Why Invest in Resort Hotels?

At the high end of the market, resort hotels offer a lifestyle investor a very reliable solution to both enjoying a premium resort hotel room for holidays as well as achieving excellent capital growth and income when they are not there. Managed resort hotel rooms provide the ultimate in leaseback investment schemes with high net yields, excellent locations and excellent resort facilities for the times the room or suite are being used.

Resort hotels can take several years to establish themselves and the rental guarantee can be much more important. In several cases, a rental guarantee period of 3 to 10 years would be typical of the rental guarantee provided by the developer or operator.

Resort hotel room investments typically consist of large numbers of hotel rooms as well as apartment hotel rooms and indeed sometimes villas or houses within the grounds. They often come with excellent levels of facilities including branded attractions - for example David Lloyd or Pat Cash Tennis Centre, an Elemis spa etc.

Resort hotels also offer the investor a very attractive alternative to purchasing an apartment for holiday use. Whilst the room or suite may be smaller than a comparable apartment, the hotel facilities make up for this. In addition, an apartment requires the investor to find a local management company and letting agent, and even then the level of marketing carried out in this method will often result in much lower income and occupancy levels in a private apartment investment. The resort hotel operator is often part of an international marketing network that ensures significant occupancy, whilst the hotel facilities help achieve significant room rates. A combination of these two factors can lead to very high net incomes on hotel resort schemes, and whilst often more expensive to purchase than business hotel rooms or budget hotel rooms, can achieve 8% to 15% net yields.

Resort hotel rooms are typically priced from around £120,000-£500,000 for Penthouse suites. In some cases, overseas resort hotel rooms can be purchased for as little as £25,000 but it is important to analyse the quality of the operator, the hotel brand and, if available, the track record of such hotels.

Reselling resort hotel rooms could also be quicker and easier than the already proven resale market for larger hotel rooms due to their dual appeal as both an investment and a lifestyle property for personal use. If purchasing a resort hotel room off-plan, then the off-plan period is often several years ( typically between two years and five years) due to the large scale development required for a fully integrated resort with excellent facilities. This therefore means that the investor is often benefiting from significant early purchase discounts whilst not benefiting from any income for the off-plan period. If quick income is required, then the purchase of a budget hotel room or an established business hotel room may be preferred.

Investing in resort hotel rooms offers the investor the best of both worlds with great income and capital growth, as well as the opportunity to enjoy the property for a period of each year (dependent upon each scheme). For those investors looking for personal usage and often visiting a certain location every year, resort hotel room investments could be the ideal solution.

 

Online Articles

Newspaper articles on this booming sector

• Gloom or boom for budget hotels? - BBC
• A budget boom for the hotel market - Mintel
• A room with a view to a profit - Guardian
• After London, buy-to-let hotel rooms go nationwide - Telegraph
• Buy-to-letters check in to room service - Telegraph
• Bed and benefits - Investors Chronicle
• Axa SIPP allows investors to buy hotel rooms - IFAOnline
• Hotel room bug bites Aegon sipp - IFAOnline