Condo Hotels Seen as the
Ultimate Vacation Home

If home ownership was once the tangible evidence of success in America, today a vacation home is the consummate symbol of truly having arrived. But for many, limited time to spend using and maintaining a vacation home, has kept them from taking the plunge.

Along comes the condo hotel, a new variation on the traditional vacation condo or family beach house. These hassle-free, upscale properties could be the ultimate second home for today's well-to-do.

Condo Hotels Defined

"Condo hotels are fully-furnished condominium suites located in beautiful hotels and resorts around the country," explained Joel Greene, president of Trump Condo Hotels, a national real estate firm that specializes in the sale of condo hotels operated by the Trump franchise.

"Owners have access to all the magnificent amenities of a five-star hotel like resort-style pools, fine dining restaurants and rejuvenating spas. They also get all the hotel services like daily housekeeping, room service, valet parking and an on-site concierge, everything you could want when on vacation."

Owners of condo hotel units can use their vacation home when they'd like. When they're not there, on-site hotel management company takes care of all operational issues. This includes everything from finding hotel guests to rent the condos, to maintaining the condos and common areas, to ensuring the smooth operation of all amenities.

How Rent Revenue Is Split

The management company receives approximately 50% (it varies by property) of the revenue the condos generate in rent. The balance goes to the individual unit owner.

According to Greene, unit owners are more likely to receive more rental income by participating in the hotel's rental program than if they try to rent out the condo themselves. "The hotel usually brings with it a national affiliation, an international advertising program, a sophisticated reservation system, brand recognition and management expertise."

Many condo hotel owners say they can more easily justify the purchase of a condo hotel unit than a traditional vacation home. "I always hesitated to buy a second home in the past because I knew we could only use it a few weeks out of the year," explained Cara Masters, who recently purchased a condo hotel unit in Fort Lauderdale, Florida. "A condo hotel was the perfect solution because whenever we're not there, the condo is rented out. The income it produces helps cover its costs."

What Condo Hotels Cost

Prices for condo hotel units range from $200,000 to upwards of $2,000,000 for five-star, ultra-luxurious homes. They usually include all appliances and furnishings as well as impressive design features like gourmet kitchens, luxurious bathrooms, marble tile and hardwood floors.

Condo hotel buyer, Sam Chauncey, said he always wanted a vacation home for his family but knew he didn't have time to contend with the kinds of problems he remembered seeing his parents handle with a lake house they owned when he was growing up.

"Even though we only used the lake house in the summer, it was a year-round burden. Burst pipes, rotting deck, fading paint, renters who didn't pay up - no thank you." Chauncey said he didn't want the added chores nor the stress.

Instead, Chauncey recently put a deposit on a condo hotel unit at New Oasis at Sea Mist Resort, a to-be-built condo hotel in Myrtle Beach. "When I learned, someone else handles all the work, I knew a condo hotel was right for me."

Condo Hotels Go Global

Condo hotels are appearing in all sorts of appealing destinations like Miami Beach, Orlando, Las Vegas, Myrtle Beach, Chicago, Colorado and the Caribbean. "The concept started in Miami," Greene said, "but it's definitely catching on throughout the country. We're also seeing condo hotels appear in Canada, Europe, Asia and the Middle East. It is becoming a worldwide phenomenon."

In addition, buyers are coming from all over the world, not just the United States. W International, a London-based company that markets condo hotels in Great Britain, finds that U.K. buyers are enchanted with the condo hotel concept.

According to Ann Adenius, president of W International, they welcome the opportunity to have a vacation home in the U.S. and have a particular affinity for Orlando, Florida. "More than 40% of the condo hotel units sold in Orlando last year were to U.K. buyers," she said. "A condo hotel is ideal for them. They want to go on holiday once or twice a year in the U.S. but do not want to be responsible for finding renters or maintaining their property from overseas the rest of the time," she said.

Big Brand Names and Luxurious Amenities

Most upscale condo hotels are operated by highly reputable hotel franchises like Trump, Hyatt, Hilton, Starwood, Sonesta and Ritz-Carlton that know how to cater to buyers who demand quality.

"When I go on vacation, I want to be pampered," said Sandra Kaplan who recently decided to reserve a unit in pre-construction stage at the W Las Vegas condo hotel. "I want to relax, not do any housekeeping or cooking. A condo hotel is perfect for our family. The kids can spend the day at the pool. I'll go to the spa and fitness center. And my husband enjoys the casino. There's something for everyone."

Investment Aspects

While having a place to vacation is the primary reason for purchasing a condo hotel, some buyers say they the concept has appeal as an investment. Places like Las Vegas, Orlando, Miami and Myrtle Beach have seen double-digit increases in real estate appreciation in recent years. Many condo hotel owners in those areas are betting the surge in property values will continue. When they sell their vacation homes, they're hoping to make a significant profit.

"I bought a condo hotel to diversify my portfolio," said George LaSalle who purchased a unit at The Cube condo hotel in Dubai, a place he said he is not planning to spend his vacations. "I was able to buy a five-star condo hotel for under $300,000. I'm looking forward to seeing decent annual returns and an increase in value when I'm ready to sell, probably in a few years."

Now LaSalle, who lives in Phoenix, says he's looking for another condo hotel to buy. But this one will be near a beach in the U.S., one he's likely to use as a vacation home as well as an investment.

"I've hesitated to buy real estate in the past because I didn't want to become a landlord and assume all the problems that come with it. A condo hotel gives you all the benefits of ownership - a great place to vacation, rent revenue of offset costs, and appreciation potential -- without any of the hassles."

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