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Why buy a hotel property
Buying a hotel is a particularly interesting investment as hotels can offer one of the highest risk-weighted returns among real estate asset classes. Buying a hotel guarantees a fixed monthly income protected against inflation.
12 good reasons to own a B&B HOTELS property:
1. Unlike office properties where vacancies decrease collected rents and therefore returns, a hotel operator pays 100% rent even if its hotel is not 100% occupied.
2. Higher yield than most other commercial real estate assets (office, logistic, retail and healthcare properties).
3. The ability of hoteliers to yield prices every day if necessary and rent indexation offers double protection against inflation to investors.
4. The Economy segment is the most resilient hotel segment.
5. B&B HOTELS’ balance sheet is strong and B&B HOTELS offers the strongest covenant in the sector.
6. B&B HOTELS’ rent coverage ratio is best-in-class at 220% (GOP / Rent), providing ample safety to ensure rents are paid.
7. B&B HOTELS’ business model is based on mandate management, whereby our hotels are managed by directors-entrepreneurs whose interests are fully aligned with B&B HOTELS’ as their commission is a % of hotel revenues rather than a fixed salary.
8. The Economy segment is the deepest and most liquid segment within the hotel asset class.
9. Sector growth is partly driven by the travel market, which grows two times faster than the European GDP in the long run.
10. A growing number of investors invest in hotels, which will further ensure the liquidity of hotel assets.
11. Data show that branding a hotel as B&B HOTELS increases the value of the hotel by close to 10%.
12. Data from B&B HOTELS’ previous portfolio of resold hotels show a significant capital gain upon resale.
Three ways to invest in B&B HOTELS properties
- M&A: you can acquire an existing hotel property whose business is acquired and rebranded B&B HOTELS.
- Forward financing: you can acquire a B&B HOTEL which once built will be operated by B&B HOTELS.
- B&B HOTELS secondary market: you can acquire existing B&B HOTELS properties when they come to market.
What B&B HOTELS offers to landlords when taking over hotels
- B&B HOTELS refurbishes or repositions hotels on behalf of landlords.
- B&B HOTELS signs a lease with the existing or a new landlord.
- B&B HOTELS’ business model implementation leads to a profitability increase.
- B&B HOTELS can also convert offices and various buildings into hotels.
Typical B&B HOTELS lease term
- Long-term lease (from 12 to 20 years with extensions).
- Fixed rent with a Real Estate yield between 5% and 7% depending on the location and asset quality.
- Triple net lease which reduces the need for a dedicated asset management team.
- Rent indexation protects investors against inflation.
- Possibility of variable rents.
- Rent cover ratio above 200% (Ebitdar / Rent).
- Refurbishment on behalf of landlords.
- B&B HOTELS pays for new Furniture Fixture and Equipment and Small Operating Equipment when required.