Tag Archives: condo-hotel

What is a condo-hotel?

A condo-hotel (also known as a condotel or hotel-condo) is a building that is used as a condominium and a hotel. The building is created as a hotel but the units are sold to people who want to own a piece of real estate in a popular resort area and enjoy the amenities and convenience of a top-notch hotel with the bonus of rental revenues. The real estate investor that owns a condo-hotel unit can now rent this room out as a standard hotel room and receive a stream of income from their investment. When you buy this unit, you own a portion of the hotel property. You buy that hotel suite and you receive a deed for it. This means that your hotel suite is all yours. Apart from the actual unit, you also own an undivided portion of all the common areas of the hotel (lobby, hallways, pool area, gym, etc).

Condo-hotels are usually given to the buyer fully-equipped and fully-furnished to the buyer as a complete real estate turn-key property investment. Note that in a condo-hotel real estate investment, you also enjoy hotel services as part of ownership – services such as room-service, maid service, massage services, hotel nightclubs, and more.

So let’s say I buy a condo-hotel unit for rental income purposes. How do I manage the rentals?

Most condo-hotels have an onsite hotel rental program that manages your property. You are usually free to choose your own rental service, but remember to ask your Realtor to check the contract! Your room is then rented out to hotel tenants and you share in the rental revenue.

What is the standard split of the room revenue that a unit owner shares with the hotel?

Owners usually keep 35 to 40 percent of the rent generated by the room.

Besides the cost of actually purchasing the unit, are there any ongoing costs with owning a condo-hotel unit?

Condo-hotel units, like other condominium units, usually have a monthly maintenance fee attached to them. For example, at the Nicky O South Beach, the maintenance fee is $1.60 per square foot (of your unit). So a 400 square foot unit would have a monthly maintenance fee of $640. All utilities are usually paid by the condo association and/or hotel, including insurance. Besides the maintenance fee, your only other costs would be property tax (assessed each November) and interest on your loan (if you borrowed funds from a lender to finance your unit).

What’s a typical occupancy rate and daily rate for a hotel in the Miami Beach area?

For example, the 194-room Delano luxury hotel in Miami Beach posted an occupancy rate of 72 percent in 2005 with an average daily rate of $474.

Why would a developer create a condo-hotel instead of just creating a hotel?

Creating a hotel costs a lot of money. When development costs go up, hotel development costs can make developing new hotels difficult (especially in such a high development cost area such as the South Florida area). Since the developer is now selling the units as individual condominiums, the development cost burden now shifts in large part to the real estate investors who are now becoming condo-hotel owners.

Are there any condo-hotels in the South Florida area?

	Nicky Olivia Hilton, daughter of Richard Hilton and Kathy Richards (and heiress of part of the Hilton Hotel chain), has created the Nicky O South Beach, located on 940 Ocean Drive in Miami Beach. The focus of the Nicky O South Beach is on design and designers. Nicky Hilton has commissioned some of the world’s top designers to create hotel suites in their style. Even the hotel staff will be dressed in designer clothing. Designer Roberto Cavalli will be creating the 5,000-sq. foot penthouse in this South Beach hotel in a gold theme that mimics his retail stores. The Nicky O condo-hotel units start at $500,000.
	The Mayfair Hotel & Spa is a 179 suite condo-hotel in the bustling Coconut Grove area of South Florida. Each Art Nouveau-style rooms is unique with private, furnished terraces including Japanese spa tubs. The outdoor courtyard is the prime location of the hotel, with fragrant orchids, botanical gardens, etched wooden doors, and stained-glass windows welcoming the hotel guests. Located on 3000 Florida Avenue, the Mayfair suites range in size from 400 to 970 square feet and range in price from $200,000 to $500,000.
	The W Hotels South Beach Residences, located on 22nd Street and Collins Avenue in Miami Beach, has condo-hotel units starting at $800,000.
	The Atlantic Condo-Hotel, located on 601 N. Fort Lauderdale Beach Blvd in Fort Lauderdale, is a 15-story oceanfront condo-hotel with 124 units starting at $470,000.