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.


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