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 Enthusiasm Spreads for Condo Hotels; Top Questions
Consumers Are Asking Before Buying
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December 2005 - It’s the newest catchphrase among real estate investors.  Condo hotels are gaining attention as the ideal solution for people who want a hassle-free, luxury vacation home that generates revenue and has appreciation potential. 

Not Your Daddy’s Timeshare

Condo hotels are not the timeshares of yesterday.  These are luxury hotel properties, complete with all the amenities and services you’d expect from a four- or five-star hotel. 

Buyers have full ownership of their condo hotel unit and are not restricted to a one- or two-week stay or a particular week of the year.  In most cases they can stay 30-60 days per year in any configuration of time they choose.  Plus, they can elect to place their unit into the hotel's rental management program when they’re not using it and share in the revenue it generates.

Hassle-free Ownership

The advantage for condo hotel owners who choose to rent their units through the hotel program is they avoid the responsibilities that come with being a landlord.  The on-site management company takes care of maintaining the condo, the common areas and the amenities.  It also finds renters and services all their needs. 

Investment Potential

The owners receive revenue throughout the year from guests who use their condo when it would otherwise be vacant and that revenue helps offset the expense of owning the vacation home.  More importantly, from an investment standpoint, they can sell their condo hotel unit whenever they wish and keep any profit derived from appreciation.

Buyers Have Sophisticated Taste

Who’s buying?  Most condo hotel buyers are affluent, well-educated and well-traveled.  They enjoy all of the amenities and services provided at a luxury hotel, including chic décor, personal concierge services, access to spa and fitness facilities, fine dining and premier club access.

Condo Hotel Trend Spreads

The condo hotel trend started in destination resort cities such as Miami Beach and Las Vegas but has spread to upscale cities with vital downtown areas.  Currently, condo hotels are under development throughout popular vacation areas like Fort Lauderdale, Orlando and many Caribbean countries and in major cities like Chicago, San Diego and Toronto.

Top Hotel Operators Run Condo Hotels

Most condo hotels are managed by prominent four- and five-star hotel operators such as Four Seasons, Ritz -Carlton, Trump International, Sonesta, The Regent, Starwood and Hilton.  Because of the hotel's brand name, worldwide marketing, national affiliations, centralized reservation system and management expertise, condo hotel unit owners typically receive a higher level of rental income than they would from owning a traditional vacation home.

Condo Hotels Sell Out in Pre-construction

Prices for condo hotel units range from $200,000 to upwards of one million.  The majority of condo hotels sell out in pre-construction phases with the earliest buyers realizing the most significant appreciation, as developers typically raise prices three to six times throughout the selling process.
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Eight Questions Consumers Should Ask
Before Buying a Condo Hotel Unit
1.  How do condo hotels differ from other types of vacation homes? 
Condo hotels are not your typical second homes.  They are fabulously-furnished condominium suites in some of the most famous hotels and resorts around the country.  The properties are usually large, high-rise, luxury hotels and come with premium amenities like valet, concierge and maid service.  Prices can range from $250,000 to over $1 million for prime properties. 
2.  Is a condo hotel right for you?
The ideal condo hotel buyer is someone who wants a luxury vacation home but will only have time to use it a few weeks a year.  The rest of the year he or she would like a professional management company to handle the maintenance of the unit and renting it out.  The income the unit generates should help cover maintenance and tax expenses as well as some or all of the mortgage payment. 
3.  Is the condo hotel well-located?
Consider whether the property is located in a popular vacation destination, one that is likely to do a healthy tourist or business trade regardless of economic factors.  Also, you must be sure you yourself like the location.  Does it offer you the ocean view, golf course access or theme park proximity that you always dreamed about for your vacation home?  If you’ll be flying to this vacation home, how close is it to a major airport?
4.  Does the condo hotel have a major franchise?
The key to a successful condo hotel investment is the hotel operator. The better the operator and the franchise, the more likely the success of the property.  A condo hotel with a name brand like Ritz-Carlton, Hilton, Starwood or Trump can often generate more revenue than a non-brand because it can charge higher room rates and also benefits from international advertising and a centralized reservation system.
5.  Will the condo hotel receive traffic from any nearby attractions or entertainment venues?
A condo hotel that is near a convention center, a theme park or cruise port will benefit from proximity to these high-traffic venues and will have higher occupancy rates.  And higher occupancy will translate into more annual rent revenue to unit owners.
6.  Does the condo hotel have any on-site amenities that will draw guests such as a well-known health club, spa, casino, water park, fine dining restaurant or golf course? 
You’ll want to choose a condo hotel that has amenities you’ll enjoy using and also help to attract hotel guests.
7.  Does the individual unit that you’re considering in a condo hotel meet your needs?
Does it have enough bedrooms, enough square footage?  Does it have a kitchen?  (Most do, but not all.)  Does it offer an appealing view?  Is it furnished to meet your tastes?  Does it offer any owner storage?
8.  Will the condo hotel unit appreciate?
While personal enjoyment should be your primary reason for considering a condo hotel purchase, it’s certainly worth thinking about whether the property you want has good appreciation potential.  Look at surrounding properties and area appreciation rates.  Does the condo hotel have lots of competition?  Is it different or better than area properties?  How has the  demand been since the property first came on the market?  A realtor who specializes in condo hotels and is familiar with the area in which you’re looking can often help you determine if the condo hotel you’re considering has good appreciation potential.
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About the Author: Joel Greene is the President of Condo Hotel Center in Miami, Florida. www.CondoHotelCenter.com
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Contact:

Joel Greene
President
Condo Hotel Center
CondoHotelCenter@aol.com
(305) 944-3090
www.CondoHotelCenter.com

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Also See: Tennis Icons Andre Agassi and Stefanie Graf Developing a Fairmont Hotel at Tamarack Resort in Idaho / December 2005
Catching the Buzz on Condo Hotels, A Roundtable Discussion / The Global Hospitality Advisor / JMBM / December 2004

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