Over the last few years we have seen far more people looking to invest in property, and some alternative property investment opportunities.
Many people have been looking for alternatives to their pensions or their savings accounts which are not giving them reliable returns, but do not necessarily want the hassle of becoming a hands-on landlord.
One attractive option is buying a hotel room, in a fully managed hotel.
This has the positives of giving:
- Very strong rental returns - between 8-12%
- Low involvement by the investor - can allow a hotel operator to manage this on a day to day basis
- Consistent returns
Capital growth potential as well as a high income - compares well to different investment classes such as bank savings accounts (offering income only), bonds (offering fixed income and variable positive or negative capital growth according to bank interest rates) and high dividend yielding shares/equities.
Some schemes come with rental guarantees during the hotel start-up period.
Many of the schemes are SIPPable - so you can invest for a small amount, and enjoy the tax benefits.
You can enjoy up to 50% of the hotel's earnings from your room without having to lift a finger to get it!
Why Invest in Budget Hotels?
In times of economic slowdown, business travel costs are looked at more closely, and companies look to cut back where they can, for example instead of first class travel, look to second class travel, hire smaller cars instead of executive cars, and stay in 3 star hotels instead of 4 stars.
Budget hotels see this as great opportunity to capitalise upon the opportunity and take business from prime hotel brands as businesses both large and small seek to scale down their costs and downsize their hotel spend.
While everyone knows some of the big brand hotel names, 80% of the hotel sector is actually held by the private sector and bed and breakfasts up and down the UK.
Budget hotels also offer the investor a low price point per room. While some buy-to-let hotel rooms are available at £1 million plus, UK budget hotel rooms are available to invest in from £40,000. Low-cost or budget hotel rooms can offer the same yield or better as premium hotel brands that could cost the investor between four and ten times as much as a budget hotel room.
Reselling budget hotel rooms can also be quicker and easier than the resell market for larger hotel rooms due to their lower price point. If purchasing a hotel room off-plan, then the off-plan period is often much shorter for a budget hotel (at around one year) than for a resort-based hotel room or premium brand (that could be between two years and five years away) meaning the investor gets income and capital growth sooner.
Lower cost, budget hotel rooms also you as the investor to diversify across more investments than you would have been able to do if purchasing more expensive rooms.
So in summary, we would recommend hotel room investments for those looking for the above benefits - and in particular the budget hotel sector - this can offer the lowest entry point, and often the highest yields - and will perform best in times of economic slowdown, as many have shown recently, outperforming the market.
To register your interest for our hotel room investment opportunities enter your details here and we will send you a full information pack as soon as details are finalised.