Apartment Hotels business

Discussion in 'Starting & Running a Business' started by Excalibur1, 29th Aug, 2017.

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  1. Excalibur1

    Excalibur1 Well-Known Member

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    hi all

    Just wanted to see if anyone has had experience with running Apartment Hotel, hotels with kitchens and laundry. Some of the big players are Quest, Medina, Mantra etc.

    Noticed that they are offering franchises with some good returns. Does anyone know anyone who runs this type of business? I would like to pick their brain about it as I have an opportunity to buy apartment hotel lease (not from the big players).

    Cheers
     
  2. Lizzie

    Lizzie Well-Known Member

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    Seems like there are a lot of lookers but no comments on this ... we have multiple self contained tourist accommodation units on one site, that may be similar in business structure, and I may be able to give some advice ... but personally ... I like to own the asset rather than lease it from the hotel.

    It's all about control and choice.

    What you will probably find, when leasing off a hotel, is that you are forced to use their cleaners, linen suppliers, management fees, maintenance etc - and they can charge what they darn well like rather than you being able to shop around for a better deal.
     
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  3. Scott No Mates

    Scott No Mates Well-Known Member

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    @Excalibur1 - @Lizzie has hit on many of the important issues - the set up of franchises mostly favours the franchisor. You will notice that costs for nominated suppliers will increase at rates greater than the cost of hotel rooms ie your margin gets squeezed not theirs. So what appears to be a great return in the initial years soon turns sour and becomes a chore rather than a business.

    This is just an effort to reduce their management costs by outsourcing it to a franchisee to coordinate the inputs.
     
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  4. Excalibur1

    Excalibur1 Well-Known Member

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    Thanks for input guys! I was surprised that nobody was answering and thought cant believe nobody is running a business in this regard.

    I agree with both of you the major players will squeeze every bit out of you and its not work doing it with them. over last few weeks i have been calling and trying to get as much information as possible. They usually advertise that you will get between 18%-25% return. That was what hooked me. But when I looked over financials I could only obtain 8%-13% and even that is whit a lot of my time in it.

    The main reason why I asked is that I have few airbnb places and the returns im getting there are really good. Like Lizzie pointed out its mainly because i have control of every aspect of that business. The only issue I encountered was finding the right stock and trying to have them all in one small area instead of spread out.

    This is why I was looking at leasing apartments in the same building, but only worth it where I have input in all aspects of business.

    I find that I'm really enjoying this type of business and trying to automate as much of it as possible while keeping the quality. I have manged to find the right people to run things for me atm so I have minimal input.

    Lizzie can I pick your brain about this? I understand if you do not want to disclose some information.
     
  5. Scott No Mates

    Scott No Mates Well-Known Member

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    @Lizzie has documented alot on one of her threads, IIRC @crest used to be on Somersoft was in this sector too.
     
  6. Lizzie

    Lizzie Well-Known Member

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    Happy to help - although I too have a manager and he does most of the work.

    I did get a txt at 7.30pm last night asking if we could change a bathroom lightbulb, as we live closer than she does - ie, next door - sent hubby
     
  7. is_don_is_good

    is_don_is_good Well-Known Member

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    A lot of serviced apartment and hotel groups team up with developers now. The developers will allocate x amount of floors dedicated to serviced apartments. The fit outs and everything else will be different. Certain facilities need to be added into the development design (e.g. storage for cleaning stuff, an office, a desk).

    The serviced apartment operator will lease all of them in a commercial type lease and the rent will be higher than what the developer would get if they just held the stock. No prop management fee, outgoings and rates are usually covered, etc. Usually annual increases, sometimes a % of profits, it all depends if you're talking about a big name group or you're talking about a student housing group that's moving from share houses to something more official.