RISKS and REWARDS of investing in a Condo Hotel like BELMONT HOTEL ILOILO

Condo hotels are a viable option for those who are considering buying a vacation home. They offer a great return on investment. It’s important to be completely comfortable with the condo hotel concept and its potential risks versus benefits before jumping in.

Here are the rewards and advantages of investing in condo hotels:

EXTRAORDINARY PROPERTY
Condo hotels, like Belmont Hotel, are exceptional properties with world-class amenities like spas, and fitness centers. They have gourmet restaurants and business centers. They also provide expanded services like valet parking, concierge service, security services and even 24-hour room service. You get the privilege for using some of these amenities and services for free.

PRIME LOCATION
Many of the best condo hotels in the world are located in desirable places. For example, in the Philippines, the majority of the best condo hotels are located in upscale, modern cities and townships. Some of them are located near international airports, luxury restaurants and casinos, and beach resorts.

STEADY REVENUE
Condo hotel owners receive income from participating in the hotel’s customer program, which will help them to cover their ownership expenses and lead to potentially substantial annual returns.

WORRY-FREE OWNERSHIP
Finally, owning a condo hotel is completely hassle-free. Maintenance of the hotel building, operation of the facilities and guest service issues are all handled by the hotel management company.

All investments involve inherent risks, whether it’s in stocks, bonds, gold, commodities or real estate.

Here are some of the risks, even if they are unlikely, that could affect a condo hotel.

MARKET FLUCTUATIONS
You could buy a project while it is still in pre-construction and see its value soar before the thing gets built, but if the market dips, as happens in every investment cycle, you may have to wait until the market comes back to get the big appreciation you were anticipating.

IBP manager’s notes: So far so good. The market did fluctuate during the pandemic but the value appreciation continued to be steady with Belmont Hotel Iloilo and it will continue to increase indefinitely.

COMPLETION AND TURNOVER DELAYS
“Acts of God” or construction issues could delay your project by a lot longer than you’d think.

IBP manager’s notes: The coronavirus pandemic did delay the construction but now that we are at the tail-end of the pandemic, we are full steam ahead and back to full operations.

PROJECT DID NOT PUSH THROUGH
Many condo hotel projects are sold before they even break ground; this means that the financing for their construction starts before the walls are already up. Because of the difficulties that can arise with getting financing, some projects simply cannot proceed, just like any other type of real estate project might.

In cases the project doesn’t go through, your money will be refunded to you, but you may have missed out on important interest payments or missed other opportunities that may have been available while your money was locked up.

IBP manager’s notes: Highly unlikely. This has not happened (and will not happen) with Megaworld Corporation. The developer is a reputable real estate company that has been completing projects for almost three decades.

HOTEL SALES NOT DESIRABLE
When the construction is finished and the condo hotel is operational, the revenue that you anticipated from operating the unit will be less than you anticipated. Maybe new competition has affected your occupancy rates or if the market for condo hotels in your area has changed, the overall number of tourists visiting your area may be down overall.

Lower occupancy rates and lower room rates mean less revenue generated from rent payments for your unit. This is a real problem that all developers know they may have to face, so they do their research before they start work on a project to ensure that the development will be successful.

IBP manager’s notes: This is the most notable risk of all. If the hotel does not do well, your revenue would be affected. Megaworld conducts feasibility studies before putting up their hotel brands. They make sure that these projects will do well by anticipating all possibilities. They cover all the bases to make sure that everyone gets profits!

So what do you think?

Considering the risks and rewards, is BELMONT HOTEL ILOILO a good fit for your personal investment goals. Does it fit your financial situation?