Hotel room investments are one of the newest and hottest kids on the global property market. Part commercial property investment, part residential property investment, hotel room investment is one of the fastest growing forms of investment, here's why.
Investing in hotel rooms makes hotel investment accessible to the masses. The hotel industry is one of the biggest and fastest growing industries in the world; all the smart global funds and large investment companies are increasing their exposure to hotels -- there are even hotel investment funds. Many private investors don't like investing in funds, they like to keep control of their own investments, but short of buying a hotel they are stumped. Now, they can invest in a hotel room.
Investing in a hotel room tends to be one of the lowest risk investments out there. We can -- and often do -- choose to invest in only the biggest and most reputable establishments. When you are investing in a globally recognised brand, further, into an established hotel under an established brand, you can see why it would be a low risk investment.
Hotel rooms are the perfect investment. You choose a hotel that is performing well from a number of hotel investment companies, you invest in a room (or rooms) and sit back and collect the income. Normally when you read things like that it is too good to be true, but not in this.
Your room becomes part of the hotel stock, it is serviced and managed as part of the hotel, and you get a share of the hotel income, either they take a percentage of the income from your room, or you take a percentage of the overall hotel income. Depending on the term of the investment there are usually incremental refurbishments, again, this is simply because your room is taken care of with the rest of the hotel. You even get some free usage thrown in.
Guaranteed Rental Yield
Many hotel investments deals come with a guaranteed rental yield. This takes another layer of risk away from the investment, and makes calculating return on investment a doddle.
Guaranteed Buy Back
Many hotel investments seal the deal with a guaranteed buyback offer. This stipulates that the hotel owner or investment management company will buy back your hotel room after a given period for a contracted amount. This is usually 125-150 percent of the purchase price, and in the best deals the buy back is optional; you can either stay on as the owner or sell on the open market.