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.