What to Consider Before Buying a Hotel in Costa Rica

costa rica hotel buyer information

What You Need to Know Before Buying a Hotel

A beautiful Central American country, spanning two coasts – the Caribbean and Pacific, dotted with waterfalls, volcanoes, rainforests, and hot springs, it’s no wonder that Costa Rica has seen such a consistent growth in tourism over the past few years (showing a 9% increase in 2015, servicing a record breaking 2.6 million visitors). These statistics and the opportunity to find successful investments has led many to consider purchasing and running a boutique hotel in Costa Rica, a market segment that is currently underserved. And while this may sound like a dream for many – hosting guests and owning a bed and breakfast along the beautiful Pacific shores, there is a lot to consider before buying a boutique hotel here..

One great thing about the land of Pura Vida, is that it makes hotel ownership easy to set up. There are no restrictions in Costa Rica on foreign business ownership, and you don’t even need to be a full-time resident. A standard 90-day tourist visa allows you to buy an existing hotel or bed and breakfast, or to build your own.

Experience isn’t a must either. While a background in hospitality and tourism is certainly a plus, many expats have seen great success in owning a hotel in Costa Rica with the simple desire to do something new in life. Combine that desire with a sense of service, some business sense, and the willingness to take a risk – and you’ve got a great start to your future success!

As in any real estate transaction, the biggest thing to consider (after your desires, ability and finances) is Location, Location, Location. While all areas of Costa Rica are seeing a rise in tourist arrivals, beach towns along the Pacific Coast, like Tamarindo in Guanacaste, and the up-and-coming Nicoya Peninsula, as well as the Southern Coast’s Dominical, are seeing a boom in tourism.

Guanacaste’s proximity to the Liberia Airport and reputation as a luxury travel and world-renowned surfing destination make it one of the hottest spots for vacationers and the seclusion of Nicoya, combined with great real estate values and constant infrastructure improvements, makes it an ideal location to run a hotel that caters to destination weddings or the Yogi crowd.

While building from the ground up is a great option (due to exceptional prices on raw land), buying an existing business is a much simpler route to follow, especially if you’ve never run your own business. Purchasing an existing hotel in Costa Rica allows you to capitalize on an existing client base, infrastructure and branding. All vital for your success in the hotel industry. With an existing name, branding, and reputation – marketing becomes easier and you are are able to free up time and money that would be spent on your initial marketing, brand awareness and clientele. What does this mean? A much quicker path to turning a profit!

Many established boutique hotels and bed and breakfasts also bring the benefit of financial history (as well as current reservations on the books!). Facilitating the preparation of budgets, allocating funds, understanding operating costs and even making it easier to obtain financing are all benefits of purchasing an existing hotel.

In addition, obtaining a commercial loan (or any type of property loan) in Costa Rica can be tricky at best. An established property provides immediate cash flow, and often times current owners will offer financing on certain terms, allowing you to obtain your dreams with a little less cash up-front.

Additional benefits of purchasing an established hotel in Costa Rica include the existence and documentation of the legal status needed to run your property. Existing hotels will have permits, approvals and often-times labor law obligations in place, which saves a new owner a ton of headaches.

One last and major thing to remember when purchasing a hotel in Costa Rica is: Don’t Forget the Ticos! As some of the friendliest people on the planet, Costa Ricans are also a big part of your client base. Attract the locals and integrate with the community. Not only do Tico tourists provide a great network, they will be the clients that keep your occupancy up during the slow season. So, get involved! Reach out to local suppliers, attend events and make an effort to integrate in your new home or business location.