The Condo Hotel is an increasingly popular way to fund new hotel projects, but it’s a project type that benefits most from a seasoned and knowledgeable team of hospitality advisors. This is because these sorts of dual-use projects don’t take into consideration the fact that each side of the deal – the condominium side and the hotel side – are distinct silos of information and experience, often inapplicable to the other side.
The Zen of Condo Hotels
There are several types of condo hotels. In one version, all of the hotel rooms are owned as condominiums by individual unit owners, but the rooms are all rented out to hotel guests on a nightly basis. Another version is as a hotel that is primarily owned by one institutional entity, but sets aside some number of its rooms to sell as condominium properties for full-time residents. This means:
- The condominiums will share appointments, furnishing, and design with the hotel rooms.
- The guests of the hotel will not notice any difference or, ideally, be aware of full-time residents at all.
- Condo owners will benefit from the full list of amenities offered to hotel guests – in fact this is usually a selling point.
- Conversely, the opportunity for conflict among the various users—hotel guests and residents—can create management problems sharing resources and allocating costs.
Why You Need a Hospitality Advisor
The need for a team of experienced hospitality advisors when setting up a condo hotel deal lies with the fact that developers or lawyers who understand condominium law and lifestyle do not always understand the hotel side of things – and vice versa. This often shows up in:
- Legal documents –Contracts designed for traditional condo sales are often insufficient and incorrectly structured for condo hotel units.
- Marketing – The marketing and sale of condo units in hotel projects, especially if being used to fund the project to some degree, is a different breed from traditional real estate marketing.
In the end, a condo hotel is a complicated project, and should have someone with the specific necessary experience on hand to guide it.