Excellent idea there two major hotels in Mombasa running on the same concept and very successful

As an investor, you should ask yourself the most obvious question which you normally do before an ipo. How many rooms are the builders or original owners keeping?
Of course you then need to know about who will manage the hotel, what are its unique selling points. Where does 70% occupancy rate come from in Kikuyu etc? What if occupancy rate is 30%? Is the rental yield on a shared basis or does your room have to be occupied for you to get paid?

what has not been mentioned is the tax rebates on hotels given by KRA, i think the IDB if im not mistaken is 100% ie you get a 100% tax rebate on the construction cost of the structure, add the other normal Wear and tear deductions and suddenly it begins to make sense

@siringi...thanks. The idea is excellent.

@jmbada...an experienced qualified hotel manager will be employed for the initial period then the shareholders decide on whether to retain or add more managerial positions during the consequent AGM. The restaurant and bar will be let out to independent players hence reducing managerial work to only marketing the hotel and cleaning,cashier,security etc roles.

@mainat..over 80% of the hotel will be sold out. 70% occupancy rate will come from the fact that the hotel sits on a busy international road, southern bypass. Most visitors idealy will be travellers from mombasa/tanzania to uganda/rwanda. A few will be from kenya.
If the hotel has very low occupancy, it transforms into bedsitters. Each owner will be given an equal share from the overall occupancy since all the rooms are the same size.

@the deal..the southern bypass will officially open from february 2015. By then, occupancy rates will be high due to intense online marketing. Kikuyu town is currently doing 100% occupancy for the hotels.
I will consult widely with tax consultants on the tax issue. In South Africa/USA, if the hotel room is taken as a second home, investors dont get taxed.
Returns of 11.8% are still far higher/profitable than for the usual apartments which are around 6 to 7%.

@kizee..true..once we engage tax consultants, we will be able to resolve the taxation issue.

@adrianmwai..true..our next project will be in nakuru/lamu/diani areas. kes 1,200 to kes 1500 gives you a clean room in nakuru. The kes 1,400 projected for southern bypass will surely rise due to the high demand since the location is right next to a busy international road.

We are currently exhausting the best markets and currently southern bypass is the best location due to proximity to nairobi, middle zone for mombasa to uganda travellers etc. After this, Nakuru,Lamu and Diani will be the next best options.

@adrianmwai..ok. In Nakuru, we are currently in discussion with 2 plot owners, one directly opposite state house nakuru and the other bordering the national park near pipeline. Once they start, i will let you know.