Most Frequently Asked Questions

Q. What is a condo hotel?

Condo hotels are usually large, high-rise, properties located on prime real estate and filled with the finest amenities.

Condo hotel units are sold to individual investors who may use their unit when they want and place it into an organized rental program when they're not in residence. A portion of the rent revenue the unit generates goes to the hotel operator, and the balance goes to the unit owner, helping to defray the costs of ownership

Q. How does a condo hotel differ from a traditional condo?

Every unit in a condo hotel looks identical to one another and is maintained by management at the highest possible standards. Condo hotels are designed to be vacation/second homes that are typically used only a few weeks each year by their owners.

When owners are not in residence, they can place their unit into the hotel rental program and receive a percentage of the revenue the unit earns. A traditional condo is designed to be a primary residence. It may or may not have a major franchise like Ritz Carlton or Four Seasons running it, but it does not offer owners the opportunity to rent their units for them. Owners can live in the condo full time or treat it as a vacation/second home. They can rent it out if they want and can also decorate it the way they want.

Q. What are the main advantages of condo hotel ownership?

Most condo hotels are exceptional properties. They have four- or five-star amenities like world-class spas, resort-style pools, state-of-the-art health and fitness centers, gourmet restaurants and fully-equipped business centers. They may also provide an expanded array of hotel services such as valet, concierge and maid service.

Most condo hotels are built on prime, highly desirable property either right on the ocean or within a few blocks of the beach. Condo hotel unit owners can receive revenue from participating in the condo hotel's rental program, helping to offset their ownership expenses and possibly resulting in a small annual return.

Finally, condo hotel ownership is 100% hassle-free. Property maintenance, upkeep, operation of the amenities and guest service issues are all handled by management.

Q. What is the typical revenue split?

Although it varies by condo hotel, usually it's in the 60-40 range. That is, after expenses have been deducted, 60% goes to the condo hotel operator and 40% goes to the individual condo hotel unit owner .

Q. Who pays for maintaining and repairing common areas of the condo hotel?

The cost is divided up among the owners who must pay a monthly HOA fee. The fees typically cover common area maintenance, property insurance, utility expenses and reserves. The hotel management company pays for its costs of operation including marketing, reservation systems, salaries and other direct hotel expenses. Most condo hotels have four- or five-star amenities like world-class spas, resort-style pools, health and fitness centers, gourmet restaurants and business centers.

Q. Will developers guarantee occupancy rates in their condo hotels?

No. They will not guarantee occupancy rates or revenues. This is in accordance with SEC regulations which prohibit forecasting returns. For that reason, you want to be sure that you select a property that has good amenities and an appealing location to help ensure occupancy rates are high.

Q. How does a condo hotel unit differ from a traditional hotel room?

Condo hotel units are usually larger than your standard studio hotel room. Often they are comparable to an apartment or traditional condo. Decorated in designer furnishings, they may have bedrooms that are separate from the main living room. Most have some sort of kitchen facilities, although these may range from a sink, small refrigerator and microwave to a fully-equipped kitchen.

Q. When is the best time to buy a condo hotel unit?

If you want the best price and the widest selection, your best bet is to purchase a condo hotel unit in early pre-construction stages.

Most developers begin selling their condo hotel units 18 to 24 months before construction is complete. By reserving a condo hotel unit at this stage, you'll be able to pay today's prices for tomorrow's real estate, and you will likely benefit from price increases as more of the development is sold. Of course, that also means you'll have a bit of a wait before you can use your condo hotel vacation home.

Q. How well do condo hotel units resell?

Appreciation really is the best selling point for condo hotels when you're considering the investment aspect, and the way to maximize appreciation is to get in early when then property first comes on the market. Prime real estate, such as the kind where most condo hotels are built has a long history of appreciation. There's no reason to believe that this trend won't continue, but please keep in mind, the past is no guarantee of future appreciation.

There are far fewer condo hotel units than traditional condos, further enhancing their value, however; to be objective, you should consider that a condo hotel is a real estate investment subject to the same potential ups and downs as all real estate.

Q. How risky is investing in a condo hotel?

It's not any more or less risky than other real estate. Some investors believe it may be a safer bet because when you are ready to sell, you not only have the building's amenities to offer a potential buyer, but also the services of a luxury hotel that you just don't get in a traditional condominium. Furthermore, the property will have been maintained and kept up-to-date by the property's management.

Q. Bottom line, is a condo hotel a good investment?

Condo hotel units represent a unique real estate ownership opportunity. However, in accordance with SEC regulations, they can be sold only as a lifestyle, a luxury vacation home, and not as a revenue-generating investment. If, however, you plan to use your unit as a vacation home, a condo hotel can be a wonderful investment. You get a first-class vacation property in a highly-desirable location. And when you're not using it, someone else takes care of renting, managing and maintaining it for you.