Many a dynasty has been built in the hotel business over the years, Conrad Hilton and Rocco Forte, being just two of the dynamic entrepreneurs whose fortunes have thrived on providing somewhere for travellers to rest their weary heads at night. But thanks to the advent of buy-to-let concept in the hotel sector, UK investors can now own their very own hotel room too.

First things first. The buy-to-let concept is not fractional ownership or timeshare. With the former not only do you get a share of the room rate when you are not using it but it is also yours to sell, when you want. By contrast fractional projects do not give you a cut of the take when other guests stay in your room.

So who sell hotels by the room?

There are now two separate companies offering buy-to-let hotel rooms in the UK: Guestinvest and Premier Resorts. Guestinvest opened its first hotel in London's Notting Hill in 2004. The group last month announced the purchase of its fourth project - The Jones - in the capital. On top of that it has an extremely high end deal (prices start at £1 million) with the Anouska Hempel designed, Blakes, in South Kensington to sell 39 of its rooms. For its part Premier Resorts is selling 66 rooms at its new 218-room hotel, The Pestana Chelsea Bridge.

How does it work?

In simple terms you buy the hotel room, and as well as the right to stay there some of the time, you also get a cut of the room rate, when it is being used by paying guest. As part of the deal the hotel will see that the room is kept in good order, and redecorated when needed.

That said the exact details of the deals at different hotels vary - even if the starting prices for rooms are more or less the same £295,000 at Pestana, and £319,000 at The Jones - so you have to look carefully at which deal works best for you, taking into account the hotel's potential. The Pestana allows owners to stay for 30 nights a year, while Guestinvest owners can stay for 52 nights at its hotels and while owners at Guestinvest get 50% of room income, those at Pestana get 50% of net room profits.

"All I had to do was hand over a deposit, set up a mortgage for the other half, and the room I owned would be managed and maintained by a team of staff." Anna Geor, assistant director in human resources, London

While Chelsea Bridge is Pestana's first UK-based hotel, the group has been running hotels for more than 30 years across the globe. The group has factored its global reach into the deal, as buyers who keep their hotel room for more than three years can swap 15 of their 30 nights for rooms in any of Pestana other hotels.

On top of that Pestana's package guarantees a minimum room return of 6% for the first two years after purchase, whereas Guestinvest investors only get a guaranteed 6% for one year.

How to buy?

Both businesses and individuals can buy hotel rooms. Indeed businesses using a hotel room just one night a week, could save themselves £8,000 a year in hotel bills alone. While for individuals it is possible to get a mortgage to buy a hotel room and even to get 40% off the purchase price (via tax relief) from the Government if you buy it through your pension.

However, one key point for those who fancy buying a room with their pension to note is that the rules for self invested personal pensions dictate that you must pay to stay in your own room as it technically belongs to your pension fund and not to you - so if it is the "free" nights away aspect which appeals, it would be better to buy the room either through your company or directly yourself.

Anna Geor, an assistant director of human resources from London was looking for a home for her savings when she read about buy-to-let hotels. She explained: "I had some spare cash from a combination of savings and work bonuses, and wanted to make an investment that would earn money, when I read about GuestInvest."

"All I had to do was hand over a deposit (I'd saved up enough for just over half the sale price), set up a mortgage for the other half, and the room I owned would be managed and maintained by a team of staff."

Miss Geor certainly feels her hotel represents a good investment. She continued: "My room in Nest, a new GuestInvest Hotel in London's Bayswater, is gorgeous, with a huge bed, ensuite bathroom and plasma TV. It cost £299,000 - the price of a pokey one-bedroom flat in much of London - and will be rented out for around £126 a night. I'll get a guaranteed annual return of 6% (£18,000) in the first year, which could rise to 8% (£22,000). The money pays the mortgage and still makes a return."

"The healthy figures for London hoteliers over 2007, concluding with strong December figures, reflect the capital's status as the one of the world's top places to visit." Robert Barnard, partner for Hotel Consultancy Services at PKF

What about the economic downturn?

Consultancy group Deloitte found that the UK hotel sector has maintained strong growth despite the reported softening of economic conditions. In particular it said London hotel rooms had occupancy rates of 83.6% in 2007, while separate research from accountants PKF shows that room rates in London are rising as well - up 6.4% in December 2007, compared with December 2006.

Commenting on the figures Robert Barnard, partner for Hotel Consultancy Services at PKF, said: "The healthy figures for London hoteliers over 2007, concluding with strong December figures, reflect the capital's status as the one of the world's top places to visit."

What about if I want to sell?

Just over one third of the original Guestinvest investors have sold their rooms in Guesthouse West. In the three years they owned their properties the average return from room rent was 6-7% while the rooms themselves, purchased at the beginning of 2004 for £235,000, were selling last year for £274,000 - a profit of £40,000, however it should be noted that these figures will vary according to the performance of the property market.

Useful links:

www.pestana-chelseabridge.co.uk

www.guestinvest.com

By Lindsey Rogerson