Buy-to-let
The expansion of this growing market is clearly reflected by the growing presence of this specialist sector at the Property Investor Show (21-23 September at ExCel, London).
Investors can buy individual rooms or apartments within a hotel complex and achieve returns of 8.72 per cent compared to 5.42 per cent gross yields for residential buy-to-let.
The concept was first launched in the UK three years ago by leading buy-to-let hotel company, GuestInvest. Since then a number of companies have entered the market including Owner Hotel and the Four Pillars Hotel Group. All three companies will be exhibiting at the Show, previewing their developments as well as offering expert advice.
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Nick Clark, Managing Director of the Property Investor Show, said: This is the first time we have been able to offer visitors so many hotel investment companies, demonstrating the growth of this asset class and its growing popularity amongst investors. The addition of a seminar devoted to this investment vehicle will enable even more investors to find out about these excellent opportunities.
As hotel rooms are classed as commercial assets, investors can purchase a room through a Self Invested Personal Pension (SIPP) either individually or in a group and take advantage of the tax relief. However, SIPP investors will have to pay the full commercial rate to stay in the room. Investors wishing to sell their room can do so, on the open market through commercial property agents, like any other property.
Johnny Sandelson, CEO and founder of GuestInvest, said: This form of asset class is suitable to a wide range of investors and offers a unique alternative to traditional buy-to-let, where investors do not have to worry about finding tenants or property maintenance.
Investors range from those looking to diversify their buy-to-let portfolio to those who need to make regular trips to the city but dont want the hassle of owning a property, which is sitting empty for most of the year.
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GuestInvest
GuestInvest currently has three hotel developments in London and has rooms for sale at its City hotel, The Chiswell Street Hotel, with prices starting from £291,000. It is in the process of expanding its portfolio with additional acquisitions in a number of international gateway cities underway.
Since the companys launch in 2004, it has expanded its portfolio to almost 400 hotel rooms and entered into a £140 million joint venture with the Bank of Scotland Corporate.
GuestInvest is led by a six-strong board of directors, including seasoned property developer, Johnny Sandelson, Geraldine McKenna, ex-CEO of the Maybourne Hotel Group, and Steve Head, managing partner of Conseil International.
Under the GuestInvest concept, investors receive 50 per cent of the rooms income and can use their room for free up to 52 nights a year. Currently investors are averaging returns over 8 per cent return from Guesthouse West, the companys first hotel in Notting Hill, although some investors are achieving as much as 8.72 per cent. GuestInvest guarantees a minimum 6 per cent return for investors in the first year of hotel operations.
Owner Hotels
Owner Hotels, currently has two luxury four star hotels in Hull and York and is about to launch the first luxury pod hotel in Hull. The pod hotel is equipped with swimming pool, Jacuzzi, sauna and steam room. Rooms are priced from £49,950 for a single and £59,950 for a double.
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Owner Hotel investors buy their room on a 999 year lease and receive 50 per cent of the rooms income and can use their room for free up to 52 nights a year, although not if the property is bought as part of a SIPP. Owner Hotel guarantees a minimum yield of 10 per cent in the first two years at all their hotels and has an occupancy rate of over 80 per cent across its two hotels.
Four Pillars
Leading hotel group Four Pillars is launching its first buy-to-let hotel at its new Hotel and Spa development in the heart of the Cotswold Water Park in Oxfordshire.
The scheme will include the Watersmeet development, which will offer investors the opportunity to purchase a holiday apartment, which can also be let as hotel accommodation.
The 63 apartments will be completed by summer 2008 and their adaptable layouts will enable them to be let as separate hotel rooms as well as apartments. Prices range from £135,000 for a one bed apartment up to £325,000 for a four room apartment.
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Investors in Watersmeet will receive 60 per cent of their apartments income and can stay free of charge for up to 90 nights per year. Four Pillars will guarantee a 6 per cent return for the first 5 years if investors purchase the apartment for investment purposes only.
