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Investment eggs in alternative baskets

  • Surrenden Invest offers a more balanced, profitable and counter-cyclical portfolio
  • 51% of survey respondents considering alternative investments in 2018 favour hotels (JLL UK hotels forecast 2018)
  • New Whitley Bay hotel investment promises strong yields and 94% ROI (Surrenden Invest)

Investing in a hotel room isn’t a new concept. For decades, institutional investors have been purchasing hotel rooms around the world, leasing them back to paying guests and enjoying the lucrative income.

What is new however, is that thanks to a new breed of investment firms such as Surrenden Invest, private individuals are now also able to access the so called “beds-sector” and the market is booming.

When priced out of mainstream sectors and looking for higher yields than traditional property asset classes such as residential property, offices and retail can offer, savvy investors know that there are numerous appeals to investing in alternative property such as hotel rooms.

“Given the cyclical nature of the property sector, adding an alternative asset class to an investment portfolio provides the benefit of countering dips on the mainstream side, such as traditional buy-to-let.  The hands-off and hassle-free aspects of room ownership are highly appealing, hotel room investors can sit back and relax whilst the management team market, manage and maintain the room.”

Jonathan Stephens, MD, Surrenden Invest

Hotel rooms offer a lower entry price and lower risk profile compared to traditional property investment, along with immediate income from the date of purchase.  Buy Back-schemes, which are in place in many hotel room investments offer a guaranteed exit when the lease ends.

Overall, there is confidence in the UK hotel sector, performing well in 2017 and mirroring property investment in general; a weakened sterling, growth in staycations and improved infrastructure development all contributed to investments in built assets exceeding those of 2016.

Looking ahead to 2018 and the outlook is equally bright. CBRE’s 2018 Market Outlook expects the UK property sector to continue to perform solidly, with the beds sector, which includes hotels, weathering any uncertainty well.

“While some property sectors will see extremely patchy growth performance, the rise of Industrials & Logistics looks likely to continue and the ‘beds sectors’ such as hotels, built-to-rent and healthcare are also set to grow strongly.”

Miles Gibson, Head of UK Research at CBRE

Looking to the regions, JLL have forecast year-on-year regional hotel occupancy growth of 0.3% in 2018, whilst PwC anticipate a further 2.3% RevPAR growth for the UK regional sector in 2018 with an expected 12,000 new hotel rooms coming on stream during the year.

Another key driver which made its presence known in 2017 and will continue to do so in 2018 is inbound tourism to the UK. Visit Britain’s inbound visitor forecast for 2018 is at 41.7 million visits, an increase of 4.4% on 2017 levels and a total spend of £26.9 billion

Surrenden Invest is delighted to have partnered up with leading financial and property group,  The High Street Group to deliver the benefits of hotel investment to its private clients.

The latest opportunity provided by Surrenden Invest is the Whitley Bay Hotel; an exclusive 32-bedroom hotel located in an excellent position in Whitley Bay, Tyne & Wear, just a short walk from the town centre and its award-winning Blue Flag beaches.

The hotel is just 25 minutes to Newcastle city centre by Metro, 30 minutes to Newcastle International Airport and 10 minutes from the International Cruise Terminal by car. Durham and a variety of tourist locations in Northumberland can also be reached in under 50 minutes.

The hotel offers guests an enhanced budget-boutique package, rivalling that of standard budget hotel groups such as Travelodge or Premier Inn. Guests will find rooms furnished to a higher-than-average standard with en-suite facilities and extremely comfortable beds.  A personal level of service ensures each guest receives a warm welcome and a wonderful stay thus delivering a 70% rebooking rate.

Renovated at a cost of £1.25 million in 2017 Whitley Bay Hotel has seen occupancy levels increase month on month. The average hotel occupancy rates in the North East of England is 75%, in the 3 months from July – September of last year Whitley Bay Hotel achieved an average occupancy rate of 83.8%.

Investors in the Whitley Bay hotel will receive an immediate guaranteed yield from day 1 for up to 10 years with a guaranteed Buy Back offer at 110%, backed up and securitised by the High Street Group of Companies. An investment of £70, 000 is required for an income of £59,000 net and an ROI of 94%.

Whitley Bay town itself has grown to 36,000 people and has become increasingly popular with visitors. It comes alive at weekends and bank holidays, when young and old alike enjoy the local amenities including restaurants, bars and nightlife.

A decade ago, in 2007, North Tyneside Council announced a £36 million regeneration plan for the coast at Whitley Bay. This has included, among other projects, the regeneration the Spanish City site with its iconic dome, completed in 1912. The dome is expected to reopen summer 2018 complete with fine dining seafood restaurant, champagne and oyster bar, a tearoom, fish and chip restaurant and ice-cream parlour.

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