Aparthotel Investment - FAQ

We have found that there are some typical questions that are asked when investors are considering this opportunity. Whilst we would be more than happy to answer any specific questions on the phone or by email or indeed at a meeting, a number of typical questions have been answered below.

Aparthotel Investment
What legal interest am I buying?

As an apart hotel room investor you will purchase a 199 year lease of your apart room. This room will be 'owned' by you in the same way as many residential apartments are owned i.e. you will 'own' your apart room and have access rights across the common areas such as the corridors and entrance.

How do I benefit from the lease to the hotelier?

When purchasing the apart room, a lease to a management company will be in place for a period of 20 years. Therefore, this is just like purchasing a residential apartment with a lease in place, but the lease for the apart hotel is longer.

The management company will in turn have a lease in place to the hotelier, for the same 20 years, and the hoteliers lease will obligate them to repair and maintain the property and pay business rates whilst the lease is in place. The lease from the apart hotel room investor to the management company will effectively ensure that the management company does two things:

  1. Obligate the management company to ensure that the hotelier carries out and performs all their obligations within the hoteliers lease i.e. repairs/maintenance, pay a percentage of turnover etc.
  2. Collect the percentage of turnover and place it into a Rental Pool for distribution to each of the apart hotel room investors.
Is any of my income guaranteed?

The hotelier will be putting in place a Notional Guarantee Fund. In the event that the gross annual income to the apart hotel room investor falls below 4% of the purchase price, then the management company will call for the shortfall to be paid from the Notional Guarantee Fund, thus ensuring that a Minimum Guaranteed Rental is obtained. The Notional Guarantee Fund will be kept in place for the duration of the hoteliers 20 year lease.

Can I sell my apart hotel room?

If you decide that an Apart hotel room isn't for you, or perhaps need to move on to another property investment then you can decide to sell. If you do sell an Apart hotel room then you will be selling it based on the income that the room can produce. Once the hotel is fully operating and the room rate and occupancy are at a level which is providing a steady income stream, then you as the owner can take advantage of the resale market.

Your Apart hotel room will be valued on a commercial basis according to the level of rental income. Typically the yield percentage is what the new investor will look at whether they be private buyer or a fund.

Can I stay in the apart hotel room?

Not unless you want to pay the room rate to the hotelier. The hotel is let in its entirety to the hotelier for a period of 20 years. During the time the hotelier is a tenant then you will not be able to occupy the apart hotel room unless you do so like any other person who books with the hotelier.