Did you know that you can build wealth and income by investing in hotel rooms? If you haven’t heard of hotel room investing, you’re not alone. Even though it is a tried-and-true strategy that is used worldwide, many people have never heard of it. Hotel room investing is similar to investing in short-term rentals, but instead of owning a residential property that you rent out to vacationers, you own rooms in a hotel. Each month, you get a share of the hotel’s profit based on how many rooms you have invested in.
If you are looking for a safe investment that still has a high rate of return, hotel room investing is the strategy to consider. It has the ability to bring in significant profits with a guaranteed return on your investment! At Ruebush Hospitality Group, we’ve been experts in this niche for many years, and we are currently working on some exciting developments that offer incredible benefits to investors.
Here are the answers to our most frequently-asked questions about this lucrative sector of the hospitality real estate market!
How Do the Yields Compare to Other Forms of Real Estate?
Short-term vacation rentals like Airbnbs are a very popular form of real estate investing right now. However, it’s not always the best option. Here in Batumi, Georgia, rental yields have been steadily decreasing over the past few years. While there is a healthy flow of tourism in this region, we are also seeing a surplus in rentals.
Published in June 2020, the most recent PMC Research tourism update for the country of Georgia shows an increase in the hotel price index throughout the summer of 2020. The average cost of a 4-star hotel room in Georgia was 223 GEL per night, whereas the average cost of a guesthouse room was just 73 GEL per night. For 5-star hotel rooms, the average cost was 322 GEL per night. When it comes to yields, hotel room investors will benefit from the fact that guests are willing to pay higher prices for a boutique hotel experience.
Did you know we started our business developing Airbnbs? We began investing in hotel rooms in Batumi instead of apartments because several factors encouraged us to change our strategy and shift our focus. Click here to see an overview of how our rental apartments performed over the past three years.
Why Are Yields Higher with Hotel Room Investing?
As compared to managing several separate vacation rental properties, the costs of managing a hotel are much lower. Housekeeping staff, guest services professionals, and maintenance staff can work much more efficiently under one roof, because they can complete all their tasks in the same building instead of accounting for travel from one rental unit to the next. Thanks to efficient operations, hotel room investors can enjoy higher yields.
What Type of Hotel is Best for Hotel Room Investing?
In general, luxury and boutique hotels are the safest types to invest in. Not only do upscale hotels tend to have the highest occupancy rates, but they can also command a higher price point by offering high-end accommodations in premium locations.
Luxury hotels come in all shapes and sizes, from small exclusive hotels to giant luxury skyscrapers. Boutique hotels are small – usually containing fewer than 100 rooms – and they feature unique, upscale accommodations. Each boutique hotel provides a one-of-a-kind experience, so guests feel like they are getting personal, individualized care.
What Makes Hotel Room Investing Less Risky?
From holiday-goers to business travelers, there are always people who need to stay in a hotel. Hotels have a reputation for being a strong investment because the demand is steady and the profits are dependable.
As a hotel room investor through Ruebush Group, you will enjoy extra stability. Since profits are divided from the hotel as a whole instead of being dependent on your particular room, you will receive a stable income from one month to the next.
When you invest through Ruebush Group, we guarantee that you will get a return on your investment. We are confident in our ability to produce returns! If your investment doesn’t double in 5 years from the hotel’s opening date, we will refund you 110%. We do everything we can to mitigate risks for our valued investors.
What Will the Return on Investment Look Like?
For our boutique hotel properties, including Black Sea Blue, the Midtown Hotel, and River Park, we currently project a yearly ROI between 11% and 12% based on historical performance and market outlook. After successfully operating in this niche for many years, we are confident that our strategies can produce above-average returns for investors!
What Is the Potential for Growth?
Across the board, it’s no secret that hotels have high growth potential. For example, from 2009 to 2017, US hotel gross bookings jumped from $116 billion USD to $185 billion for a compound annual growth rate of 6%. International hotels are growing at a similar rate. While it is a competitive industry, innovative hotel brands are poised for growth well into the future.
We look forward to being a part of the future of boutique hotel room investing, and we hope you will join us! Get in touch with one of our personal investment advisors to learn more.