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Hotels & Resorts Strata Sale Lease Back Business Model

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Hotels & Resorts Strata Sale Lease Back Business Model

The Indian Hospitality industry has become the backbone of the Indian economy. It contributes nearly 9% of the overall GDP and created one of the four new jobs in the country. However, with the outbreak of COVID-19, the sector became standstill with a small demand from the key sectors. Not only the hospitality industry but the entire corporate sector has been shaken due to the outbreak.
With the current scenario, work from home (WFH) has become the new normal making everybody con- fined within the four walls of their homes. Though the culture of WFH has gained prominence, it also has resulted in increased working hours, a lack of personal time, disrupted work-life balance between the in- dividuals. Though the lockdown brought in the WFH culture to our country, the leisure from home concept is still something that cannot be explored.
With the rise in work from home culture for at least the financial year 2020-21, the demand for staycations and weekend getaways is expected to rise and create demand for the hospitality sector in India. The rise in this new trend has given re-birth to the concept of the strata sale-lease back model in India. As of now, the hospitality sector primarily operated on the lease, management contract, and franchise model where the developer and hotel operator entered into an agreement with the aforementioned business models and executed their hotel & resort project.
The rise of this new business model will open avenues for investors, home buyers, as well as high net worth individuals to come and invest in hospitality, focused real estate projects. The projects can either be a res- idential building with service apartments or a project which only has villas. The middle-class who dream to buy a home of their home will get this opportunity to invest in a self-sustainable business model that will not require any additional in-pocket expenses to run unlike Air BnB and other privately owned holiday homes.
These second homes not only are self-sustainable but also allow the individual owners to occupy them for a specific period every year as agreed upon in the contract to escape from the daily routine and might use the space for the work from home culture which is picking up pace in the country. Not only this self-sustaining asset allows you to earn from it, but it also allows you to use the space for a specific period within a year for free.
The business model was introduced in the country maybe a decade ago but due to unclear thought and lack of detailed study, the business model turned out to be unsuccessful during the first attempt. In this report “Hotels & Resorts Strata Sale-Lease Back Business Model- The Future of Hospitality Industry In India” we have tried to capture the key ingredients to make the business model successful in India by studying many successfully implemented cases across the developed nations. The report also captures the key el- ements of the sales agreement as well as the profit & loss statement projecting 10-year potential financial gains the investors can make from a luxury project with this business model.
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