Hotels are an attractive asset class for many property investors, bringing in healthy yields without the maintenance of buy-to-let; and 2020 could be a good year to invest.
Buy-to-let is still cited as one of the most rewarding places to invest your money, provided you choose the right investment, but hotel room investment is a popular alternative.
Some key benefits
Unlike buy-to-let which normally involves dealing with tenants – unless you appoint a management company – hotel room investments are managed by the hotel, and usually come with a long lease, so they are a good option for investors who want an investment they won’t have to spend time on. They can also provide more attractive yields than a traditional buy-to-let.
Starting price points tend to be lower than investment in a whole property, making it easier to spread your money – and risk – across several hotels in different locations should you wish. The lower cost also means no mortgage is required, which can be beneficial to some investors.
Unlike buy-to-let, the value of your investment isn’t influenced by housing market fluctuations, and many hotel investments come with guaranteed returns as well as capital growth.
Which locations for hotel investment?
Earlier this month, Deloitte published its European Hotel Investment Conference (EHIC) report looking in more detail at the hotel investment sector across Europe as well as within the UK specifically.
On a Europe-wide basis, London came in third position in terms of its attractiveness for the asset class, after Amsterdam and Paris. Of those surveyed, 31% believe hotels will be the most attractive asset class for investment in 2020 because of their positive demand fundamentals (71%) and yield profiles (46%).
Within the UK, the top locations for hotel investment according to the report are:
The strength of the tourism industry in these areas is a major factor in the results, and the northern cities of Manchester, Liverpool and Birmingham are seeing increased interest from every class of property investor, including in the hotel sector.
To find out about BuyAssociation’s hotel investments as well as residential investment opportunities, see our investments page and sign up for more information.