* These are not guarantees , but are based on actual hotel rates quoted in Delhi. It does not matter if your particular unit is rented or not. As the revenue from all the similar units is pooled together and the revenue divided in equal proportion among the owners.

20% Guaranteed Rental or Rental Split: Most typical splits are 60-40. This developer is offering a split of 85-15 in favor of the buyer. In addition for the first year, the buyer will receive from the developer 20% minimum guaranteed rental revenues on the initial invested price for their unit, Or 85% of the rental revenue, whichever is higher.

After one year the revenue will be split 85% -15% in favor of the unit holder, with no guarantees. This guarantee will be reviewed annually to reflect changes in economy, wages and operating costs, and determined whether it should be kept or discontinued.  From these revenues the buyer as a owner is responsible for his/her property and has to meet all the expenses and third party expenses on it as detailed below.

The developer for its 15% split is responsible for the Administration of the project. Repair and maintenance of the structure and the buildings. The developer has the sole authority and discretion as to the Management company, to select the Hotel or rental agent, decide room rates for the project and change it if required. The developer is giving a good deal to the buyers in charging property management fees of only 15%, although the work and expenses involved in condo hotel management are much more complex than the simple apartment rental management who also charge 15%.

The original franchise hotel lease will be for 10 years. After the first 10 years the owners and the hotel developers will agree on the future, with a residents association that will likely collectively decide on the best course of action to benefit all concerned. 

1. Franchise fees to the 5 star hotel chain for providing the brand name, quality control, advertising, and the world wide reservation system to keep the occupancy high. According to industry standards this works out to be 10-11% of the revenues.
   
2. Management fees, staff salaries, including front office, maids & maintenance staff, & other desk clerks, telephone and internet operators, service personnel etc. Legal counsel, and attorney firm fees, charter accountant and accountancy firm fees, auditor fees etc. According to industry standards this works out to be 8-10% of the revenues.
   
3. Daily consumables and pilferages provided in the rooms, like soap, shampoo, lotions, creams, toilet rolls, mineral water, ice, newspaper, towels, bed sheets etc, etc. According to industry standards this works out to be 2-3% of the revenues.
   
4. Daily and annual cleaning, service, repair, maintenance inside the building like boiler room, air-conditioning units, generators, lifts, laundry machines etc and outside the building like swimming pools, tennis courts, jogging trails etc.. Daily and annual repair, maintenance and replacement of properties and interiors of the rooms, lobby, front office and corridors. The apartment carpets, draperies, sofa, bed, mattresses, furniture, tv, appliances, lamps, wall hangings, decorations etc need to be replaced every 2-3 years to maintain the units at 5 star luxury hotel standards. According to industry standards this works out to be 5-6% of the revenues. Minimum 4% is held on an annual basis in a reserve account for this purpose.
   
5. The owner is responsible for obtaining insurance for their apartments and contents, against any loss, damage or theft. Plus miscellaneous unforeseen small costs and charges. According to industry standards this works out to be 2-3% of the revenues.
   
6. All utilities, electricity, gas, heat, water, postage etc. According to industry standards this works out to be 3-4% of the revenues.
   
7. Property and hotel license and taxes. According to prevailing rates this works out to be 2-3% of the revenues.

Total expenses as above are expected to be 40%. For the first year the developer has agreed to cap these expenses, and guarantees the above expenses to be maximum 40%. Add to this the developers 15% = 55% of the revenues. Net profits to the owner is estimated at 45% of the revenues from the units. This guarantee will be reviewed annually to reflect changes in economy, wages and operating costs.

The range of profits from all Businesses is usually 15 -25% of the sales. However this business being a real estate business. The net net net profits of 45% of the room sales revenues is a very high and an excellent return to the buyers. In addition the buyers can look forwards to property value appreciations of 30 - 50% every year. If the buyer reserves a unit in 2006, then by the time of completion in 2010 the buyers can expect an appreciation of over 300% on their units. We expect the buyers to make a very good return.  

For argument sake let us take a worst case scenario: This scenario is not likely to happen, however the figures show that even in the worst case, the buyer will still make good money. There is nothing to worry. 

Scenario 2: Let us assume the annual revenue is not $109,610 or higher, but less than even half of that say $50,000. The owner's share at 85% comes to $42,500. Less 40% of $50,000 as third party expenses = $20,000. The owner's net income is $42,500 - $20000 = $22,500. Not bad even this is good income. 

So as the above scenarios show the buyer has all his bases covered and is bound to make a profit on this project. First realistically it is not expected the revenues to be so low as shown in the above scenario. Secondly the owners can take a quick profit and sell their unit at any stage. The owners can sell their units within 1 year, 2 years or 3 years and need not wait for the rental incomes to kick in. The owners can just take the benefit of the appreciation and prices increases and then sell their units. In fact the developer will help the owners sell their units, through their subsidized commission structure in their resale pool program. 

No Management: The owner may decide not to take part in the rental management program. This option the owner can take. Basically this leaves the unit occupied by the owner. The owner can let it to friends or other guests, Long term yearly rentals are OK. However he is barred from letting it out on commercial short term daily or weekly basis and competing with the hotel itself. If the owner elects this option, the owner has to pay home owners association fees of $700 per month. The owners may still take advantage of the cleaning services as a regular hotel suite and other hotel services for a service fee of $800 per month. This ensures the upkeep of your apartment to the same standards as that of the regular hotel suites. Regardless of which program is chosen, owners will have the opportunity to change their plan every 12 months.