Where to buy a hotel if not on sunny Cyprus? Tourists come here all year round, and they are interested not only in the sea coast, but also in the mountains.
If you are thinking of buying your own hotel on Cyprus, take a look at our short but informative guide on this topic!
Benefits of buying and owning a hotel in Cyprus
Yep, there are a lot of competitors, but The hospitality business is still one of those types of businesses in Cyprus that quickly pay off and make a profit. There are always a great number of tourists on the island, especially in the summer season. In large cities, the hotel attracts not only vacationers, but also international workers who came to Cyprus for a short period of time. So your rooms won't be empty.
What should be noted fr om the obvious advantages of buying and maintaining a hotel in Cyprus:
- low cost as similar level hotels in Mainland Europe cost significantly more
- year-round in some locations of Cyprus
- ease of recruiting staff who speak several languages: for example, it is not difficult to find employees who are fluent in Greek/English/Russian/German and Turkish languages
- a wide variety, you can buy a house in a tourist village in the highlands as well as seafront hotel
- profitable investment as the hotel is an excellent real estate that doesn't lose value.
It should be noted that some hotel owners are selling their business at a discounted price during the pandemic. This can be regarded as a plus, but you need to remember that since it's time of COVID, the company will not start making profit immediately. But later (after all the quarantines) people will go on vacation, and at this moment the hotel owner will begin to receive excellent income.
Risks and how to avoid them
Of course, there are not only benefits but also risks.
- The most important risk is if the new owner cannot withstand the competition. And Cyprus, as we noted above, has a lot of hotel competitors. But there are still many unoccupied areas, so before buying, you should carefully learn your competitors: what they offer to customers and if you can create something new that others don't have.
- The second big mistake of a hotel buyer is the purchase of a hotel with unclosed debts for booking services (Booking and others). These things need to be checked before signing the contract. If the former owner warned about the debt, it is quite logical that they should make a discount just for this amount.
- The third mistake is to save on audit. Independent studies are the most revealing. They give a complete picture of the property and the profitability of the business (if an operating hotel is being sold). Even if, outwardly, it seems that there are many guests and the hotel is prospering, you need to ask for help fr om an audit.
Another mistake that beginners often make is an attempt to create a hotel from scratch. As a rule, this is a specific area of business. Therefore, persons who are inexperienced in hotel business should consider two options: either the transfer of the hotel to management, or the purchase of a ready-made developed business with everything necessary (equipment, personnel, etc.).
You also need to understand that a small hotel (for 20-30 rooms) costs less, but it pays off more slowly. Medium and large hotels are more expensive, but if the business management is accurate, the business starts bringing money much earlier.
Family business or management company?
Small hotels are bought by people planning to independently and closely engage in the hotel business, attracting family members and thereby significantly reducing personnel costs. The family business scenario is usually as follows: people are not afraid to take out a loan for part of their expenses, they work carefully and in 1-2 years they start to get a stable income. They buy a finished building with 10-50 rooms.
Buying a large hotel and even a hotel complex is another matter. As a rule, big business needs the management company, or, if the owner has another hotel, the management personnel can be transformed from the other hotels. If the hotel was purchased at the time of construction or immediately after its construction, advertising, some equipment and staff search costs also are required.
How much income can you expect?
The business run by the management company, after reaching a 'plateau of stability', brings the owner 2-3% per annum. But at the same time, income is almost completely passive, and a businessman does not need to worry about small and medium issues. It is enough for the owner to devote time to the hotel 1-2 times a month.
Doing your own business gives you a different amount of money. The smallest percentage that can be counted on is 5%, but experts note that the profit of experienced hoteliers is 2-4 times higher (from 10 to 20% per annum).
Hotel business variety in Cyprus (with examples)
If we simplify the classification of Cypriot hotels, there are several conventional categories:
- on the seacoast or in the mountains
- in the city or in the countryside
- year-round or seasonal
- small or large.
The first category is geographic location. Coastal hotels in Cyprus have their own target audience, and mountain hotels have their own. They are also related to seasonality.
For example, the seafront hotel is actively welcoming foreign visitors from mid-spring to late fall, when people are focused on the beach holiday. Mountain hotels are in demand among local residents in summer (they prefer to take a break from the summer heat to the mountains on a budget vacation), and in winter they welcome snow lovers and skiers (both locals and foreigners).
Cyprus' urban and rural hotels vary greatly in scale and atmosphere. The city hotel can work all year round if its clients are not only vacationers, but also foreign workers. A village hotel is one or several cozy houses for agrotourists. As a rule, the flow of visitors in rural hotels is not as large as in urban one, but the drops in demand for it are less and therefore not so noticeable.
As a vivid example, here is a hotel in the foothills of the Limassol region. It is designed for a quiet holiday away from the bustle of the city, among the natural beauty. It can be made year-round for guests who are interested not in the beach, but in other types of recreation.
You can note that the hotel is excellently finished, which means that there will be almost no additional costs: a great option for families or beginners. This is the rare case when the exterior matches the "stuffing": the hotel is really good in every sense.
More about the hotel here
A year-round hotel in Cyprus is popular. As a rule, this is the largest complex in the suburbs or a city hotel, designed to have tourists and business travelers. A seasonal hotel in Cyprus is usually open from March to November and only closes during the winter months, unless it is in the mountains.
The sizes of hotels in Cyprus also vary. Here you can find both a small boutique hotel with literally a dozen rooms and a huge complex with a capacity of several thousand people. There are chain hotels, there are private (family) hotels. Each of them has its own circle of clients as well as its own characteristics and features.
For example, a hotel in Peyia (or Pegeia Paphos district) is designed for a small number of guests. This business has to be developed practically from scratch and you need to invest in renovation, but if a competent manager gets down to business, it will soon begin to bring good profit (thanks to the good location and comfort).
More about the hotel here
And this hotel in Episkopi (Limassol) is quite large as it has about 100 rooms. It is in a good location of a vibrant Limassol suburb and has excellent buildings. Moreover, the business operated until recently, which means that you won't need to make a lot of investments in restoration work.
More about the hotel here
Professional advice when buying a hotel in Cyprus
Transaction evaluation and support is the issue that should be entrusted to professionals.
DOM specialists supervise their clients when they buy residential or commercial real estate. DOM real estate agency provides the following services:
- free consultation
- huge database of affordable Cyprus hotels for sale
- looking for real estate objects according to the request
- building condition assessment, advantages and disadvantages of real estate
- advice on taxes, fees, legal and legislative issues, as well as on the provision of different residence permits in Cyprus
- assistance in risk assessment and calculation of approximate profitability
- pre-sale and post-sale premises photos, design services, etc.
- support of the sale and purchase transaction from the beginning to the end
- the possibility of obtaining a ready-made hotel business.
The last point is a really profitable offer for those who want to get a ready business, and in the very center of Limassol. An excellent old building is being restored and finished as a boutique hotel with 22 rooms. Specialists make all the necessary calculations, as well as purchase equipment and hire personnel. The task of the future owner is to make an investment and get a ready-made business.
Read more about the hotel and investment project here
We wish you good luck in fulfilling your dreams and acquiring a hotel in sunny Cyprus!
- Rental property in Cyprus and pets (link)
- Maintenance expenses for your own property in Cyprus (link)
- Limassol city overview: a place to live, relax and invest (link)
- Pissouri. A place in Cyprus wh ere you want to live (link)
Photos: pixabay.com, DOM LiVE, Parklane