Sterling Woodrow

 

 
If you are looking to create a steady stream of income or benefit from a tax deduction to your pension, investment in a hotel can be highly beneficial.  Reports indicate that hotels produce an average gross investment of approximately eight percent.  If you compare this to the four percent on share dividends and one percent of cash deposit accounts, you will gain some idea of the income advantage of UK hotel investment.  This article will discuss, in addition to financial gain, all the positives to UK hotel investment.
 
#1:  Low Cash Requirements For Investment
Investment in UK hotels is commonly compared to investing in buy-to-let properties.  You can purchase a form of real estate and receive income from guests when the real estate is a hotel.  Yet, the initial cost of a buy-to-let property is out of reach for most people.  For most of property investors making buy-to-let investments, mortgages are required to fund the purchase price.  However, a hotel investment is typically less than the deposit amount required to make a buy-to-let investment.
 
 
#2:  No Mortgage Is Required
The reduced cost of purchase means that no mortgage is required for the investor to, well, invest in the hotel.  Most investors will use existing savings to fund their projects or use a lump sum portion from pensions; however, as there is no mortgage required you can be more flexible regarding the financial situation.  You will not be reliant on the bank; therefore, you will not be subject to any of the lending rules.
 
#3:  Reduced Administration In The Investment Process
Contrary to popular belief, UK hotel investment processes are highly straightforward and can be easily completed.  The process involves investing in the property, which will become registered to you, and then you receive income on the real estate.  There are no complicated cost deductions or tax reliefs to manage, and the tax return administration is simple to complete.  In fact, you could stay in the hotel you have invested in if you feel it is a good investment.
 
#4:  A Certain Source Of Income
The hotel investment income can be based on the profit made by the hotel management company; however, many investors tend to take advantage of the deals offering guaranteed income.  This tends to provide a certainty of income that is not available on most other property investment alternatives.  For instance, if you invest in a company's shares and the shares fall, it is likely that the dividend income you receive will be reduced.  If, however, you invest in a hotel there is a guaranteed income regardless of the dividend received.
 

div>#5:  An Immediate 'Set And Forget' Investment

Typically, hotel management will take care of the daily running of the hotel; as well as the marketing and advertising of the property.  This is beneficial for you as you merely invest in the property and then 'forget about it' waiting until you receive passive income.
 
Final Words
As can be seen, investing in the UK hotel industry can be highly positive as it is a passive income that does not require much money to make the investment.

 

 
For centuries, explorers have travelled the globe in search of new lands and places to conquer.  In the late 19th and early 20th century, the hotels are not as we know them now; however, hotels did exist.  Hotels were frequented by the upper class and the idea of investing in a hotel was unheard of by anyone.  Nowadays, this emerging trend can be hopped on by anyone with the correct sum of cash or know-how.  Here is a brief guide on how investing into hotels works.
 
1.  Inspection
 
Hotel properties, despite appearing attractive and sturdy, may be considered unusual after finishing the deal.  This can be due to various reasons, such as structural damage, interior mould, pest infestation or underground environment pollution.  To avoid falling victim to this situation, it is advised you finalise the deal only once the property has been inspected by a professional engine.  To needs to comply with building code regulations to be considered safe.
 
 
2.  Knowing The Management Company
 
If you are considering employing a hotel management company, you must be certain of their capabilities.  Review operating performances and cross check these with other hotels on their management roster.  Doing a review beforehand will ensure you don't lose any revenue in your investment.
 
3.  Analysing Visitor Segments
 
It is essential the hotel receives visitors from all sectors such as the corporate sector, business, group and leisure travellers.  Hotels depending on a single segment for business rarely do well throughout the year.  On the other hand, hotels deriving visitors from different sectors count on other segments when an area slackens.
 
 
4.  The Barriers To Entry
 
There are specific markets where it is simple to acquire hotel-zoned land and build the structure.  When the financial norms are eased, the market sees an overcrowding of companies.  Therefore it is preferable to make a hotel investment when the market is high.

 

 
Cardiff has been named as one of the top locations in the United Kingdom for hotel investment. The 2018 hotel market index by Collier's International has ranked Cardiff in the top 10 spots for hotel acquisition and development. In fact, Cardiff is behind only Bristol, Cambridge, Bath and Belfast. Edinburgh was listed as the best area for hotel investment in the UK.
 
Cardiff was listed at the 11th spot in the 2017 annual index. This index analyses over 30 locations in the UK, and each location is ranked based on several key indicators. Each indicator is rated on a scale from one to five. One is the lowest score possible, and five is the highest.
 
This area has reached one of the top spots in the index due to having low construction costs, a low pipeline and a very strong hotel performance over the past few years. The city also earned recognition by hosting the 2015 Rugby World Cup.
 
The scores are consolidated into one number, and this is the number that is used to rank them. This allows investors the opportunity to see which areas are considered 'hot' and the ones that are not when it comes to purchasing an existing or building a new hotel.
 
Land Values
 
One of the indicators that Collier's International considers when choosing the top locations for hotel investment is the value of land in the area. The price of land is extremely important. The more affordable the land, the greater the potential for hotel investment.
 
 
Room Occupancy Rates
 
Investors want to ensure their money is working for them. This means that they are looking for room rates that are competitive enough for them to make a profit, but not so expensive as to drive potential customers away. The area must have high levels of room occupancy.
 
Construction Costs
 
The next indicator that Collier's International considers when choosing shortlist locations for UK hotel investments is the cost of construction in the area. Once again, investors are looking for areas where construction costs are not very high, so they can get the highest return on their investments.
 
 
Market Appetite
 
Another indicator that is equally important is the market in the area. Is the location considering a top destination in the United Kingdom? Cities that offer more activities, dining and other destinations for residents and tourists typically score higher on the index.
 
Investors consider how hungry the market is in an area for a new hotel. If the city does not have attractions to lure tourists, it will likely score lower on the index.
 
The destinations on the shortlist are subject to change. These changes reflect variances in the indicators and other site-specific factors.

 

 
Hotel investment is a great way to diversify your portfolio.  If you are thinking of this type of investment, you need to know some tips to make the most of this.  It is important to note that this is not an investment that should be entered lightly, and you always need to do your due diligence. 
 
Know Your Hotel Brands
 
Before you choose a hotel investment, you must do your research.  While doing research, you need to ensure that you look at all the different brands that you can invest in.  When you get to know the different brands, you will be able to determine which ones are on the rise and which are waning.
You do not want to invest in a waning brand because your returns will not be very good.  Global popularity is important when you invest, and you need to look at this.  You can only make an informed investment decision when you have done your research.
 
 
Think Local
 
While you need to look at the global popularity of a hotel brand before you invest, you also need to consider the local market.  When you look at local brands you will generally be able to understand their driving factors better.  This is since you better understand the market that they operate in. 
When you look at local hotel brands, you will need to carefully consider if luxury or budget hotels will be better.  There are certain areas where a budget hotel will be more profitable than a luxury one and you need to consider this.  The success of the hotel will impact the success of your investment.
 
Always Read The Small Print
 
Every hotel investment is different, and you need to read the terms and conditions carefully.  The small print will tell you more about the return that you get on your investment and what type of investment return you are getting.  There are several ways that your return can be provided to you and you need to ensure that your contract details the right one. 
It is recommended that you have a solicitor look at the contract before you sign it.  They will be able to tell you what each of the clauses and terms mean and how this will affect your investment.  You should only sign the contract when you are completely happy with all the terms and have ensured that the figures add up.
 
 
Look For A Guarantee
 
Not all hotel investments will offer you a guaranteed income, but there are many that will.  This will often be a better option than a shared return on your investment.  If possible, you should prioritise these types of investments. 
Of course, you will need to assess whether the guaranteed return that you get will be worthwhile.  If you are investing in a hotel that you are very confident will do well, your guaranteed return might be less than the shared profit return.  However, this is always a risk and the guarantee will lower your overall risks which is beneficial for many investors.