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In a study of this investment class investors received a 6.5% annual income after charges, which compares favourably with the returns on buy-to-let. In addition, they get up to 32 nights stay at the hotel, providing an additional benefit.
Investors are therefore looking at receiving a healthy sum in total benefits per year. Rooms can be sold on and investors have achieved on average a 10% capital gain. The income on a room depends on how successful the hotel is and market trends show that demand for hotel rooms in many major Central and Eastern European cities is rising rapidly with the increase in tourism.
Our analysis has shown that an investor should be able to make returns of between 5% and 9% a year on the room, depending on how often they use it themselves. Revenue from letting the room is shared equally between the hotel and the room owner, and investors have to pay 50,000 CZK a year towards maintenance and room renovation costs.
Hotel bedrooms are sold off to private investors seeking occasional accommodation and looking for an investment vehicle, or to corporate investors who have a high spend on hotel rooms for staff and clients and are seeking cost savings.
The purchaser has a contract with the hotel to let the bedrooms out and gets access to the room for up to 32 nights a year, full use of the hotel facilities and a share of the letting income after deduction of any third-party sales, credit-card commissions or booking fees.
At the end of each quarter, the managing agent produces a set of accounts for the investor, outlining the monies received by it for the supply of the room as a hotel room during that quarter. This amount is then transferred to the investor.
Hotels in Prague Investment can arrange a personal appointment with you to discuss the benefits, costs and initial capital structure options that are available for you to invest in this exciting opportunity.
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