Apart hotels abroad - guidance

[Roy Turner]

Asset Property Brokers, who are promoting an interesting project in the Philippines, offers some useful advice on investing in these types of projects. Here are some tips:


·Look at the track record of the managing company by examining previous developments.

·Check if the management company is a respected name in the industry.

·Is the project in the right location for the target market? For example, a hotel for the business market must be in close proximity to a main city with good transport connections. Tourist destinations must also appeal. For example, beaches and attractive climate for sun searchers and maybe forests and mountains for outdoor activity holidaymakers.

·Find out what occupancy rates are expected and the rates of other hotels in the area.

·Does the hotel or resort offer facilities, such as swimming pools and spas, to attract its target market? Tourist resorts providing better leisure facilities than competitors will be more appealing for customers.

·Make sure operating costs for the apartment or villa are clearly stated. There should be a breakdown of deductions for management and other operational fees on the earnings the property generates.

·Concerning viability of a project, examine other income streams, for example events and conference facilities. The more variety, the less the risk.

·Is the nearest airport served by a limited number of airlines? Most good hotel operating companies will have thoroughly analysed the business case of their project. However, in the present climate, when airlines are going bust, make sure the destination is accessible via an airport serving a large variety of routes with many airlines.

·It is important to consider entry price. In some locations, such as London, New York or Tokyo, entry prices are very high, and yields can be low.

·Can the developer provide investor testimonials? If investors at other projects have benefited, your investment is also likely to perform well.