Investing in hotel real estate — how to build your own “retirement portfolio”

Arthur Lupashko, founder of Ribas Hotels Group

Many people are currently wondering where to invest their money to generate passive income: deposits, securities, real estate, or their own business? Unfortunately, during wartime all investments carry risk to one degree or another. Yet real estate has always been the most straightforward and stable investment asset. According to expert estimates, two thirds of all global capital in the world is concentrated in it. Ukrainian investors are no exception, traditionally choosing residential real estate as their primary investment vehicle. However, the situation in the country has shifted this trend. A more attractive asset has emerged — hotel real estate investment — which has become accessible now that it’s possible to invest not only in large properties, but also in individual cottages, rooms, or even spa facilities.

Better than rental

When people ask me about investing, I always say that first and foremost it’s about protecting money from devaluation — and only secondly about returns. Yes, due to population migration, demand for housing is declining, and along with it, its investment appeal. That’s why investing in hotel real estate is more profitable than buying apartments for rental purposes — the payback period is faster. Moreover, hotel real estate in Ukraine is currently at a stage of forming new rules. Broadly speaking, there are two types of hotel real estate for investment: the classic format — for major players — and a new format for private investors. Increasingly, people are buying individual cottages, apartments, or fully fitted-out hotel rooms, with a management company renting them out to guests and distributing the profits. For example, Ribas income-generating hotel real estate works like this: the investor selects a project and puts in the funds, while partners handle everything else — the developer builds it turnkey, and the management company operates it, transferring dividends on a quarterly basis. Each investor receives full reporting data — everything is transparent and straightforward. As a bonus, every investor can also vacation at their own asset. In other words, hotel real estate today is the most reliable tangible asset — it not only preserves capital but also generates stable passive income. Most importantly, hotels are a more predictable and understandable asset compared to other real estate segments.

How much to invest

When it comes to the size of the investment, the amount itself doesn’t really matter. What truly matters is what share of the funds at your disposal it represents. I decided long ago that it should be no less than half of incoming cash flows…

Read the full column in Interfax to find out what amount to start investing with, what risks exist in the hotel real estate market, and why professional management is the key factor in a project’s success — [link].