An EB-5 project for hotel construction involves an investment that finances a hotel development as part of the EB-5 Immigrant Investor Program (EB-5 Visa). The EB-5 Immigrant Investor Program is for foreign investors that can invest a minimum capital in a U.S. business. An EB5 project for hotel construction has a high potential for creating the minimum 10 jobs required for EB5 Visa eligibility. There are important considerations such as investment security, job protection, and prospects for permanent residence when choosing to invest in an EB5 hotel construction project. An EB-5 Visa holder can apply for permanent residence (green card) to live and work permanently in the United States.
The process of investing in an EB-5 project for hotel construction involves consulting with an immigration lawyer and gathering the necessary documents for an EB5 Visa application. The EB-5 project should be carefully chosen and the required amount invested to qualify for the EB5 Visa.
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What is the EB5 Project for Hotel Construction?
An EB-5 project for hotel construction is among the top choices for EB5 investments along with real estate development, biotechnology, and the restaurant industry. An EB5 investment is the minimum capital required of a foreign investor who is applying for the EB-5 Immigrant Investor Program (EB-5 Visa). The EB-5 Visa allows foreign investors (EB-5 investors) to obtain permanent residence (green card) in the United States. Having a permanent residence (green card) status allows a non-US citizen to lawfully work and stay in the US permanently. Foreign investors should invest a minimum capital in a new US business that will create at least 10 full-time jobs for American citizens to qualify for EB-5 Visa.
The EB-5 project for hotel construction remains a viable source of construction financing for hotel developers in the United States. The number of employment produced by new hotels increases the pool of potential EB5 investors and funding sources. An EB5 hotel construction project increases the likelihood that the project will satisfy all criteria for the EB-5 investors’ visa application.
How Does the EB5 Project Work with Hotel Construction?
An EB5 project works with hotel construction investments because of the favorable dynamics of hotel value and financing. Hotels are reliable sources of repayment to EB-5 investors. Hotels typically need two to four years to ramp up their operations after construction is finished. The value of a hotel increases to a significant amount above the project cost after opening and reaching stability. An EB-5 project for hotel construction will be able to repay the investment in 5-7 years which is the average maturity date for an EB5 project.
Examples of EB-5 hotel construction projects include the Hilton, Hyatt Hotels, Marriott, and Starwood’s SLS Hotel & Casino. An EB5 hotel construction project involves an abundant supply of brands, independent third-party managers, and industry-specific professional advisors. The majority of these players avoid dangerous agreements by using their experience, resources, and insights. These experts help to reassure EB-5 investors that the EB5 hotel construction project and company plan are viable.
What are the Advantages of Investing in EB5 Project for Hotel Construction?
These are the top advantages of EB-5 project investment in hotel construction.
- Need for EB-5 investment. Hotel developers need more capital from EB-5 investors compared to other developers. Hotel developers have fewer appealing options for construction finance and depend on EB-5 funding. Hotel developers are more ready to put up with the processes associated with EB-5 financing to fill out their capital stack.
- New job creation. Hotels are operating businesses that create more jobs compared to other types of real estate projects. An EB5 hotel construction project makes it easier to meet the minimum job creation requirement of the EB-5 Visa.
- Ready source of repayment. An EB-5 project for hotel construction is a reliable source of repayment to EB-5 investors in 5-7 years.
What are the Disadvantages of Investing in EB5 Project for Hotel Construction?
EB-5 investors should take note of the top disadvantages of an EB5 project in hotel construction.
- Operations jobs. There is a possibility that the United States Citizenship and Immigration Services (USCIS) would not consider operations jobs in the total job creation requirement. The United States Citizenship and Immigration Services (USCIS) specifies that jobs must be created within two and a half years of the approval of an EB-5 investor’s Immigrant Petition by Standalone Investor (I-526). A hotel project should fit within the timeframe indicated by the USCIS to have operations jobs included in the total job creation requirement.
- Tenant jobs. USCIS is stringent about which employment can be included in the total number of jobs created. Jobs created by tenants of a hotel project might not be included in the required job creation total.
- Visitor spending. Visitor spending revenues can be used to estimate new jobs created in the area as a result of the EB5 hotel project. The difficulty lies in proving visitor spending. USCIS needs the EB-5 hotel project to show that it would draw tourists to the area rather than merely tapping into an already-existing tourist industry.
What are the Things to Consider in Investing in EB5 Project for Hotel Construction?
The EB-5 Visa requires a substantial investment from foreign applicants. It is important to understand the considerations in investing in a particular EB5 project. Here we have the 8 things to consider when investing in an EB-5 project for hotel construction.
1. Reliable Brands
An EB-5 project for hotel construction involves working with reliable international hotel developers. These hotel developers have extensive experience in constructing and sustaining lucrative hotels. Working with reliable hotel brands increases the EB5 investor’s chances for investment return and eligibility to create new jobs.
2. Job Protection
Job protection pertains to the number of jobs that exceed the minimum of 10 jobs required for an EB-5 Visa. Increased job protection is possible with EB5 hotel projects that generate more than 10 jobs per investment.
3. Job Creation in Operations
An EB-5 hotel construction project generates daily operational jobs in staffing, housekeeping, and guest services. Establishing job creation and protection satisfies one of the conditions of the Immigrant Petition by Standalone Investor (I-526) of creating at least 10 full-time employment for US citizens.
4. Direct Job Creation
The USCIS considers construction jobs from an EB-5 Project for hotel construction lasting longer than 2 years as direct jobs. A direct job is a position generated by the new EB5 project itself. The 2 year period allowed by USCIS gives EB-5 investors the time to generate more direct jobs compared to projects lasting less than 2 years.
5. Full Capital Stack Contributes to Job Creation
All funds raised contribute toward the EB-5 investor’s job creation requirements. An investment of $900,000 during a $200 million development of a new hotel potentially results in sizable job protection.
6. Improved Prospects for Permanent Residency
Hotel construction projects with strong job protection increase the likelihood that a conditional permanent resident EB-5 investor would be granted unconditional permanent residence. A conditional permanent resident is granted a green card valid for 2 years. An unconditional permanent resident has a green card that is valid for 10 years. The EB5 investor files the Petition by Investor to Remove Conditions on Permanent Resident Status (I-829) to become an unconditional permanent resident of the United States.
7. Security of Investment
An EB-5 project for hotel construction is recognized as relatively safe for return on investment. The risk of an EB5 hotel construction project is comparatively low as opposed to other EB5 investments.
8. Structure of the Project
The EB-5 hotel project structure is simple to comprehend for foreign investors. The income models of hotels are simpler for novice investors compared to other projects. One of the most important factors in a hotel’s success, for instance, is a wise choice of location, which most investors can make with little more than a map.
Check our page on What is an EB-5 Visa Project? for more information about EB5 projects.
How to Invest in EB5 Project for Hotel Construction?
There are 6 steps to investing in an EB-5 project for hotel construction.
- Do an initial search with your immigration lawyer. Conduct preliminary research regarding the EB5 Visa with your immigration lawyer. The research will help you determine if the EB-5 Visa is aligned with your personal goals. Your immigration lawyer can help you meet the eligibility requirements for the EB-5 Visa.
- Look for an EB-5 hotel construction project. Choose the EB5 hotel investment project that suits your goals and needs. EB-5 projects are usually sponsored by regional centers. A regional center is a public or private company that serves as the fund manager or sponsor of an EB5 project.
- Perform due diligence on your chosen EB5 project for hotel construction. Get to know your EB-5 project by accessing documents to ensure its legitimacy. It is important to know that the EB-5 hotel project has a low immigration risk.
- Invest the required amount in the EB-5 hotel project. The EB5 Visa requires a minimum investment of $800,000 for a Targeted Employment Area (TEA). A Targeted Employment Area (TEA) is a region with high unemployment rates. A non-TEA requires a minimum investment of $1,050,000.
- Gather the needed documents. Complete all the necessary documentation to support your EB-5 Visa application.
- File for I-526. The I-526 form is filed with the USCIS to petition your EB5 Visa application. You will receive a receipt notice with the priority date for your EB-5 petition.
Are There Any EB-5 Real Estate Projects in Hotel Construction?
Modern hospitality projects now build hotels that include private, luxury residential units. The EB-5 Program is a viable source of hard-to-find funding for combined hotel construction and EB5 Real Estate Projects. Here are the top 5 examples of the hotel and residential brands funded through EB 5 capital.
- Hilton Hotels & Resorts
- Hyatt Hotels & Resorts
- Marriott Hotels & Resorts
- Montage Hotels & Resorts
- Four Seasons Hotels and Resorts
Do EB-5 Investments Support Hotel Brands like Hyatt, Hilton, and Marriott?
Big hotel brands have depended on EB 5 investments to access lower-cost capital rendering hotel construction projects more feasible and practical. Large groups from the hotel industry have supported the reauthorization of the EB-5 Visa Program including the American Hotel & Lodging Association (AHLA), Asian American Hotel Owners Association, and the Latino Hotel Association (LHA). These are the top 5 hotel brands supported by EB5 capital investment funding.
- Hilton Hotels & Resorts
- Hyatt Hotels & Resorts
- Marriott Hotels & Resorts
- Starwood Hotels and Resorts Worldwide, Inc.
- Resorts World
What are the Requirements for an EB5 Project for Hotel Construction?
The basic requirements for an EB5 project for hotel construction are categorized into project, financial, and personal documents.
Project documents
- Evidence that the investment will be made in a qualified EB-5 project.
- Evidence that the project is in a TEA, if applicable.
- Proof that the investment will create a new US business.
- Proof that the EB5 investor has invested in a regional center aligned with the approved regional center business plan. The letter from USCIS designating the regional center should be attached to your I-526.
- Evidence that the EB-5 hotel project will generate at least 10 full-time jobs for Americans.
Financial documents
- Proof of your source of funds.
- Proof of business ownership.
- Copy of all business licenses.
- Tax return in the last 5 years.
- Bank statements in the last 5 years.
- Financial statements for your business/es.
- Evidence that your investment capital was obtained legally.
Personal documents
- Copy of your valid passport.
- Copy of your old passports, if any.
- Arrival/Departure Notice (I-94).
- Copy of your dependent’s (spouse and children) valid passports.
- Copy of any prior immigration applications.
- Household registration.
- Documents with biographical information including birth certificate, marriage certificate from you and your dependents.
- Local or national identification documents.
- Certified copies of any judgment, pending governmental civil or criminal actions, or private civil actions against you from any court in or outside of the US in the last 15 years.
What are the Regional Centers that Offer EB5 Projects for Hotel Construction?
The USCIS has 632 approved Regional Centers as of October 25, 2021. You can check all EB-5 Visa regional centers on the USCIS official website.
What Other Related EB5 Projects are Available?
Other popular EB5 projects are in the restaurant and biotechnology industries. The restaurant industry yields numerous jobs for an EB5 investment. EB5 Restaurant Industry Projects can create approximately 20 jobs per EB-5 investor. In North Carolina, EB5 Biotechnology Projects are part of its main EB-5 industries.
Is an EB5 Investment Safe?
The nature of an EB-5 investment project involves gains and losses. The USCIS requires a foreign investor to make and maintain an “at risk” investment to be qualified for the EB5 Visa. Proper planning, conducting due diligence, and working with the right EB-5 firm minimizes your risk of losses in your EB-5 project.
Is Hotel Construction an EB5 Project?
Yes, hotel construction is a popular choice for an EB-5 project. EB-5 investors are more likely to create 10 full-time jobs and enjoy a return on investment because of the lucrative nature of the hotel and hospitality industry.