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The price for the hotel is 4.200.000 euros
Area of the hotel 4406 m2
Room: 111
1. Evaluation of facility construction costs
According to information received from several construction companies in the construction cost is 1000-1500 euro/m2. Based on this construction cost of this facility is an average of 5.5 million euros (4406 m2 * 1250 Euro).
2. Evaluation of the object by the number of rooms. According to the procedure adopted in
Spain's hotel industry, the cost of the hotel is calculated based on average
the sum of 60.000 euros multiplied by the number of rooms. According to this
method of cost of the hotel is 6.66 million euros.
3. Score based on market value per square meter. According Fotocasa market value of m2 in the province of Girona in July 2010 was 2,580 euros. On this basis the cost of the hotel building is equal to 11,367,480 euros.
4. Score based on payback.
The cost of living in a room is 40 euros per night. The hotel is open
5 months of the year. With a maximum load of revenues of
5 months * 30 days * 40 Euros * 111 rooms = 666,000 euros.
Profit is 60% of revenues, ie 399,600 euros. (According to one
owner of hotels in Lloret de Mar).
Profitability = 399.600/4.200.000 euro = 9,5%.
According
to data obtained from the staff of several real estate companies of
Lloret de Mar, the profitability of hotels in this city does not exceed
10%, but this is when the seasonal work (4-7 months per year).
Since
this return below the target, we must either abandon the idea of buying
hotels, or do the calculation allows us to see under what conditions
the desired profitability (15%) is attainable.
It
should also take into account those factors, which is quite a
significant part of the revenue income of the hotel is a restaurant,
bar, various additional services.
Also, be right to expect no overall profitability and return on capital invested by the investor. It is understood that half of the deal could be financed by the bank.
In
the case of this hotel at a cost of 4.2 million investors will need to
invest 2.1 mln calculate the return on investment of this amount.
Of
the profits should be deducted the interest the bank at a rate of 4% of
this amount constitutes 2.100.000h4% = 84.000, profits, which remain at
the disposal of the investor, be: 399.600-84.0000 = 315.600 euros. Now the figure for return on investment will be as follows: 315.600/2.100.000 = 15,0%. Ie The capital invested in the sum of 2,1 million euros will be paid back in less than 7 years.
An
important positive aspect is the fact that now the property prices in
Spain have reached historic lows, and their growth in the future play to
increase the profitability of this type of investment.
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