What would it cost to live in a hotel after retirement?!

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.

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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!) 🙁

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40 thoughts on “What would it cost to live in a hotel after retirement?!

  1. Reju Mathew

    I think there is an error in your calculation...If breakfast is included, the cost for the remaining meals would be INR 4000 (Lunch + Dinner) for 2 people, bringing the total cost to INR 8500 as per your assumption.

    I think your assumption of INR 1000 per meal per person is on the higher side.

    In addition to loyalty, hotels also provide long term discounts, which would easily yield 5 days of free stay per month.

    Reply
  2. Reju Mathew

    I think there is an error in your calculation...If breakfast is included, the cost for the remaining meals would be INR 4000 (Lunch + Dinner) for 2 people, bringing the total cost to INR 8500 as per your assumption.

    I think your assumption of INR 1000 per meal per person is on the higher side.

    In addition to loyalty, hotels also provide long term discounts, which would easily yield 5 days of free stay per month.

    Reply
  3. PV Subramanyam

    Not such a fantasy post. A good calculator to design - if I were to live in an old age home where I did not own ANYTHING except a phone. Such a cost would be easy to accept. Move in when you are say 75..estimate to live till 95...what will be the cost. Fair enough question.

    Reply
  4. PV Subramanyam

    Not such a fantasy post. A good calculator to design - if I were to live in an old age home where I did not own ANYTHING except a phone. Such a cost would be easy to accept. Move in when you are say 75..estimate to live till 95...what will be the cost. Fair enough question.

    Reply
  5. Jayakanth J

    A room in Hotel Shelter costs only 2000 bucks i think.. Thats enough for us i guess Pattu!! Heart of Mylapore... Great thought. MD of Office tiger, a foreigner had the office in Spencers and stayed in Connemera. He used to walk to his office. Stayed for 8 yrs. Sold it off and its now RR Donnelly..

    Reply
  6. Jayakanth J

    A room in Hotel Shelter costs only 2000 bucks i think.. Thats enough for us i guess Pattu!! Heart of Mylapore... Great thought. MD of Office tiger, a foreigner had the office in Spencers and stayed in Connemera. He used to walk to his office. Stayed for 8 yrs. Sold it off and its now RR Donnelly..

    Reply
  7. Jayakanth J

    A room in Hotel Shelter costs only 2000 bucks i think.. Thats enough for us i guess Pattu!! Heart of Mylapore... Great thought. MD of Office tiger, a foreigner had the office in Spencers and stayed in Connemera. He used to walk to his office. Stayed for 8 yrs. Sold it off and its now RR Donnelly..

    Reply
  8. PV Subramanyam

    If you want 365 nights in a hotel, you need to pay for 100 nights only. That is how the costing in a hotel works. You will of course have to pay for the food on actual number days....The problem is it is very claustrophobic

    Reply
  9. PV Subramanyam

    If you want 365 nights in a hotel, you need to pay for 100 nights only. That is how the costing in a hotel works. You will of course have to pay for the food on actual number days....The problem is it is very claustrophobic

    Reply
  10. Ujjwal Mukherjee

    I have seen old people (mainly old ladies) staying in Serviced apartments in the US. It used to cost in 2003 USD 2000 per month for the one bedroom serviced apartment, which had a separate living area & Kitchen area. The advantage over staying in one's house is security, cleaning is done by the company, you can go to the restaurant for food you you do not want to cook on some days, plus there are some entertainment options and people of your age who are also staying there. I thought it was quite good.

    Reply
  11. Ujjwal Mukherjee

    I have seen old people (mainly old ladies) staying in Serviced apartments in the US. It used to cost in 2003 USD 2000 per month for the one bedroom serviced apartment, which had a separate living area & Kitchen area. The advantage over staying in one's house is security, cleaning is done by the company, you can go to the restaurant for food you you do not want to cook on some days, plus there are some entertainment options and people of your age who are also staying there. I thought it was quite good.

    Reply
  12. Ujjwal Mukherjee

    Since we are talking about Fantasy please read this..... Surely this will remain a fantasy for most of us but hey who knows.... If Indian markets continue to give us return in the excess of 20% for the next 20 years, if we can increase the investment corpus and Indian currency holds firm against the dollar then may be it can be a reality for some....
    http://www.telegraph.co.uk/travel/cruises/cruise-news/11357243/Meet-the-86-year-old-widow-whos-spent-10-years-living-on-a-cruise-ship.html

    Reply
  13. Ujjwal Mukherjee

    Since we are talking about Fantasy please read this..... Surely this will remain a fantasy for most of us but hey who knows.... If Indian markets continue to give us return in the excess of 20% for the next 20 years, if we can increase the investment corpus and Indian currency holds firm against the dollar then may be it can be a reality for some....
    http://www.telegraph.co.uk/travel/cruises/cruise-news/11357243/Meet-the-86-year-old-widow-whos-spent-10-years-living-on-a-cruise-ship.html

    Reply
  14. RAJEEV

    No need to do all this calculation,just become LIFE member of Harekrishna community and you can stay in all temples which have very decent accommodation at dirt cheap rates Across the world .Three days free stay is there across the temples across the world including USA , Europe Australia & of courseIndia.You can find HareKrishna temple even in the remotest places .ALTHOUGH TRAVELLING COST WILL BE THERE but it will not be more than 1 lakh per month I presume add 10,000 for food if you don't want prasadam KHICHDI which is delight for people like us & available of course free there.

    Reply
  15. Senkan

    Nice Post. Reminded me of my naive childhood ambitionss When I was 10 years old, my biggest goal in life was to make enough money to eat breakfast (Two Idlis + 1 vada), lunch ( Bisibela bath + Curd Rice) and dinner (Dosa or poori) at a vegetarian restaurant called Anjaneya Vilas in my hometown.

    Reply
  16. B

    These points are not related to this post. However I came across recently so it thought let me post it so that it can be shared with others.

    1) In one of the advertisement of Pradhan Mantri Suraksha Bima Yojana (PMSBY) (Rs12 a Year wala), on how to claim the amount in case of death, I read that postmortem report (PM) has to be submitted.
    • If that is the case we need to ask our selves...will our families carry out PM for claiming 2 lacs?
    • Is such a clause present in all the accidental death policies?. If yes than I doubt most of the families will do PM to claim the money.
    2) In case of mediclaim, I am aware that the room rent is capped at 1% of the insurance amount. However my agent (new india) recently told me that the entire claimed insurance amount is given in proportion of the permissible room rent vs actual room rent.
    • For Eg. Insurance amount 100000/-. So room rent capped at 1000/- per day. However if I stay in a room of 3000/- per day and rightfully claim 60000/- as expenses….than only 20000/- i.e. (60000*1000/3000) will be paid and not 60000/-. Balance 40000 I will have to shelve from my pocket. Is it so in all the policies?
    * is it true for group policies also??

    Reply
    1. freefincal

      Checked it. My understanding is, PM is required only in case of suspicious death and not otherwise. A simple death certificate will suffice.

      Reply
  17. A.Sundaram

    Dear Pattu,
    I seriously toyed with this idea after the tragedy in my life-of both me and my daughter shifting to a decent and plush hotel-and spent lots of time deliberating on the pros and cons.While one issue is the claustrophobia(as Subra has rightly pointed out),another major problem will be that you will find that all the other guests leave after staying for 2-3 days-while you are stuck in the hotel all alone.You will have no known neighbours and you will start yearning for the comfort of known faces with whom you can have a friendly and intimate chat.And the food-eating in a hotel every single day for all the meals will make one sick-literally and metaphorically.[I was-from May to November 2013-and trust me,it is the most sickening experience].

    Still-I fantasize about staying in a 5-star-knowing fully well that more than the financial implications,it's the loneliness and the claustrophobia which will eat me up.

    Reply
    1. freefincal

      Dear Sir,

      I thought of you the whole time while I wrote this. I vividly recall our discussion on the topic of a retirement home at AIFW and your requirements. The efficiency with which those requirements will be met at a hotel, imo, will far better than any retirement home.
      As long as one is healthy enough, I think there are enough options inside and outside a hotel for food and company. Yes claustrophobia is a serious issue and I have experienced it. The only way to solve that is to get a bigger room with a view! All said and done, it boils down to personal tastes.

      Reply
      1. A.Sundaram

        True.Again staying in a hotel/retirement home as a couple is far easier-at least one has the support and company of the spouse if not anyone else-but for a bereaved person it's unfortunately a hobson's choice.

        Thanks,anyway,Pattu,for this post-it at least helped to fantasize a colourful world still awaiting.Just now informed my daughter but she had already read it in the morning soon after you posted 🙂

        Reply
  18. moronbuffett

    as a fantasy from a hitchcock screenplay,

    there might be an unclaimed dead body rotting for 10 days with no next of kin notification.

    that might be you.

    Reply
  19. Basudev Tewari

    When I have stayed in 4/5 Star hotels for conferences, a few days have made me claustrophobic, lonely and finally, home sick. The hotel comfort is rather PLASTIC whereas home stay seems NATURAL.
    But staying in 5* hotel in old age (for people with 10 crore corpus) vs that in an old age home is another debate...

    Reply
    1. freefincal

      I agree about claustrophobia. However, if perhaps the spouse is there with you in a larger room it may be better?!

      Reply

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