Living in a hotel after retirement has been my fantasy for long. Let us calculate how much it would cost to live in a hotel after retirement.
Yes, this is a fantasy post and I will never be able to pull it off, but it is intriguing to calculate the costs and consider the benefits of hotel living.
The first time I was exposed to the idea of hotel living was when I saw the James Bond movie, Diamonds are Forever.
There was a character (a bad guy of course) who live in the top floor of a Las Vegas casino. He was modelled after maverick tycoon, Howard Hughes (the 'aviator') who spent years in a hotel (at Las Vegas where he owned several).
Ah! To be a recluse seems so inviting! Only the rich can afford that though.
A fantasy that was gathering dust at the back of my mind was jolted back to life by two events that occurred in the last two weeks:
1) Dadi Balsara, who founded the Mount Everest Water company (and sold it to Tata) died last week. after staying in room no 901 of the TajManSingh Hotel since it started in 1978. That was his official address! The 5-star hotel rewarded his loyalty by charging his only Rs. 15,000 a day. He had Rs. 250 Cr in his account when he died, so it was not much of an issue for him!
2) Omar Sharif who remains immortal on screen in Lawrence of Arabia and Dr. Zhivago, died a few days ago after long hotel stays in Cairo and Paris. He is supposed to have loved that fact that all the staff knew him and he did not have to worry about cleaning and an ambulance was available on call when he needed one!
Hotel living has some serious advantages the way I see it. We don't have to clean or cook and worry about property and water taxes.
Photo credit: PortoBay Hotels & Resorts (flickr)
We can be as social as we want to be: stay in your room or have an active social life.
Instead of living in a remote retirement villa or alone at home, there would be a doctor on call and an ambulance to take us to the best hospitals in the city.
The more I think about it, the more I fall in love with the idea.
Now, what would it cost a couple (with no children or with independent children) to live in a hotel?
Let us assume they opt for a three-star hotel.
The current tariff in a hotel I know is Rs. 4500 per day (all inclusive+ breakfast).
Taking into account Rs. 1000 (all inclusive) per person, per meal, the couple would need to spend about Rs. 10,000 a day.
That is Rs. 36.5 Lakhs a year on hotel costs alone. If we add tips, other expenses such as travel, medicines etc., let us make it a safe and round Rs. 45 Lakh a year.
Now if this is the current cost, how much would it take to live in such a hotel for 25 years?
The biggest advantage of hotel living is royalty benefit. Your costs will not increase as much as it would elsewhere. So let us assume a low inflation of 6% a year.
We invest in such a way that the entire portfolio earns about 8% a year after taxes. Not easy, but we will go with it.
With these assumptions, the corpus need for 3-star hotel living is about Rs. 9.1 Crores.
This is not such a high figure. Unattainable for me, but it is not as high as I thought it would be.
If I wait for 10 years and then choose to live a hotel, I will need Rs. 23.5 Cr at 10% inflation (no loyalty benefit before you become a guest!) 🙁
Register for the New Delhi DIY Investor meet: April 23rd 2017Get free, yet comprehensive calculators, tools and analysis delivered to your mailbox! Subscribe to get posts via email
Buy our New Book!You Can Be Rich With Goal-based Investing A book by P V Subramanyam (subramoney.com) & M Pattabiraman. Read more about the book and pre-order now!