A condo hotel, also known as a hotel-condo or a ‘Condotel’, is a building, which is legally a condominium but which is operated as a hotel, offering short term rentals, and which maintains a Front Desk.
Condo hotels are typically high-rise buildings developed and operated as hotels, usually in major cities and resorts. These hotels have condominium units which allow someone to own a full-service vacation home. When they are not using this home, they can leverage the marketing and management done by the hotel chain or property manager to rent and manage the condo unit as it would any other hotel room.
Note that analyzing the economics of a condo hotel unit is extremely difficult because of the challenge of getting accurate information about the potential income stream.
The primary factors that contribute to the financial outcome in ownership are rental revenue, appreciation or depreciation, lending and tax deductions if any.
Financing is generally costlier than for a primary residence.
Rental revenue is shared with the management company, and owners typically pay no upfront fees for management, which includes the marketing and reservation of the units. Although the revenue splits between owner and management company do vary from project to project, most hover around 50 percent. However websites like VRBO.com and AirBnB.com allow owners to manage their properties directly, while using a local manager for check-in and check-out of guests. Some property managers offer services for as little as 10% allowing an owner to retain more of the income **
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** Note – No information contained on these pages is intended to substitute in any way for professional services such as CPS’s, attorneys, or other legal and financial advisers. Hawaii Americana Realty and it’s agents offer no legal or financial advice of any kind.