Fancy owning a fancy hotel apartment?


Coco Channel had an apartment at The Ritz in Paris. Elizabeth Taylor had one at New York’s The Pierre Hotel. And there were — and still are — many other famous politicians and celebrities who own apartments in some of the world’s most prestigious and luxurious hotels. Owning residential apartments within grand hotels is not a new thing. It is, however, a growing trend and it is not just for the super-rich anymore…

According to PricewaterhouseCoopers (PwC) Hospitality Outlook report for 2015 to 2019, business tourism in South Africa is growing and the demand for flexible corporate accommodation is also increasing. This explains why sectional title hotel suites and privately owned apartments within hotels are once again attracting the attention of property investors and travellers alike. Upmarket hotels providing mixed-use hotel rooms and owner-occupied ones seem to be the way forward for investors with some cash to spare.

For their revamp, an internal rebuild that cost well over R90 million, the Triangle Building in Cape Town’s Riebeeck Street (the former corporate headquarters of Safmarine) won a slew of global awards for their sassy conversion into the Radisson Blu Hotel and Residence.

General Manager Desmond O’Connor explains: “We have a mixed-use development consisting of hotel and private residences. There are 155 apartments and 214 pure hotel rooms. Floors ground to 11 are for hotel use and 12 to 23 are only apartments. On top if that we have a rental pool of 17 apartments that form part of the hotel stock and are decorated to the same high standard as the rooms and suites.”

O’Connor says today’s business travellers particularly like the hybrid of a hotel apartment that is also self-catering and has laundry facilities. At the Radisson Blu Hotel and Residence for instance, all apartments share the same 24-hour manned reception area, but hotel guests and apartment dwellers use different elevators which can only be operated with approved access cards.

“Owners can elect to enjoy the hotel’s full basket of services such as twice daily housekeeping, turn-down services, valet and laundry services. And, like hotel guests, they can sign food and beverage from the hotel’s restaurants and bars to a pre-approved charge account,” he says.

Most establishments of this sort operate in a similar manner, offering both owners and guests the best of both worlds in terms of finance and convenience.

“Another example of this type of mixed-use development is the recently launched Onyx development on Cape Town’s Foreshore and developments in Johannesburg. Dubai also has a number of similar developments where people are able to purchase units that form part of the rental pool,” says the highly experienced O’Connor, who was among others, opening GM at The Cape Royale, GM at Mandela-Rhodes Place and GM at the Radisson Blu Port Elizabeth.

“The nice thing about this concept for a property investor is that there is a risk with tenants, but you don’t really know them until you have them living in the unit. In our establishment, we at all times know who is staying in the units and we look after the units — the owner doesn’t have to,” he says, adding that whilst being a solid investment, owning a hotel room is not a get-rich-quick scheme.

“My advice is not to go for this kind of investment unless you have the available funds to do so. Hotels typically take five years before it shows a profit, so it can be a lengthy period before a substantial return on investment. Our deal works on a Participation Quota (PQ) calculated on floor-space, occupancy and revenue. Even if the unit isn’t occupied, there is still income. That said, all hotels experience seasonal ups and downs, so investors must be prepared for fluctuating returns and consider this a long-term investment,” he warns.

O’Connor says there are fixed and variable monthly costs like in any property investment, but says they make provision for furniture, fittings and equipment reserve costs.

“We retain a monthly amount towards maintaining furniture and fittings, so if the TV breaks, we replace it. For the investor there is a certain peace of mind, knowing that we will maintain the unit to the required standard, which includes refurbishment every five to seven years as necessary, without hitting investors with massive special levies,” O’Connor concludes.

comments powered by Disqus


This edition

Issue 64


exploresa_mag The new Interactive Digital edition of Explore South Africa is available now. #ExploreSA #Tourism #TourismSA 2 months - reply - retweet - favorite

exploresa_mag Reed Exhibitions Africa has confirmed that Africa Travel Week, which comprises of World Travel Market Africa and In… 5 months - reply - retweet - favorite

exploresa_mag has nominated destination Plettenberg Bay for the 2020 Global Wedding Awards.… 6 months - reply - retweet - favorite