According to a survey by Tranio.com, the second most popular foreign commercial property type in 2015, after flats, was hotels. However, the hotel business is complex. In addition to finding a suitable property, the most complicated issue an investor usually faces is managing this property. Tranio.com explains how hotel property management is executed, with the profit divided between the owner and the operator. In short, the owner can either manage the hotel independently or hire a management company.
If the investor runs a hotel business independently, it is necessary to calculate beforehand the supposed income and expenses. Being directly involved in management, the investor does not have to share profit, which remains after paying the taxes and maintenance costs.
Management company services
As a rule, management companies offer their services only if a hotel has at least 70 rooms, as a smaller room supply will not enable the company to pay salaries to their employees and secure profits for itself.
Management company types
Usually, those acting as management companies are the hotel operators who often hold large international chain franchises. Such companies specialise in management and successfully turn a profit. There are two types of operators:
1) Branded operators are branded companies that take charge of hotel management. They include Hilton, Hyatt, IHG, Marriott and Starwood, to name a few. Branded operators generally manage large hotels.
2) Independent operators are management companies which focus on management only, not providing a brand. For instance, the U.S. major independent operators include GF Management, Interstate Hotels & Resorts and White Lodging Services. Usually, the owners of small and medium-sized hotels are those who use the services of independent operators.
To learn more about investing in overseas hotel and moving money to and from your investment opportunity (repatriation of profits and paying suppliers), feel free to download our hotel investment guide here.
Tranio.com is an international overseas property broker with a network of 500 partners worldwide and a catalogue of more than 100,000 listings. The team publish daily news, high quality analysis on foreign realty, expert advice, and notes on laws and procedures related to buying and leasing properties abroad so that our readers can make their property decisions with confidence.