Essence of the Hotel Sectional Title concept
A “Sectional Title Hotel” is a hotel where individual rooms or suites within a hotel are owned by separate investors who each own title to a particular room or suite. So, in a sense, these are “alternative” investments within the overall property investment category, with a slant towards hospitality industry investment.
Usually there is an arrangement whereby all the owners within an individual hotel complex “pool” their rooms or suites, so that all owners in that complex share the income and costs generated by the complex as a whole.
When compared to the ownership of a single rental apartment or house, Sectional Title Hotels have the advantage that there is a Management Company that handles administration, letting, maintenance, cleaning etc. etc.
So Sectional Title Hotel ownership is comparatively trouble free, as the Management Company handles all the chores that the owner of a stand-alone rental property normally has to contend with.
Different Names Used Internationally
One of the first things a potential Sectional Title hotel unit buyer has to come to grips with is the different names used for this type of concept in different parts of the world:
In USA and the Americas Generally:
Projects like this are known as “condominium hotels”, or “condo hotels” for short.
In the United Kingdom:
These projects are generally known as “apartment hotels” or “aparthotels”, but sometimes the American word “condo hotels” is used.
In Continental Europe and Some Parts of Latin America:
Generally the terms “aparthotels” or “apartment hotels” are used.
Australia, New Zealand and Canada:
In these countries the name “strata hotels” is used.
Here in South Africa, the Sectional Title Act is the vehicle used to make it possible for individual hotel rooms or suites to be owned by many different owners. As a result, this concept has become known in South Africa as “Sectional Title Hotels”.
Beware – Only Some Sectional Title Hotel Schemes Give Good Income and Growth
Hotel Sectional Title schemes vary enormously in the detail of how unit holders participate in the net income stream from the hotel.
- Some schemes keep conferencing and food and beverage revenue entirely for the benefit of the Management Company and / or the developer selling the units.
- Some schemes pass an unreasonably small share of room revenue to unit owners.
- In some cases the unit holders bear an unreasonably large share of refurbishment expenses.
- Sometimes the Management Company takes an unreasonably large share of profits.
- Sometimes the Management Company draws substantial fees even when the hotel is running at a loss.
See Why Our Very Fair Parktonian Sectional Title Hotel Scheme Offers the Best Investment Property
Please go to our INVESTMENT DETAILS page to see why our Parktonian scheme offers investors the best property investment: a hotel room investment which offers good income, capital growth and the best value available in Sectional Title Hotel units.