Small and medium-sized investors can enter the hotel business to earn a monthly income. What is investment in tourist real estate?
Within the real estate business, investing in hotels is one of the options that is growing. Small and medium investors can enter the hotel business without having to make million-dollar investments. However, it is a medium to long-term investment, so it is not suitable for the impatient.
A small investor can become a “hotel owner” in different ways: investing in a condo hotelthat is, owning a room with tourist income or investing in “serviced apartments”, which involves owning an apartment with tourist income.
By purchasing a room or apartment, investors obtain a title deed, becoming part owners of the hotel, and participate in the profits generated by its operation. In short, The investor acquires a unit that affects the hotel operation in exchange for a dollarized rent (which results from the marketing of all the hotel’s services, not only its rooms, but also the restaurant, spa, lounges, etc.).
“We are facing A window of opportunity for tourism real estate in the country and the region. Travel demand will grow by 5.8% annual average for the next 10 years, more than double that of the global economy, 2.7%, and supply is projected to grow by just over 2%. There is a significant supply gap to be filled, and the condo hotel “It is a powerful, proven and successful investment product,” explained Ramiro Alem, CEO of Invertir Realty. “The formula for success in tourist real estate is that it makes you the owner of a real estate asset brand and professional hotel management, accessing higher rents,” he added.
How much do you have to invest to enter the business and what profitability do you obtain?
To be the “owner” of a hotel, the investment range is between US$60,000 and US$120,000 on average per hotel unit, although there is also the opportunity to acquire a portion of a room, which makes the entry ticket even more accessible. “The condo hotel as an investment product comes to democratize the investment in tourist rental bricks, allowing small and medium investors to enter the hotel business, previously restricted to large funds and capitals,” said Alem.
The annual variable income in dollars obtained is between 7 and 12%depending on the profile of the destination and hotel. It is settled monthly or quarterly and is obtained from the start of operations of the hotel. Along with the rent, the investor accesses a revaluation of the invested capital given by the brand and hotel operation. It is estimated that the recovery of the investment occurs in half the time of a rental apartment.
In Argentina, both in Buenos Aires and in the provincial capitals and destinations in the regions of the country there are plenty of room to develop hotels. “We are facing a window of opportunitya supply gap, many years of disinvestment and decoupling resulted in an offer stuck in time. The opportunity lies in the so-called economy and midscale segmentsboth in urban and leisure destinations,” Alem concluded.
Business data
- There are more than 1,000 rooms worth US$100 million in condo hotel projects under development and/or marketing in Argentina, 11 hotels in 9 provinces (Misiones, Jujuy, Santa Fe, Río Negro, Neuquén, Tierra del Fuego, San Luis, Province of Buenos Aires and CABA),
- In Brazil, 75% of the rooms of the global brand with the largest presence were structured through the condo hotel as an investment product, in the economy-midscale segments. Today Brazil is on the podium of real estate funds for hotel income.
Source: Ambito
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