As Second Homes, Condo-Hotels Are Inn Wall Street Journal (12/11/00) p.B19D; Morrissey, Janet
More wealthy Americans, fed up with time-shares, are
turning to luxury condominiums hotels as secondary residences.
Hilton Hotels Corp., Marriott International Inc.'s Ritz Carlton,
FelCor Lodging Trust, and Four Seasons Hotels Inc. are among the
growing number of major hoteliers beginning to manage condo-hotel
units. "This is the most affluent generation to approach
retirement, and these people are well-educated, well-traveled,
and demand comfort," according to Aubrey Faeroe, president of
Gulf Bay Group of Cos., which is developing a luxury hotel-condo
at Marco Island, Fla. Condo-hotel units, which are sold as
condominiums but managed by the hotel, provide several advantages
to renting out traditional apartments. When an owners is not
using a unit, the hotel can rent out the space, with the rental
revenue shared evenly between the two parties. This type of
arrangement can enable owners to pay off their mortgages sooner.
Moreover, the condo-hotel gives owners access to conventional
hotel perks, such as room service, when they are occupying their
unit. But condo-hotels also come with several restrictions.
Owners usually have to furnish the hotel according to prescribed
guidelines, and they have to schedule their visits well in
advance. They also run the risk of troublesome tenants renting
and trashing their unit. Despite this, many people prefer
condo-hotels. With their increasing popularity, condo-hotels are
proving to be an even wiser investment. Conversely to
time-shares, rentals, and leased vacation properties,
condo-hotels provide the benefits of ownership, such as tax
breaks on mortgages. Additionally, according to one hotel
president's estimates, advertising and marketing a time-share
eats away at least 35 percent of the total sale price, as opposed
to only about 10 percent of that of a hotel-condo unit. Hotel
owners prefer the concept because it involves a one-time sale as
opposed to 40 or 50 needed to sell off the time-share.