Tourism remains the main sector of the economy of the Republic of Cyprus. Therefore, opening your hotel is the most attractive business idea. If you are considering buying a hotel in Cyprus, you should know the features of this type of asset to accurately assess all the pros and cons of this investment.
What to pay attention to when buying a hotel?
Selling hotels in Cyprus is one of the ways to get a ready-made business and start earning money. Prior to investing your money in a hotel, you need to assess the possible risks and understand how quickly the investment will pay off. Therefore, if you are offered to buy a hotel, answer the next question: "How much net profit can I get in a year?". A thorough analysis of the following materials will be helpful:
- accounting statement;
- automated accounting systems (PMS);
- contract base of the hotel.
Analyzing electronic and paper documentation, you will be able to understand what the costs of hotel maintenance are, how much money the owner makes, how many contracts with booking systems, travel agencies and individuals are concluded and valid.
If you are not good at finance and economics, get the assistance of experienced market players when evaluating the hotel's profitability. It is better to get assisted by an expert who is firsthand familiar with the peculiarities of the tourism industry in Cyprus.
Yield estimation
Do not hesitate to find out the sale reasons prior to actually buying a hotel. It is likely that the business has ceased to be profitable or its owner has legal issues. "Sale for additional profit" will be a good answer. In other cases, the desire to give away a profitable and independent business should alert you.
To assess the investment attractiveness of the offer to sell a hotel in Cyprus, calculate the difference between the income received and mandatory expenses. You can find data on fixed costs in accounting documents and automated accounting systems. The list of basic expenses of any hotel, as a rule, includes the following articles:
- payroll budget;
- marketing and advertising;
- maintenance of the real estate and adjacent area;
- taxes and mandatory contributions to extra-budgetary funds;
- commission for booking agents.
The hotel owner can hide one-time expenses, such as fixing the air conditioner. This trick helps hotel owners increase the investment attractiveness of their business. To avoid any mistakes in calculating the possible profit, allow for 15% of the total cost of repairs and depreciation of hotel equipment.
Location
If you would like to buy a hotel in Cyprus, pay attention to its location. If the hotel is located in a big developing city, the cost of real estate will grow from year to year. This also indicates a good capitalization of the hotel's assets. The location of the hotel in Cyprus significantly affects its commercial success. Hotels by the sea are in great demand among tourists. Hotels downtown also remain popular, as they attract with its developed infrastructure.
The sale of hotels in Cyprus is pretty common. There are many hotels with a well-established reputation. Building new hotels is cheaper than buying a ready-made business but becomes increasingly difficult. This is due to the fact that Cyprus is an island state with significant restrictions on land resources.
Selling hotels in Cyprus: possible risks
If you decide to buy a hotel on the sunny Mediterranean coast, remember to avoid unexpected expenses. Make sure that the previous owner does not have any debts to online booking systems and agents before sealing a deal. It is better to have a good relationship with these players if you plan to engage in the hotel business. If the hotel's seller left your debts, you will have to pay them. Admonitions that you are not related to previous transactions, since you have just bought a ready-made business, will not help. Bookmakers apply sanctions not to the owner but to the hotel address. And they will not book it until the businessman pays off the existing debts.
Another investor rule is to carefully assess the hotel's technical condition prior to buying a hotel. Pay attention not only to engineering systems but also furniture, equipment, interior design and even textiles. Buying a hotel in Cyprus, you may have to invest in some repairs and upgrades.
The hotel sale should be carried out together with the staff responsible for meeting guests, maintaining cleanliness and providing comfortable recreation conditions. Otherwise, mass layoffs will leave you alone and forced to suspend the hotel's work until fully staffed.
Advantages of buying a hotel in Cyprus
Buying a hotel in one of the sunniest and most picturesque corners of the planet has a whole range of advantages. The main one is a high level of income. The tourist flow in Cyprus seldom runs out. It attracts by year-long sunny weather, mild climate, clean ecology, a large number of historical and archaeological sites and opportunities for interesting leisure activities with the whole family.
The decision to buy a hotel in Cyprus can be regarded as an investment in the local economy. When investing at least EUR 2,000,000, you become entitled to the so-called Golden Passport. The authorities of Cyprus care about attracting foreign investors. Therefore, they have developed a simplified citizenship program. According to the program, EUR 2,000,000 or more invested entitles you to a local passport. You will be able to live and work in Europe, and visa-free travel around the countries of the Schengen Area. Cyprus citizenship does not void the residence of another country. It is issued not only for the investor but also for his/her family members:
- spouse;
- financially dependent children under the age of 28;
- parents.
You do not need to reside permanently in Cyprus or take history or language exams. You can refund your investment in 5 years by selling the hotel or other assets. Citizenship remains for an unlimited period.
You can invest not only in hotels but also in other kinds of business. To get citizenship, you can buy a company in Cyprus or its assets, government securities, or invest in real estate at least EUR 500,000. The passport drawing-up will take 6 months. It is important to have zero problems with the law and be able to prove the legitimacy of funds invested in the economy of Cyprus.
Taking into account the specifics of the Golden Passport program, we believe that the decision to buy a hotel in the Republic is a worthy contribution to the happy and secure future of your family.
How to buy commercial property in Cyprus?
If you decide to become a business owner, contact the experts of P.L. Property Gallery Developers & Constructors Ltd. Our company is the biggest developer in the region with 18 years of experience in the local market. We offer commercial real estate in Cyprus under unique architectural projects using innovative technologies and proven solutions. P.L. Property Gallery Developers & Constructors Ltd. will assist you in preparing necessary documents, provide interior and landscape design and manage the purchased property.
