How to invest in apartment hotels: advantages and features

Unique offer for investors

It really feels like a miracle to invest in a property that doesn't require significant management and promotion costs, while also generating rental income and allowing for personal use. Although this idea sounds like an exhausting dream, in practice, it has been successfully working in the market for several years. We are talking about aparthotels — a special type of property that is indeed actively developing in European countries after its popularity in the United States.

Investments without unnecessary worries

In Russia, the categories of "aparthotel" and "condo hotel" are often perceived as different concepts: the former refers to properties where rooms are rented out for a long term, while in many European countries, an aparthotel is considered equivalent to a condo hotel in the USA—a kind of complex where apartments are put up for sale and can be rented out.

Advantages of apart-hotels

In practice, apart-hotels or condo-hotels represent hassle-free rental housing. This model allows for the purchase of various real estate properties around the world, starting from:

• standard hotel rooms with a bathroom;
• to fully furnished luxury apartments;
• with service levels comparable to those of a luxury hotel.

On the terms of management

Guy Tolhurst, the head of the consulting agency Intelligent Partnership, explains:"The process of buying a property in an apartment hotel and then renting it out is quite simple.Hotel and resort owners offer private investors the opportunity to purchase rooms, after which they take over the management of these properties. In most cases, rental income is split evenly between the investor and the hotel, although there is a possibility of receiving a guaranteed annual income. During a certain period of the year, the investor can use the purchased room for personal vacations. Additionally, if desired, they have the option to sell the property and profit from its increased market value.

Western trends

The idea of apart-hotels began to develop in the USA back in the 1980s and 1990s, largely thanks to well-known figures like Donald Trump and the Marriott Hotels chain. Nowadays, this concept is gaining more and more supporters around the world, and investing in real estate through apart-hotels is becoming increasingly common.

Advantages for investors

The obvious advantages of buying an apartment in a condo-hotel make this method of investment very attractive. The investor becomes a full-fledged owner of the property and receives a stable rental income, which often exceeds the income of traditional investment methods, where the owner himself is looking for tenants. Taking into account the mentioned circumstances, it is impossible to disagree with the fact that apart-hotels provide a unique opportunity both for those who wish to increase their capitals and for those who are looking for comfortable and profitable accommodation for their own vacation.

The approach based on a combination of convenience and financial benefit is becoming increasingly popular among investors, which confirms its sustainability and attractiveness in the market.

Mark Bingham, the head of Owner Invest, an agency specializing in the management of serviced apartments, shares his thoughts on the current state of this market:“Investors generally have a positive perception of this business model, as the management process is carried out by professional teams, and guest services are organized at a high level.”However, there is one significant risk that needs to be taken into account. Bingham points out that"if the occupancy rate of an aparthotel falls below a critical point, rentals may generate significantly less profit than originally planned"However, despite this, for the first few years, such a situation should not raise serious concerns, as at the very beginning, sales dictate a fixed income.

The role of the Trump Organization in the development of condo-hotels

One of the key players in the condo-hotel market is the Trump Organization, a family business of the well-known developer Donald Trump. In Panama City, located in Central America, a new ambitious project will soon be launched —Trump Ocean Club International Hotel & TowerThe cost of which is about 270 million dollars. This complex will be the largest in Latin America.

As usual in Trump's projects, the complex will operate in a condo-hotel format. Guests will have access to:

• services of seven restaurants;
• gourmet store;
• casino.

Owners of apartments and their guests will be able to reach the private beach of the club on cozy yachts going to the nearest island and to the picturesque areas of Panama Bay. The hotel itself will offer yacht mooring services, a yacht club, as well as its own berth. Completion is scheduled for 2010, and prices for apartments will start from456,000 dollars.

Project V…Greece on the World in Dubai

In turn, the resortV…Greece on the WorldIn Dubai, which is set to open in 2011, there are plans to recreate the atmosphere of Greece. This project will be located on an island known as The World. The developers promise that the architectural style of the buildings will reflect the spirit of this sunny country, emphasizing natural water and sunlight.

General information

This aparthotel has its own conference center, providing owners the opportunity to attract tenants who may come for business purposes or to participate in seminars. The construction company Aston Lloyd promises that in the first year after purchase, owners will be able to earn an income of6%from the value of their apartments. Kostinbrad is just a 20-minute drive from Sofia, and recently funds were allocated for the repair of local roads.2.45 million euros. Moreover, Aston Lloyd is planning to erect a business park next to the Aston Hotel, which could potentially increase room rates.

Options for investors

There are options for those who want to invest but are limited in funds. One can consider combining two approaches: a serviced apartment hotel and equity participation. For example, in the Caracola Beach & Spa Resort project in the Caribbean, assets start from103,800 dollarswhich allows you to obtain a one-fourth share and enjoy one week of vacation throughout the year.

Advantages of investments

There are many advantages to investing in apart-hotels. First of all, this type of investment helps to minimize risks. The investor gets ownership of individual apartments, but they are also part of the hotel chain, which will ensure a high occupancy rate like other rooms in the hotel.

• Unlike regular apartments, which can remain vacant for long periods, accommodation in aparthotels remains in demand throughout the year.
• Owners benefit from both rising property prices and stable rental income.
• Regular investments in apartment hotels are less risky compared to traditional property purchases for profit.

Management and maintenance

Owners can also rest assured that rental concerns are handled by a professional team that oversees the entire process, from decoration and furnishing to maintenance without additional fees. Owners of condo-hotel apartments do not face the problem of dealing with disgruntled neighbors or tenants.

Benefits for relaxation

It is also important to note that there is an option to use the apartments for personal leisure. This is indeed a significant advantage of serviced apartments.

Recommendations for buyers

For those considering a purchase, it is essential to first analyze how attractive the area is for tourists and business people, as well as to determine the expected occupancy rate of the hotel.

• Ideally, the area of interest should demonstrate stable demand for short-term rentals throughout the year.
• It's best to choose complexes that offer additional services and are located near popular attractions.

Selection criteria

It's also important not to overlook residential complexes built by reliable developers and managed by experienced hotel chains. This significantly reduces risks and increases the chances of successful investments.

Finally, it is important to carefully evaluate all the purchase conditions and study the market before making a final decision.

Conclusion

In concluding my thoughts on the profitability of investing in serviced apartments, I want to emphasize that this segment of real estate truly offers investors numerous opportunities. As the author of this article, I aimed to show that serviced apartments are not just a collection of tiles and furniture, but a whole ecosystem that encompasses comfort, stable income, and the possibility of personal leisure.

Combination of personal and financial interests

There is a unique opportunity to combine personal and financial interests: buying a room in an apart-hotel, you become a full-fledged owner who can enjoy a vacation in your own home away from home, as well as increase your capital through rent.

Risks and management

Naturally, as with any investment project, one can encounter risks - for example, a potential decrease in occupancy levels. However, considering the experience in managing the hotel business, the abundance of professional staff, and the support from hotlines, this model demonstrates its advantages.

Prospects in the Russian market

It is clear that becoming part of the global trend by investing in serviced apartments is possible in Russia, where such projects are just beginning to gain popularity. This opens up new horizons for investors who want to achieve both stable income and the opportunity to actively spend time in their own property during vacations.

Advantages of the aparthotel model

Therefore, if you are looking for a way:

• Multiply your funds,
• To maintain the ability to relax at one's own resort.,
• Don't waste time on rental and management questions.,

The model of aparthotels may become a preferred option for you. As practice shows, it is not just a good investment, but also a lifestyle that suits many modern people.

Recommendations before making a choice

So, before making your choice, carefully analyze the market, research the offers and choose the facility that will best suit your needs and financial goals.