Hotel Occupation

[scotguy85]

Hi guys,

Got a wife and 5 kids. We have been looking for a new property for a couple of years but struggle to find something to suit our family size.
Got my hands in a few different industries and own businesses in the engineering, fitness and home care sectors. My wife and i have always liked the idea of adding a pub/restaurant to the portfolio.

There is a small hotel for sale, close to us (12 bedroom) which comes with a bar and large function suite and eating area, which ticks a lot of our boxes. It has been up for sale for almost 2 years.

Big question is, can we occupy 6 of the bedrooms as a family, while keeping 6 for bookings? It would be the addition to the portfolio we were looking for as well as being the "house" move that we needed.
From research, the hotel is a bit oversized as it is, and only a couple times a year was all the rooms booked, so its not like we are losing out on a massive amount nightly fees

I have heard of hotel managers etc staying in hotels, but how does it work regarding the family of a hotel owner.... a bit commercial vs residential...

Thanks

 

[Mark T Jones]

I'm not fully understanding the question - are you refering to tax to licences or physical changes to the building?

In basic terms, there is no reason why you can't occupy rooms yourself - though things like business rates may be affected

 

[WaveJumper]

A 12 bed hotel has just become a 6 bed I would have thought the only thing that was going to hurt would be the bottom line, unless of course you double the room rate per-night. Make it one of those Boutique Hotels I like staying in them

 

[scotguy85]

I'm not fully understanding the question - are you refering to tax to licences or physical changes to the building?

In basic terms, there is no reason why you can't occupy rooms yourself - though things like business rates may be affected

Basically... am i allowed to move my family in and use as primary residence

 

[scotguy85]

A 12 bed hotel has just become a 6 bed I would have thought the only thing that was going to hurt would be the bottom line, unless of course you double the room rate per-night. Make it one of those Boutique Hotels I like staying in them

Averaging 3 rooms a night booked during winter, 6 rooms a night during summer and fully booked 2 or 3 nights a year when big events are on. That is enough to make ends meet, then the external bar and restaurant is where most of the money comes in.
Bottom line won't take a hit, especially with me saving £10k a year on my current mortgage.

 

[Mark T Jones]

Basically... am i allowed to move my family in and use as primary residence

Small hotels are often the primary residence.

In mortgage terms I guess it will be viewed as commercial rather than residential, which differ in both criteria and terms. (It's a while since I've done commercial mortgages, so you'll need to ask).

In practical terms, it is very different living in a business open to the public than in your own house - something to consider!

 

[Paul Kelly ICHYB]

Basic answer is yes, you can.

However, if the hotel runs at a highish occupancy, you may be losing out on good revenue that could allow you to rent/buy a better property!

Assume 10 rooms regularly rented out 4 nights a week. You using 4 of them for residential (as 2 are not rented out, on average and used for residence anyway), at £50 per room/per night is £800 turnover per week/£42k year, plus additional revenue on F&B, is lost

What could you rent/buy for that!

The hotel costs are mostly sunk, so you will not sweat the asset!

 

[fisicx]

I know soneone who did just this. They had to block off a set of stairs and add a door to keep the two areas separate. They also needed to add a small kitchen and add a family bathroom to the private area.

Not sure if they needed planning permission but they did need the building inspector to approved the structural changes.

 

[WaveJumper]

Averaging 3 rooms a night booked during winter, 6 rooms a night during summer and fully booked 2 or 3 nights a year when big events are on. That is enough to make ends meet, then the external bar and restaurant is where most of the money comes in.
Bottom line won't take a hit, especially with me saving £10k a year on my current mortgage.

Just to clarify I did mean, yes make it a six room hotel, increase the rates on the 6 and away you go

 

[scotguy85]

Just to clarify I did mean, yes make it a six room hotel, increase the rates on the 6 and away you go

Cheers, i will be doing research with council on Monday, so hope its as easy as that!

 

[scotguy85]

Basic answer is yes, you can.

However, if the hotel runs at a highish occupancy, you may be losing out on good revenue that could allow you to rent/buy a better property!

Assume 10 rooms regularly rented out 4 nights a week. You using 4 of them for residential (as 2 are not rented out, on average and used for residence anyway), at £50 per room/per night is £800 turnover per week/£42k year, plus additional revenue on F&B, is lost

What could you rent/buy for that!

The hotel costs are mostly sunk, so you will not sweat the asset!

Hi Paul, there was a reply above...
Average 3 rooms a night during Winter, 6 rooms a night during Summer, so even at "peak" there will still be 6 operational rooms while other 6 used as residence.

Only 2 or 3 single nights/weekends a year was the hotel ever fully occupied. Offset that loss vs what we wpuld be saving on our current mortgage, we will be quids up!

I just hope its easy enough to push through

Cheers

 

[Nathanto]

Big question is, can we occupy 6 of the bedrooms as a family, while keeping 6 for bookings?

The simple answer is yes you can.

Not as grand as what you are considering but my home is a 9 bedroom property and the previous owners simply sectioned off four of the bedrooms for themselves and kept the other 5 for accommodation bookings. I've now reverted it back to just being my private home.

As others have mentioned, if you need a mortgage then one downside is that you will need a commercial mortgage rather than a residential one.