(Reprinted from The Orlando Sentinel, Fla. Knight Ridder/Tribune Business News April 2, 2006)
By Carrie Alexander
You have worked up quite an appetite after an afternoon on the golf course, and a filet mignon with a side of fries sounds good about now. No worries. The chef will broil it medium-rare. Just the way you like it.
Oh, and you have just remembered you will need your blue suit cleaned for tomorrow’s meeting. Again, no problem. The concierge will handle it.
Later, maybe you will have a soak in the hot tub with a chocolate martini in hand. Relax, the bartender will pour you one.
Ah, all the comforts of home and then some.
You can enjoy these amenities and more because you bought into one of the latest trends on the real estate market — a condo-hotel.
Condo-hotels or condotels, as they are sometimes called, aren’t a new concept, but interest in the concept is heating up these days. These hybrid properties differ from traditional condominiums, hotels and time-shares in a number of ways.
Consumers who purchase a traditional condominium pay property taxes, insurance and maintenance fees, and can live in their unit year-round. Buyers of time-shares are paying only for the right to stay at a property for a few weeks each year.
Condo-hotel buyers purchase an actual unit in a building but not as a full-time residence. The property functions as a full-service hotel, and room owners have access to all amenities and services just like hotel guests.
The difference is that owners receive a deed to their unit, and when they are not in residence, they can place their rooms into the hotel rental program. Any revenue that is generated is usually shared between the unit’s owner and the management company.
The idea is that owners reap the rewards of condo ownership while enjoying the privileges of a hotel.
Condo-hotel development is booming, according to Lodging Econometrics, a Portsmouth, N.H., research firm that collects data on hotel construction. Projects currently in the construction pipeline will offer about 36,800 condo-hotel units, according to the firm. In Orlando, 13 projects with 5,600 condo-hotel units are in the works.
Typically, the units are more expensive than traditional condos, but owners don’t have to worry about maintenance, and they can recoup some of their costs through renters. Plus, owners enjoy tax benefits, and they can sell the unit just like a typical property.
“You actually own a piece of that hotel. And people really love that idea as opposed to owning just a time block. You get all the amenities of a full-service hotel, so when people arrive at these resorts they’re pampered.” says Bob Ostrander, an Orlando representative for Condo Hotel Center, a Miami-based real estate agency that specializes in the sale of condo-hotels.
Buyers can purchase a unit long before the hotel is built. The hotel-management company handles room maintenance and oversees amenities such as pools, tennis courts and golf courses. Rules about owner stays, however, vary among companies.
Usually, owners must notify hotel management in advance if they plan to occupy their unit, and in some cases, they must pay housekeeping fees during their stay.
Also, units generally come furnished and owners aren’t allowed to make changes or add personal items such as family photos, although many properties provide locked spaces where the owner can store personal items while the condo is rented. Depending on the contract, an owner may have to pay to replace the TV or other items in the room that are damaged or wear out.
One variation on the condo-hotel concept is a mixed-use luxury hotel with a residential component. In these hotels, units on the top floor are sold to individuals who can live there full-time. Although the rooms aren’t part of the rental inventory, the owner has access to hotel facilities and services.
Despite the higher costs,buyers choose condo-hotel units for several reasons, Ostrander says. Consumers may opt not to buy a traditional condominium because they don’t expect to use the unit often enough to make it worth the cost and trouble of maintaining it. Or the buyer just enjoys the idea of owning a part of a brand-name property.
Sometimes they view the purchase as an investment opportunity much like a second home. However, Patrick Ford, president of Lodging Econometrics says, “If you’re looking for a good investment, there are better investments than that.”
Usually, he says, the buyer is “someone who is looking for a repeatable vacation [spot.] Nine out of 10 are sold with that purpose in mind.”
Although owners can rent their units, part of the challenge is calculating potential revenue since hotel occupancy can be unpredictable.
Ostrander says real estate firms are prohibited from making predictions about possible future income from the units, so buyers must do their homework to make sure they are buying into a project that is likely to offer a return.
Condo-hotels are most often developed near beaches, casinos and theme parks. “They’re built where there’s a need for hotel rooms,” Ford says. “That’s their primary purpose.”
In Florida, condo-hotels have been popular in Miami, where they do well on the resale market, Ostrander says. He adds that Orlando’s strong tourism market makes it an ideal location. “We are the largest lodging market next to [Las] Vegas, so it’s fitting that Orlando would be next in line for that,” he says.
One example of a local project in development is the Sage Resort, a 10-story hotel spread across about 5 acres. Amenities at this 260-unit condo-hotel will include a fitness center, restaurant, spa, pool and concierge services. The property, being developed by Turkey Lake Partners LLC, is located just a few miles from local theme parks.
Prices will range from $419,000 for a two-bedroom unit to more than $1 million for a penthouse.
The resort won’t be ready for occupancy until 2007, but units are being offered for sale.
Ostrander says condo-hotels are a great buy for consumers, but “they’re not for everyone. There are restrictions on living circumstances.”
Not everyone will be comfortable with that, he says. But for those who are, filet mignon is on the menu.