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January 18, 2018

Investing in an Aparthotel – What you need to know

Filed under: 100 reasons to love Manilva,Property,Useful Information — Barrington Homes @ 6:10 pm

Aparthotels – the official definition is “a hotel with furnished suites of rooms including kitchen facilities, available for long-term or short-term rental”.

Aparthotels are an ideal base for beach holidays as the multi-bedroom concept makes it perfect for families or friends to stay together who wish to be self-sufficient but still have holiday resort facilities; the best of both worlds.  When you are looking to purchase an aparthotel room, the most important question is feasibility. Is it a hotel that will generate good profit and is its location going to help it do that? I have had a look at articles and other sources of information to clarify some details:

Personal Use
You buy the aparthotel room and are guaranteed a set amount of days every year when you can use it. You might be charged a nominal fee at a fraction of the regular room rate. The rest of the year, the hotel lets the room to other paying guests.  If the hotel is extremely successful, they may allow you to reduce the number of days you use the room in exchange for a portion of the extra income the hotel earns from other paying guests.

Shared Profits
Most investors in aparthotels benefit by sharing the income with the hotel management. This incentivises management to push other income generating facilities at the hotel. Often all the profits are pooled together and shared out equally among investors, in a similar way to how a company would pay dividends on shares. It ensures that no single room generates more profits than another.

Guaranteed Income
This type of return provides the investor with a known and fixed income on their investment. The management team are incentivised to get the room let in order to generate excess profits for the management company.  This type of return produces a stable, high yield for a fixed period. The investor benefits from knowing how much income the investment will generate, though foregoes participation in any extra profit that the hotel management team can produce through sales of other services and products at the hotel.  Often this type of return is combined with a guaranteed capital growth at the end of a fixed period.

Guaranteed Capital Growth
Some aparthotel room investments also offer guaranteed returns on the capital invested. In such a scheme, the investor buys the room and will be guaranteed a fixed price to sell the room back to the hotel management team after a fixed period.  For the investor, this gives the certainty of capital return (and capital growth). The hotel management team benefit from the capital injection that allows them to expand their business faster.

Flexibility for long-term financial planning
An investment in an aparthotel room is a low-cost alternative to traditional buy-to-let property investment. It offers a hassle-free, high yield investment that is particularly attractive to income seekers. With flexible options for the type of return, investors can choose to take a greater risk in return for potentially greater returns should the hotel capitalise fully on all its available amenities.  On the other hand, the certainty of high and stable income from a guaranteed income investment will be particularly beneficial to investors who want the certainty of income. When combined with a guarantee of capital growth, investors could benefit from a steady stream of high income with the additional benefit of an element of protection against inflation.  You’d be hard-pressed to find another investment that offers diversified exposure to property and a fast-growing economic sector, while simultaneously offering above average income and guarantees of capital growth.  Your investment is looked after, maintained, secure and gives peace of mind your asset will generate an income. Each aparthotel offers different packages but for those who want an annual dividend with minimal effort, it is certainly worth consideration.

Spain has now become the 2nd most popular holiday destination worldwide, very positive for aparthotel investors which is rising globally and showing no signs of slowing down.  We are marketing some lovely aparthotel rooms in the area, so get in touch with the team to find out more.

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