How to Invest in Hotel Units & Rooms in the Philippines

Last Updated – Mar 20, 2023 @ 8:05 am

When people think of real estate investments in the Philippines, hotel rooms aren’t the first things that come to mind. But did you know investing in hotel units and rooms can also be lucrative?

Investing in this type of property will truly give you a great deal. Instead of building a hotel from scratch, investors, like you, can purchase a unit in a finished or upcoming development and collect a percentage of the income generated by the room and the hotel itself.

If you’re curious about how to invest in a hotel room or unit in the Philippines, you’re on the right page. In this guide, we’ll let you in on how you can do this.

Contents

What is a Hotel Room Investment?

When you buy a hotel room investment, you are purchasing a hotel room and letting the hotel rent it out to their customers. Hotel units give you a steady stream of income from short-term tenants who pay high rates per night for the room and the facilities in the hotel.

This hands-off investment requires very minimal effort from investors since all they need to do is purchase a room or unit and let the hotel manage their property on their behalf. The hotel will be in charge of advertising the hotel, managing the bookings, collecting rent from customers, and maintaining the property.

This type of investment is considered low-risk thanks to its high demand and low entry price. A hotel room investment is a way to get passive income with an exit strategy where you can get a lump sum profit if you decide to sell this property.

How does investing in condotel & hotel rooms work?

Hotel unit investments are ideal for investors who don’t have the time and resources to manage a property. Since this type of investment requires little work, it’s also ideal for investors who live far away from the property they’re investing in.

When you invest in a hotel unit, you can turn your savings into a steady stream of income without worrying about the intricacies that come with managing a property alone.

Pros and Cons of Investing in a Hotel Room or Unit

One of the best things you can do as an investor is to assess the pros and cons of each investment vehicle. To give you a better idea of what this investment entails, take a look at its pros and cons below.

Pros

You can get access to high-quality properties easily

Hotel units cater mostly to tourists so they are built with high-quality facilities and styles that attract customers both in peak and non-peak seasons.

These hotels also come with spas, top-notch restaurants, gyms, and other facilities that are perfect for leisure.

These properties are located in accessible and high-traffic locations

Since they are built in highly accessible areas like cities and tourist spots, investing in this property is a great way to make your money work harder for you.

It requires very minimal effort

With this investment, you can get into the real estate market without having to worry about managing a property on your own.

This is something that is ideal for busy entrepreneurs like you who don’t have much time to spare.

You can earn income even if someone didn’t stay in your unit

If you’re looking for something that gives you a predictable return on your money, this is the right investment since it gives you a guaranteed percentage of the entire profit of the hotel.

Hotel unit owners are also entitled to perks like discounts on all the facilities in the hotel property, as well as free stays.

Your property’s value can appreciate

Some investors view hotel unit investments more favorably since their value can go up over time as the hotel property and area around it develops.

If you decide to sell your unit at a later date, you can reap the profits and earn a good return on your investment.

Cons

It can be more expensive than regular condominium units

While hotel units can be more lucrative than regular condominium units, they can also be more expensive due to their potential to earn more income.

It can be hard to get a bank loan to finance it

If you’re planning on investing in this property, you’ll need a large sum of money to cover the deposit and the remainder of the property’s price.

Unfortunately, you may find it hard to get financing from a bank, especially if you don’t have a high credit score yet or if your hotel developer isn’t reputable.

Your hotel may have poor management

In order to make a profit as a hotel unit owner, you need to find a hotel that has a good reputation and management.

Always make sure the hotel you invest in is run by a trustworthy company that is known for its high-quality service. If not, your profits may suffer.

The construction may face issues

While most hotels meet the required building code requirements before construction, it’s still possible for the property to face some issues related to construction.

You need to be sure that the hotel you invest in has a good track record when it comes to building and construction. If the construction faces delays, your potential profit will also be deferred.

The real estate market can dip

Another thing to keep in mind when investing in a hotel unit is the economy. It’s not uncommon for the real estate market to dip, which will make it much harder for you to resell your unit and make profits from it.

For instance, when the pandemic happened, many hotels closed due to the lack of guests. That said, many hotel units (like Hotel 101) already have set plans for pandemic resiliency.

The hotel may not generate enough revenue

Hotel unit owners have to rely on the hotel itself to make a profit, which means it has to have a proper strategy to generate a good amount of revenue.

This way, investors like you can enjoy a good return on investment. If things go wrong, the hotel may not be able to pay its investors, which means you won’t get your ROI.

You may be charged maintenance and management costs

Another thing to keep in mind when investing in a hotel unit is that these properties may have maintenance fees and expenses you have to cover.

It’s advisable to read the fine print of your contract to know how much you’ll be charged.

Top Condotel & Hotel Room Investment Opportunities in the Philippines

Ready to invest in condotel and hotel rooms in the Philippines? We’ve gathered some of the best choices for you.

Hotel 101

Price range: P5 to P6 million, depending on the location
Potential profit share/earnings: Regardless of whether their unit was used or not, every 16th day of the succeeding month, Hotel 101 investors receive an equal distribution of 30% of the total Gross Room Revenue.

Hotel 101 is one of the most popular and reliable choices for investors who want to try their luck with this investment vehicle.

This hotel is a leisure and business hotel that was developed by Hotel of Asia, Incorporated, a subsidiary of DoubleDragon Properties, a major player in the real estate industry.

This company has a market capitalization of more than $1 billion, and it’s also one of the leading properties in the PSE. That said, investors are sure they will get their money’s worth.

When you buy a hotel unit from Hotel 101, you don’t have to worry about all the costs that come with its maintenance and upkeep.

Every 16th day of the month, you will receive a deposit in your bank as passive income. Even if your hotel unit was not booked, you can still get a profit because 30% of the property’s income will be equally distributed to all investors. Not only that, but your hotel will have a condominium title.

Currently, Hotel 101 has locations in Fort and Davao. They also have plans of expanding in Libis, Palawan, Boracay, Cebu, and Bohol. Investors are also entitled to free overnight stays in all hotels nationwide.

Anya Resort & Residences

Price range: P8 to P21 million
Potential profit share/earnings: n/a

Located in Tagaytay, this resort is poised to be one of the best leisure properties in the Philippines. It is an exclusive residential boutique luxury resort that promises a personalized service that will make even the most demanding guests satisfied.

One of its selling points is its culinary efforts headed by the prolific Relais & Chateau Chef Emmanuel Stroobant, which highlights fresh and local produce from Tagaytay.

This property features not only pocket gardens, but also manicured pathways, refreshing brooks and streams, and beautiful wide open spaces. It is backed by Roxaco Land Corporation, one of the leading developers in the country.

It is also a member of the Small Luxury Hotels of the World. If you purchase a unit, you can also enjoy exclusive use of the hotel amenities, and book your preferred dates for free.

Ridgewood Premier Hotel

Price range: P3.5 to P6.9 million
Potential profit share/earnings: Guaranteed 6% returns per annum

Ridgewood Premier Hotel is one of the most ideal property investments for those who want to purchase a hotel unit in the Philippines. It is located in BGC, one of the most strategic and busiest areas in the Philippines.

Considering this, Ridgewood Premier Hotel will surely be competitive in the market. Investing here will be an amazing way for you to enjoy luxury without straining your pockets.

Savoy Hotel

Savoy Hotel is a chain of hotels in the Philippines featuring world-class amenities that attract both foreign and local guests.

Whether you want a property in the city where you can escape from the hustle and bustle of everyday life, or you prefer a property near the beach where you can treat your family and friends, Savoy has it for you.

Savoy unit owners can enjoy a free stay for 30 nights annually, where guests can stay up to 10 nights at a time.

Savoy Hotel Boracay

Price range: Starts at P7 million
Potential profit share/earnings: 8% of net room rental, and 92% of unit revenue

Boracay is one of the most popular islands in the Philippines, especially among local tourists. Considering this, it has its fair share of luxury hotels. If you are new in this industry and want to invest in a hotel unit in the Philippines that’s near the beach, you may want to take a look at investing in Savoy Hotel Boracay.

Savoy Hotel Palawan

Price range: Roughly P15 million
Potential profit share/earnings: 8% of net room rental, and 92% of unit revenue

With its pristine beaches and abundant marine life, Palawan is one of the best locations for your investment.

Savoy Hotel Palawan is scheduled to open in 2028. It will be a 10-story building featuring 306 guest rooms in the beautiful coastal town of Paragua, which is poised to be a premier surf destination in the Philippines.

Savoy Hotel Manila

Price range: Starts at P7 million
Potential profit share/earnings: 8% of net room rental, and 92% of unit revenue

If you prefer a property in the city, look no further. Savoy Hotel Manila will give you quick access to the capital’s hot spots.

Hotel Room Investment Tips

Before investing in a hotel room in the Philippines, make sure to keep these things in mind to avoid possible risks.

Establish your budget

Buying a hotel unit is not cheap. Determine the hotel unit that you can afford, and assess if it is a profitable venture, especially when it comes to its ROI timeframe.

This way, you can avoid overextending yourself financially.

Educate yourself about the hotel industry

All investments have their risks. Before investing, keep in mind that unforeseen things can happen, which could make you lose your money.

That said, it’s important to know the ins and outs of the hotel industry in the Philippines to prepare yourself. Educating yourself will help you make a more informed decision.

Make sure to research the location

Tourist areas and big cities are usually the hot locations for hotels.

If you invest in a hotel unit in the Philippines, it will be a good move to put your money in the areas with consistent high demand for accommodation.

Assess the developer’s reputation, especially when it comes to the management

Before you invest in a hotel unit, it’s best to check the developer’s credibility.

A reputable developer will not only build you a luxurious hotel unit with high quality, but will also ensure that it is properly managed. This way, you can get the best value for your money.

Always read the contract and discuss it with a lawyer if needed

When buying a hotel unit, read the contract thoroughly and have a private lawyer assess and review it for you. If you see something you don’t like, ask the developer if you can negotiate.

Look for hidden costs

Figuring out the expenses you need to prepare to manage your hotel unit will help you avoid unpleasant surprises.

Make sure to research if you need to pay maintenance fees and other out-of-pocket expenses. These costs can sometimes eat up the profits you are expecting to get.

Consider the perks

Research the property you are planning to purchase and see if you can enjoy the property’s services and rooms.

Most hotel properties for investments offer free stays for investors, which can be an incredible perk if you are planning a vacation for your friends or family.

Condotel & Hotel Room Investment FAQs

Still got questions about investing in a hotel room in the Philippines? We’ll answer them below.

Are condotels and hotel rooms a good investment?

Condotel and hotel room investments are not exempted from risks. That said, this property is still a great way to invest and make money if you research well.

Be sure to educate yourself about the hotel industry in the Philippines and different profitable locations. Also make sure to factor in the potential return on your investment.

What are the key factors to consider when selecting a hotel room investment opportunity?

The location of the property is one of the most important factors to consider. If you are planning to invest in a hotel in the Philippines, make sure the location is near a tourist area or a big city. This will help you attract more guests and earn more money.

Another factor to take into consideration is the developer’s reputation, especially when it comes to the management of the hotel property. This will give you more peace of mind knowing that your hotel unit is in capable hands.

What are some common investment structures for hotel room investments?

Hotel unit investments in the Philippines are usually done through a hotel ownership structure. In this setup, you can purchase your preferred hotel unit by paying the developer a certain amount.

You will be given a certificate of title which means you own the unit. However, the hotel will manage it for you. You can sell the unit anytime you want.

How does investing in hotel rooms compare to other types of real estate investments?

When it comes to real estate investments, hotel rooms are surely a great option. The Philippines is home to many tourist destinations and is known for its diverse culture and rich history.

That’s why there’s always a demand for a variety of accommodation options.

While investing in condotels and hotel rooms might have its risks, it is still a good way to diversify your real estate portfolio.

This kind of investment also has a good potential for profit without much effort from you. This makes it an amazing option for those looking for a passive investment.

How much capital is typically required to invest in hotel rooms?

Your capital requirements will depend on the type of hotel unit you are planning to invest in. Keep in mind that prices can vary widely from one hotel to another.

It usually starts at P3.5 million and can go up to eight figures.

What are some potential exit strategies for investors in hotel room investments?

One way to cash out is to sell your unit to another investor who is looking for a hotel property. Since this investment can appreciate in value, you can still churn out a profit.

What should investors look for in a hotel room investment?

When looking for a good investment, it’s best to have a clear vision of what you want to get out of it. Knowing your goal will help you narrow down your options. This way, you will have a better idea of what kind of hotel unit you want to invest in.

For example, if you are planning to use your hotel unit for vacations, you can narrow down your options to hotels near the beach. If you’re planning to buy a hotel for your friends or family when they visit the Philippines, you can choose hotels near tourist destinations like malls and theme parks.

Location and ROI are also two important factors to consider. You need to make sure that the location gets a lot of foot traffic, and that you’re fine with the ROI timeframe.

Disclaimer: All information listed in this article is for information purposes only. Although utmost effort was made to ensure accuracy of information on this website, readers must not solely rely on it in making any investment or financial decision since it does not take into consideration the risk tolerance, financial situation, investment goals, and experience of readers. It is best to consult a professional financial planner or your bank before investing to make a more informed choice and limit your risk exposure.

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