Guide to Condo Hotels

WHAT IT IS

The hybrid concept of a luxury hotel that sells some of its units as condominiums has become one of the most popular trends in the Real Estate industry in recent years. Individual condo owners like it because they enjoy the resort-style luxuries, and in many cases the hotel rents out their units when they’re away. The condo-hotel units that are rented are not the same as timeshares. Several factors have led to the current boom in condo-hotel projects—the improving performance of hotel companies, the recent investment appeal of real estate over the stock market, low interest rates and baby boomers approaching retirement who want to invest in a second home, with high end hotel amenities.

WHAT IT ISN’T

Condo Hotels are not private residence clubs, as condo hotel owners actually own the whole residence, not a fraction of it. Condo Hotels are not destination clubs either, where members own none of the residences. They are also not timeshares, because a condo-hotel unit is purchased outright, while a person owning a timeshare owns only the time where he or she occupies a unit.

HOW MUCH IS IT?

In general, the condo hotel residences range in price between $400,000 and $5M. Cost depends on location, quality of the amenities and the brand name. Also, cost depends on view, floor height, amenity quality and furnishings.

INCLUDES

Most condo hotels have exceptional features which can be used by the condo hotel owner: branded spas, sports facilities, fine dining, business centers, indoor and outdoor pools, concierge services. The onsite management company takes care of residence upkeep, management and all interaction with future renters.

THE PLAYERS

TOP DESTINATIONS

Miami | Orlando | Las Vegas | Chicago | New York | Turks and Caicos | Bahamas | Mexico | Dubai | Napa Valley

QUESTIONS TO ASK

Part 1 – Of the developer and of the project

- Who is the developer? What other condo hotel developments has the developer built?

- Who is the management company? What other condo hotel developments does this company manage?

- What are the planned uses for this development (condo hotel, hotel, residential, retail, commercial)? And how would that affect my unit?

- How many condo units will be included in this development?

- What is the range in floor plans and sizes of the condo units in this development?

- Has the price of the hotel condo units changed during the preconstruction sale period? If so, how often and by how

- Does this development carry the National Association of Condo Hotel Owners (NACHO) Seal of Approval?

Part 2 – Questions –about the Condo Unit and rental program details

- What are the monthly maintenance costs associated with my unit?

- Will there be any on-site storage available to owners?

- Are there living restrictions that limit the amount of time per year I can stay in my unit?

- If I stay beyond my allotted time, does the hotel offer a discounted hotel rate to owners?

- How much notice do I need to provide to guarantee availability of my unit?

- Are there any blackout dates during which owners may not stay in their units?

- What is the procedure and costs associated with opting into or out of the rental program?

- Are there fees such as departure fees, maid service fees, etc… that accrue when I stay in my unit?

- Which amenities will I have access to during my owner stays? Are there any additional fees for usage?

- What is the split of rental income between the management and the owner?

- How often is rent distributed to owners?

THE FINAL WORD

It is important to check out the reputation of both the hotel developer as well as the hotel management firm. It you are satisfied they are reliable, it is important to ask YOURSELF about your reasoning for choosing condo-hotels – will it be a lifestyle or will it be a financial investment for you? If the former, ask yourself will you interests be the same in 5-10 years or will they change? If the latter, will your condo hotel residence have the same appeal five to ten years in the future? If it is a financial investment, ask the development company about other condo hotel units in the area and how they have done. The condo-hotel has become extremely popular in recent years, however, in a capricious economy, it is best to be skeptical about any investment, whether it be lifestyle or fiscal or both.