|Do condo-hotels make good investments?
Hoteliers in resort locations are offering guests
a stake in the business by selling individual units as condominiums.
Not only is this an opportunity to own a second home in some of
the country's favorite playgrounds, promoters say, but owners can
look forward to some income when the property's management rents
the room out to guests.
Realtor Christian Charre, a senior vice president
with Jones Lang LaSalle, markets hotels throughout the Americas
and the Caribbean. "If you live and work in New York and buy
a residence in Florida that you use maybe two to four weeks a year,"
he says, "having a professional company renting the room for
you the rest of the time, when it would otherwise be empty, can
offset some of the expense -- and you still own a piece of the beach."
It sounds like a pretty good deal, but the facts show
condo-hotel consumers would be wise to check the closet for financial
skeletons before signing on the dotted line. The hotel business
can be notoriously unstable -- and if that room doesn't rent out,
the buyer won't see any of the income from it.
Where you'll find them
"Condo-hotels are usually upscale, full-service developments
in the strongest hotel markets -- either popular vacation destinations
or large cities where suburbanites frequent hotels for business
or leisure purposes," says Tim Ford, vice president of operations
at Lodging Econometrics, one of very few companies tracking the
Some 43 condo-hotel projects containing 7,715 guest
rooms are scheduled to open this year in the U.S., Ford says. Another
33 projects totaling 8,271 rooms will open in 2007. Of these, 70
percent will be built new, while 30 percent represent conversions
of existing hotels. Nearly half are in Florida.
Hotels undergoing conversion run the gamut from the
ultraluxurious to more modest family-style lodgings.
Ancient City Hospitality Group plans to convert the
Del Mar Inn & Suites. The property is a Spanish-style waterfront
luxury hotel in Vilano Beach near St. Augustine, Fla., the state's
oldest city, and is set in prime golf country.
Sales prices for Casa Del Mar's 94 rooms, ranging
from 350 to 500 square feet, start at $329,000. The asking price
for the 1,552-square-foot presidential suite is $1.8 million.
Buyers who prefer something quaint can get a unit
Shores Resort, in Indialantic, Fla., not far from Cape Canaveral.
Developer Jacqui McPhillips says when she heard the 32-unit property
was on the market, "I was tearing it down in my mind for high-rise
condos. But when I saw it, I realized it was much too nice to tear
Two-room suites in the L-shaped building are selling
for $244,900 to $274,900. Most of the roughly 400-square-foot units
offer breathtaking views of the Atlantic Ocean.
While independents were the first to latch onto the
condo-hotel concept, major hotel chains are starting to get into
the act. For example, Boston-based Sonesta
International Hotels has four condo-hotels completed or underway,
all in Florida, says Stephanie Sonnabend, CEO and president. "That's
where they're popular now, but I believe that the trend will be
growing in other similar destinations," she says.