Buyers of condominium-hotel units in Edgar “Injap” Sia II’s Hotel 101 near the Mall of Asia complex in Pasay City received Php16,368.40 each as their share from the hotel’s income in May, the first month after the full completion of the project. The hotel started partial operations in July last year.
Officials of DoubleDragon Properties Corp., which owns the Hotel 101 brand of condominium-hotels, projected that early investors in Hotel 101 will likely earn an annualized return of more than six percent.
“If the unit owner bought the unit for Php3 million, that will translate to an effective yield per annum of 6.55 percent,” said an official. That is “4.55 percentage points higher than a regular time deposit investment yield of about two percent per annum.”
If the investor bought his or her unit in the secondary market at around Php4 million, however, the projected return is only 4.91 percent, according to Entrepreneur Philippines’ estimates.
Hotel 101 Manila is a 15-storey development with 518 fully-furnished condotel units.
Unlike residential condominiums for rent or other condotels, Hotel 101 unit owners earn depending on the average occupancy rate of the entire hotel—not just of their individual units. Owners earn a monthly income of 30 percent of the total gross room revenues less value added tax, divided by the total number of hotel units.
For example, if the average occupancy rate is 90 percent, the investor can expect to earn Php329,786 a year, which yields a return of 11 percent if the unit was bought for Php3 million or 8.2 percent if the unit was bought for Php4 million. If the occupancy rate is only 50 percent, the annual revenue share is Php183,214, which gives a return ranging from 3.7 percent to 4.9 percent depending on the acquisition cost of the unit. (See table)
Apart from their share of hotel room revenues, Hotel 101 unit owners are also entitled to a voucher that entitles them to 30 days of stay at the hotel a year.
All operations of the hotel rooms—which includes marketing to the public, handling the tenants and maintaining the room—will be handled by the Hotel 101 management. In return, they get a 70-percent cut of the hotel’s revenues.
Jess Uy, a Singapore-based investor who bought a Hotel 101 condotel unit from the primary market, told Entrepreneur Philippines via email that he is happy with the investment. “More than the income, we are happy with the capital appreciation of the property,” said Uy, adding that many unit owners like him are “holding it for longer term.”
As well, he is optimistic about his condotel investment due to several factors. “The strategic location, hassle-free benefits of owning a unit in this condotel project, riding on the economic uptrend of the Philippines including the tourism boom as well as the fact that we have very capable, visionary, trustworthy and experienced tycoons leading the charge makes it a worthwhile investment for the long term,” explained Uy.
Seeing large potential in the condotel business, Hotel of Asia will soon open a second Hotel 101 branch near Bonifacio Global City. Called Hotel 101 Fort, the property is planned to have 608 condotel units.
“We envision Hotel 101 to soon become one of the largest and most recognized hotel chains contributing significantly to the recurring income of DoubleDragon and at the same time providing an innovative, safe and secure investment platform,” said Sia.
Lorenzo Kyle Subido is a staff writer of Entrepreneur PH