From This is Money:
A high-profile advertising campaign and luxury London boutique hotels attracted hundreds of investors to GuestInvest, but the company announced it had gone into administration today.
The business was a joint venture with Bank of Scotland and is likely to have been hit hard by parent group HBOS’s forced rescue merger with Lloyds TSB.
Launched in 2004, by businessman Johnny Sandelson, GuestInvest offered investors the chance to buy hotel rooms on long leases, which were then let out to guests for up to £1,000 per night.
Its first venture was a hotel in London’s trendy Westbourne Grove, where 20 rooms went on sale for £235,000 each on 999-year leases.
Investors got a 50% share of the income from their room and were entitled to use it for up to 52 nights per year.
Returns of around 8% per year were reported by investors, however experts said that the market for reselling hotel rooms was likely to remain niche and could be seriously affected by an economic downturn.