Hotel investment is on the rise again

Despite the various setbacks of which the tourism sector was the involuntary victim during the last pandemic, hotels - against most expectations - are once again proving very popular with both old and new investors. Investing in hotels and/or hotel rooms can offer diversification for an investment portfolio and also generate a stable income stream. This is how you capitalise on the ever-growing tourism sector and the increasing demand for accommodation. Read the first part of our 'Hotel investments' dossier here.
In the second part, we also let some investment groups have their say.

The recent viral crises evoked a veritable 'hotel phobia', with the vast majority of visitors and investors seeking refuge in flats and holiday homes, which were considered much safer and healthier. Despite all this negative outlook, the hotel sector is proving to be far more resistant in retrospect than the flailing resilience that many individuals had expected beforehand. For instance, from a fairly recent survey by Black Collie Capital, we learn that 78 per cent of travel enthusiasts in the United States prefer hotels and only 61 per cent prefer holiday homes and flats (such as Airbnb). The main reasons for their choice are the recognisability and predictability of the hotel product, a higher sense of security, more privacy, greater convenience due to higher service and, finally, a lower cost. In short, hotel investments are considered more forward-looking than ever. We zoom in on the underlying reasons.

Firstly, during the past pandemic, hotels proved their resilience by recovering faster (26 months on average) than after the crises of 2001 and 2008 - which were admittedly less fierce for the hotel sector - with a happy return of both leisure and professional business tourists.

During the pandemic, many investors also discovered that managing flats and holiday homes can be quite difficult, time-consuming and expensive. Hotels can offer investors much more of a relief, such as the rental, management and maintenance of the hotel room done by the hotelier. In any case, the just about daily cleaning makes this a fairly durable capital asset, whose components last much longer than in a flat or holiday home.

Moreover, the need for leisure time seems greater than ever. With the pandemic, therefore, travel has evolved from a superfluous luxury item to a must-have: a necessary and valuable investment with many people willing to pay extra for it.

Due to lower competition from the internet, hotels - whose product is not consumed virtually and remotely - also seem to be much safer and more profitable in the eyes of a lot of investors than the other available property categories such as residential, retail or office. Important factors here include the influence of telecommuting and the possibility of working remotely from hotels, known as the work-from-anywhere principle.

Globally, investments are currently being made mainly in hotels at attractive leisure spots, or resorts. A fine example of this is Dune Hotel in Nieuwpoort, which swung open its doors in mid-July 2023. The architecture of the hotel building was carefully blended in with both the dune-rich nature reserve and the typical white buildings of the Simli district.

This hotel project is also a great illustration of the fact that the sale of hotel rooms seems to be becoming increasingly important as a form of investment in Belgium. Of Dune Hotel's 88 rooms, two are yet to be sold. This hotel is the result of a rather remarkable and attractive investment product. For example, it guarantees a 3.25 per cent net return over 30 years. Moreover, the buyer becomes 100 per cent owner through a notarised basic deed - so no ground lease or co-ownership. Furthermore, there are no maintenance and repair costs, with each room being renovated every seven years at the hotel operator's expense, which also applies when the lifts are renewed. Property tax is borne by the operator, income is exempt in personal income tax and there is a variable profit share after five years.