have been five years ago.”

Charles Weston-Baker, director at estate agency, Savills, advised buyers to take professional advice before investing in apart-hotels.

“The model can be good,” he said, “but like all property it is dependent on location. It needs to be somewhere with high occupancy rates.”

On the popular Philippines holiday island of Borocay, marketing for the Continent Fairways apart-hotel, is underway. Fifty-six guest apartments are offered at prices starting from USD110,035. The developer, Paradisya Land, guarantees investors a 14.2 per cent rental return for at least one year.

The apart-hotel is being built in the grounds of the Fairways and Bluewater Golf and Country club where there is an 18-hole golf course which investors and hotel guests can use.

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