Condominium Hotel Living: Land and Sea

Condominium Hotel (condo hotel, hotel-condo hybrids or condotels) living has become the next major real estate development, in recent years, and accounts for less than ten percent of vacation homes, and investment properties in the United States, according to National Association of Realtors. In 2006, forecasted 32 projects with 4,831 Condo Hotel units for sale, and 27 projects having 5,025 units expected for sale 2007, throughout the United States. Most condo hotel units are developed by hotel and resort companies, such as Starwood Hotel & Resorts Worldwide, Hilton Hotels Corporation, Marriott, The Ritze Carlton Hotel Company, LLC, and Four Seasons Hotels and Resorts. These condo hotels offer unit owners upscale amenities, which includes: Maid service, concierge, fitness and spa services, tennis court facilities, golf courses, valet parking, fine dinning restaurants, pool(s), and more. Sometimes, unit owners are required to pay, for certain amenities or services offered. These types of condo's are usually more expensive (sometimes up to 25 percent or more), than purchasing a conventional condominium, which may not offer any extra amenities. Most of the time, consumers purchasing a condo hotel are looking for a second home. For example: In Florida, many condo hotel units, purchased by those living in Latin America, and Europe. Owner of a condo hotel has the legal rights to rent out the space, and sell it anytime, contrary to a timeshare, where the buyer pays for a limited use of a resort and does not own the residence. Any residence of a condominium hotel, must notify management whenever the unit is not occupied. The management company will try to locate a renter, through their marketing and promotion capabilities, and through name brand of the hotel. For their service, a charge is applied as percentage of rental income, usually fifty percent. The management company is responsible for the maintenance, beautification of grounds, maintaining highest quality guest amenities, and cleaning-up the residence after renters leave.

Most popular areas of condo hotels development are located in Florida, New York, Arizona, Las Vegas or popular vacation destinations. These prime locations and other localities, have become very popular, and have seen increases in real estate prices. Donald Trump, real estate expert currently has six condo-hotel projects, being developed in Chicago, Fort Lauderdale, Miami, Las Vegas, Phoenix, and Dubai. The 90-story Trump International Hotel & Tower in Chicago will have more than 400 residences and 200 condo hotel units, expected to open in 2007. According to Lodging Econometrics Report (December 14, 2005) for 2006 and 2007, condo hotel units projects accounts for 45% Oceanside locations, ten percent theme parks, nine percent at Casino destinations, and 46% within Miami, Fort Lauderdale, West Palm Beach, and Orlando Florida. Selling price for pre-construction condo hotel units usually cost less. However, the condo cannot be rented until the project is completed.

Developers of condominium hotels will recoup their costs faster, (compared to developing conventional hotels) and operate profitably, by offering meeting facilities, spas, restaurants, other facilities, and hotel rooms. Also, earning a percentage of rent, when those condominiums are rented. Developers expect prospective buyers, an amount for down payment or security deposit. Developers average profitable return on their investment 25 to 30 percent selling condo hotels, compared to conventional hotels, yielding about half the amount. Also, selling penthouses or suite condominium hotel units, yield substantial profits. Lenders or financial institutions will provide 85 to 90 percent average construction loan amount, for condo hotel projects. However, construction costs for this type of development, will cost more, attributing to constructing larger units, providing more expensive amenities, and finishes are typically higher quality standard or upgrades. For example: Starwood Hotel and Resorts projects, building condo hotels in Fort Lauderdale (The Atlantic and St.Regis), reported $1,000 cost per square-foot compared to $400 - $500 cost per square foot, for a high-end residential condominium units, in the surrounding South Florida market. Developers of condo hotels, partner with luxury and boutique brand retail outlets or stores, which rent space within their development. Considering, purchasers of condo hotel units are wealthy or able to afford more luxury purchases. One of the concerns developers have, as they maintain ownership of the common areas, regards allocation of expenses, between condo owners and management, becomes disputed or argued.

Owning a condominium hotel has advantages and disadvantages or restrictions.

Advantages: Management company upkeep's the property, and facilities. Also, works in the behalf of the condo hotel unit owner, locating a renter when requested. During the past many years, real estate prices have increased, mostly attributed to location, and resale values have increased. Amenities that are offered, will pamper the unit owners of a condo hotel and guests.

However, unit owners are treated throughout most of the year, compared to the guests, staying for a short period of time. Condo hotel units are fully furnished, includes living room, bedroom, kitchen, and art on the wall. Prospective buyers living outside the United States or Europe have seen during the past year, a strong US Dollar exchange rate, offering a good investment opportunity, owning a condo hotel in the United States. Besides, condo hotel residence can claim to own, a piece of the world's most famous property, such as the Plaza Hotel in New York City or Fountainbleu Hilton in Miami Beach Florida.

Disadvantage owning a condominium hotel: Management companies selling condo hotel units may have restrictions, regarding how it should be decorated and stipulate how often, residence must make the place available to be seen by management. Management companies may request unit owners for notification, within certain number of days, before an owner wants to use their condo. For example: Fountainebleau Hotel management requires notification, at least 60 days in advance. Housekeeping or other services provided, condo hotel unit owners, maybe charged extra. Monthly maintenance averages fifty cents to one dollar a square foot, which includes upkeep of amenities, cable, electric and local phone service. Unit owners will be responsible to pay for the replacement cost of any damage item, such as furniture or television. Some hotel condos require unit owners to replace furniture or other items, within a number of years. In regions were real estate market is declining or performing poorly, reselling a condominium hotel is very difficult and the re-sale price will likely be less, than the original purchase price. Management company fee charge, renting a condo hotel for an owner is very costly, and the income may not be sufficient paying expenses, which includes taxes and maintenance. Unfortunately, when condo hotel is rented, the owner is unable to occupy the residence.

Some condo hotels are only open during certain times of the year or seasonally, such as in the Northeast, when shore properties maybe closed, during the winter and early spring months.

Some cities or states have regulations regarding hotel condominiums. In 2005, Hollywood Florida local legislatures, adopted new rules for hotel condominiums that limit owner occupancy to 90 days a year, and require hotel amenities, including a lobby and maid service.

When a prospective condo hotel buyer, interested purchasing a new unit from a developer, amount presented as a down payment or security deposit, should be held with a title company, not the builder. This ensures the deposit safe keeping by the title company. Money will be returned to the investor, in case of nonperformance by the builder or developer. The developer may request permission to use part of the deposit, towards construction costs. This may be risky, if the construction project has any financial problems in the future, which may jeopardize a refund.

Some cruise lines have converted staterooms onboard cruise ships into luxury condominiums. The original concept started by Knut U. Kloster Jr, billionaire and former chairman of Royal Viking Lines and Norwegian Cruise Lines. In March 2002, "The World": 644 foot vessel was the first cruise ship to have condominium staterooms with a 50 year term lease, and visiting 100 ports in dozens of countries. Any unsold condos, where occupied by conventional cruise passengers. Condo Cruises Lines created by Mark Boyd, a consultant to many Gulf Coast condo real estate developers, his cruise line buys medium size cruise ships and then converts staterooms into one, two or three room suites. The ships will carry 200 - 300 passengers, and have the major amenities, that a cruise ship will offer, including pool and sun deck, duty-free shopping, casino, bars, medical facility, beauty and hair salon, dining room, and more. The condo suites earn income and conventional staterooms that are reserved, fund the operating budget of the ship. The condos sell for $229,000 to $549,000, plus condo fee charge: $7,000 to $10,000 a year. When the resident of cruise ship condo is not utilizing the stateroom, has the option to rent the stateroom, through the assistance of the cruise ship affiliation with luxury cruise travel agencies. Average cost per person onboard a cruise ships under $400 to $1,000 a day (According to Cruise Lines International Association (CLIA)), for cruising a week. However, these luxury condo cruise staterooms rent from $3,000 a week for basic suite to $6,000 a week, for the largest three-room penthouse suite. During the reservation process, purchasing a condo onboard a cruise ship, requires a $10,000 deposit, which is refundable with interest for any reason by the purchaser or Condo Cruise lines. Suggested by Condo Cruises Lines: Take a four month world cruise, and rent the suite out another seven months, and make a sizable profit. After the ship has retired from future voyages, it becomes a floating hotel, and condo owners continue to collect earnings from renting staterooms. The cruise line does charge a thirty percent rental management fee. Further information available: Contacting Mark Boyd: 850 - 650 - 7433 or emailing: mark@condocruislines.com