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Condotels
Condotels are the latest trend in hotel development.
A condo unit within a hotel. Is this real estate right for you?
It’s the latest rage in the hospitality industry, a
condominium that acts like a hotel room. A condotel. A person owns a condotel much
like a condo. The owners pay regular condo association fees, property tax, and all
the other fees associated with owning real estate. Unlike time-shares, the owners
are free to rent their condotels as often or as little as they like. The hotel rents
out the condotel units much like a regular hotel, handling reservations and guest
services. The hotel then splits the income equally with the condotel owners.
A Lifestyle Choice - A condotel is not right for everyone, and it takes a person
or family wanting a specific lifestyle to get the most out a condotel. People must
understand that this is not traditional real estate, and they are getting into the
hotel business. Condotel owners are subject to check in and check out times, just
like a traditional hotel. Many hotels will charge owners housekeeping fees during
their stays. You never know who your neighbors are, since most hotel guests will
differ nightly. Families looking for a stable environment may not fully enjoy the
condotel experience. Retirees may not appreciate the ever changing cliental of a
hotel, preferring a traditional piece of real estate with a more stable social scene.
Real estate investors looking to invest in a condotel must fully understand the
business they are getting into, and the many factors that can either make condotel
ownership a profitable or un-profitable venture. A person or family considering
a time-share property may be the best candidate for condotel ownership. The property
retains the benefits of a time-share property, while producing income as a hotel
room.
No Shortage of Condotels - Developers love the concept of condotels, since it allows
them to recoup their initial building costs quickly with condotel sales, while maintaining
ownership of the hotel common areas such as retail space, restaurants, and bars.
Out of about 375,000 hotels rooms that are currently under development in the US,
around 30,000 of those are designated condotel units. Another 70,000 units are currently
set aside as private residences within the hotel that are not designed to be rented
out on a short term basis. A majority of these units are high end, luxury units,
since the higher costs associated with the units are more quickly recouped from
condotel sales. This trend ensures that there will be sufficient inventory to meet
the condotel demand. Many older, traditional hotels in areas such as New York City
and San Diego are currently converting some of their rooms to condotel units to
meet the demand of individual condotel investors.
For the right person, family or investor, a condotel makes perfect sense. Those
seeking the flexibility of coming and going as they please, without the limits of
a time-share, will love the idea of a condotel. People looking to turn their second
home into an income producing investment will also welcome the income generated
by condotel bookings. They just have to remember that they are also getting into
the hotel business when buying a condotel.