Author: Andrey Marenchuk, Executive Director of the management company Ribas Hotels Group.

A hotel is a long-term investment. And not every investor is willing to spend his time managing it, or generally does not have a similar experience. Often people think that a hotel is similar to renting an apartment for a long-term lease: come and take the money. But it is not. This is an operational business that needs to be done every day, without days off. And not everyone is ready for it.

However, investing in hotel real estate can be profitable and certainly successful if the property is managed by a management company. And investors of the new formation understand this. The main task of the management company is to ensure that the hotel depreciates evenly. With this kind of cooperation, the investor can receive a guaranteed passive income.

Our management company Ribas Hotels Group works with hotel real estate in the long term in the format of receiving a percentage of net profit. The priority for us is the hotel, because the owners can change. In addition, it is up to us to monitor the hotel and receive feedback from guests. This is also our image component, so it is important for Ribas Hotels Group to keep the hotels in good condition.

We have many case studies of hotels in our portfolio, with which we work in a similar format. Let's talk about some of them.

Richard by Ribas

Initially, the hotel complex Richard, located at the village of Gribovka, st. Primorska, 11, was managed by its owner. That is, he hired staff, managers, but they had to be directly monitored. He contacted us in 2017, and after a year of work, he wanted to see if he could leave the hotel management on us and move to Australia with his family. And so it happened. However, at some point he needed funds to invest directly in Australia, and he asked to organize the sale of this hotel. We packaged and sold it together with the management company.

The hotel was bought by an investor who was not located in Ukraine as well. He acquired it as passive income. In fact, we solved two tasks for him as for our partner - we supported him well and made the profit that was needed, and got rid of his main pain - he did not want to manage this hotel himself.

We are responsible for the Richard by Ribas all year round, although it is seasonal. That is, our employees come, control the guards, who monitor the property, etc. And now we have been managing this hotel for 6 years. It has a fairly high rating on - 8/10.

Hotel details:

Wall Street by Ribas

Another case is the business hotel Wall Street by Ribas, located in the heart of Odessa on the street. Vice-Admiral Zhukov, 12. The owner initially built a business center, then bought a building nearby and did not know what to build there: either a continuation of the business center or a hotel. As a result, we convinced him that there should be a hotel there, by calculating its financial model. Its payback at that time (2016) was about 8 years. As a result, 6 years have passed since the construction of the hotel. The war and the pandemic intervened a little in our calculations, but at the same time we almost completed the plan to achieve payback.

In addition, it should be noted that at the moment the hotel is in excellent condition, it does not require super-renovation. You can learn more about it from the video on our YouTube channel..

We initially thought about a strategy that after a payback period the owner will put it up for sale.

We participated in this project at the stage of design, financial modeling, launch and management. Completely, comprehensively.

After many years, the Wall Street by Ribas rating on remains quite high - 9.5/10, as the hotel was built according to our requirements.

Hotel details:

Helios by Ribas

In the first year of management of the resort hotel Helios by Ribas, located in Bukovel (Ivano-Frankivsk region), in the village Polyanytsya, Vyshnia tract, we showed a good planned result. I believe that the professionalism of the Ribas Hotels Group consists in the fact that we can repeat the same high result every year. If one day you manage to increase profits, and the next time you don’t, then this is just luck, an accident.

There are hotels that we have been managing for 5-6 years, and they regularly fulfill their targets. Even the pandemic did not affect this data much, because we believe that the task of the management company is to evenly, without any bursts, work on the payback of the hotel and work to ensure that it functions as an enterprise. We raise the hotel to the level that it is capable of receiving, supporting it over the years.

Hotel details:

Bossfor by Ribas

We started cooperation with the Odessa hotel Bossfor (24D Genuezskaya St.) three years ago. In this project, we conducted an analysis, made an audit, thought about how we can increase income, optimize expenses, how to make liquid from illiquid - that is, the usual work with the enterprise.

So we doubled its net income in the first year. This became its target. And now we achieve it every year.

Under the planned indicator, we mean the results that we get after the first three years. That is, for example, the first year was conditionally x, the second - x + 20, the third - x + 20 from the previous year. We take the average from the first three years and make it a plan for ourselves.

Follow the link to read the review of the owner of the Bossfor hotel about cooperation with Ribas Hotels Group.

Hotel details:

How will the market change after the start of the war?

Comparing the European market with the Ukrainian one, we can draw such a parallel - in Europe there are many workers in the hospitality industry and they perform different functions. In Ukraine, this ecosystem has not been formed within the hotel management. In Europe, a hotel without a management company has the lowest value in the future implementation. An exception may be a mini-hotel as a family business.

In fact, any crisis is the best time to review all the problematic points that you had in your business before. In any business, after the war ends, quick solutions will be needed to get out of the predicament. And the result - further business income - will directly depend on the professionals who will manage it.

I am sure that now there will be many investors who want to go abroad and receive passive income. Therefore, the future belongs to operating companies. And it doesn't matter what you want to invest in: offices, hotels, consulting, etc. - let the business be managed by professionals.

More cases of the management company Ribas Hotels Group on YouTube.

Subscribe to our blog to keep abreast of hotel real estate market trends!