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Questions Often Asked About a Resort Condominium Hotel?
1. Q: What is a resort condominium hotel?
A: One of the hottest concepts in the lodging and real estate industries today—condominium hotels—are coming to Arizona and to InnSuites Hotels and Suites. So, why have condo hotels become so hot?
Condominium buyers purchase fee-simple equity in their individual unit which is a hotel guest studio or suite. Hotel condominium unit owners may live in the hotels as they wish, use them as second or third homes. You may also rent your hotel condo when you are not in residence. Unit owners incur a monthly Home Owner’s Association (HOA) fee for budgeted maintenance, utilities, and operating expenses. Unit owners have the benefit of the hotel’s amenities including fitness center, heated spa and pool, business center, free hard wired reliable high speed internet access, as well as limited access to hotel extras such as complimentary hot breakfast buffet and free afternoon social hour.
There are many variations of the condo hotel model. One of the more popular concepts and the one followed by InnSuites and Suites is the straightforward condo hotel, whereby the hotel operator sells each of the hotel condo suites. The new hotel condo owners can then elect to occupy their condos and/or rent the units when not in use.
Condo hotel units are highly prized. But there are reasons for this. Buyers have the fun of a resort area vacation home but they do not have to worry about maintenance. Plus they have the opportunity to recoup some of their costs through hotel rentals on their own or through others if they wish. The hotel condo provides an opportunity to hold value and over time build real estate value.
Unlike traditional condo units, condo hotel owners have the added benefit of being part of a suite hotel, which attracts a constant stream of guests through brand marketing and toll-free as well as web reservation systems.
Condo hotel units are highly prized. But there are reasons for this. Buyers have the fun of a resort area vacation home but they do not have to worry about maintenance or utilities. Plus they may have the opportunity to join a management program.
2. Q: How do Condo Hotels Compare to Traditional Vacation Condos and Single Family Homes?
A: Condo hotels are not the typical second or third home. They are luxury furnished condominium studios and suites in resort areas such as Arizona. Owners have access to all the amenities and services of the resort area suite hotel.
Like a traditional vacation home, owners can use their home as they wish. However, unlike a traditional home, they may have the option of joining a management program. Ownership is hassle-free as all maintenance, utilities and other issues are handled by the Homeowner's Association (HOA) and/or at the option of the owner by a professional management company.
3. Q: How do Condo Hotels Compare to Timeshares?
A: With a timeshare, owners are typically allotted just one or two weeks of the year to use their condo. They are always the same weeks unless the owner goes through a process and expense to exchange time with someone. (The hotel condo also makes this exchange option available but with greater flexibility.)
With a condo hotel unit, owners have deeded ownership to their condo and can use it any time they want.
Finally, timeshares can be difficult to resell, even if the seller is willing to take a loss. On the other hand, condo hotels, because of their prime locations, limited inventory, actual fee deeded real estate ownership, and upscale quality, are a highly desired commodity.
4. Q: Is a Rental Program Available?
A: A hotel condo owner may use a condo hotel management company of their choice. Additional management information will be available when the Arizona Department of Real Estate (ADRE) public report for a specific project is approved and available and the buyer has entered into a binding contract.
5. Q: Who are the Condo Hotel Buyers?
A: Typically, condo hotel buyers are vacationers who appreciate the many services and hotel amenities available in resort areas. The appeal of hotel condos is not limited to U.S. buyers. The concept has received international attention.
6. Q: What is the Best Time to Purchase a Condo Hotel Unit?
A: There is a limited inventory of condo hotel units and they are selling fast, often unbelievably so. Many condo hotels are sold out in the pre-sales period. There are many examples of large condo hotels selling out in 30 to 90 days.
As word continues to spread about condo hotels, more and more buyers around the country and around the world are learning of this fun proven concept and looking to participate.
As an added bonus to purchase, any hotel studio or suite rental of up to 30 days will be fully credited to the purchase price of a condominium at that hotel. As an added bonus to joining the rental program, a 2-year membership to RCI is included in the rental program.
7. Q: "When should one consider a hotel condo suite as opposed to just a second home, cabin, resort area home or condo?"
A: "For those that have owned or do own a cabin or second home, they know the joys of family bonding, relaxing get-a-ways, being in different areas and the needed excuse to leave home that a second home offers. Plus they know the benefit of owning real estate.
But they also know the grief of a water pipe breaking when you are not there, the hassle of paying the utilities and other bills, and the annoyance of cleaning up after a insensitive guest or relative visitor.
A hotel condominium suite truly offers the best of both worlds. It provides a family bonding experience and the much needed relaxing vacation in the sun. It provides the benefits of ownership, and yet it eliminates or avoids the annoyances of cleaning up after guests, arranging various utilities and cleaning services, the concern, inefficiency and cost of a vacant second home. The hotel condo truly is the best of both worlds."
8. Q: What are the major benefits of condominium real estate ownership?
Real estate and condominium ownership can bring enjoyment enhancement to your life in many ways including the following:
A: Bragging rights-Own a condominium in the resort area Phoenix/North Scottsdale “Valley of the Sun”.
9. Q: Once I have purchased my hotel condominium real estate, how do I watch and track the events that affect the value and monitor my purchase?
A: First you might want to subscribe to the local newspaper and watch the activity and growth of the area. Secondly, you may want to be actively involved in the home owner’s association (HOA) and watch the HOA’s newsletter for activities that affect your property. You may also wish to monitor local municipalities including planning and zoning departments and follow public meetings for planning and zoning that affect the area.
10. Q: What are the costs/expenses and benefits of holding hotel condominium real estate?
A: If you pay cash, the monthly home owner’s association and semi-annually property taxes pretty much sums up the cost. If you finance your property you have interest and principal to pay. (interest may vary over time) Rental either on your own or through a rental program may be available to offset some of the cash flow. The benefits of a vacatioin home needs only your imagination to define.
11. Q: "What are the changes in the past year and latest condo hotel trends?"
"Excerpts from condo hotel specialists include the following:
A. "There is a spreading enthusiasm about the condo hotel concept. More buyers are recognizing the benefits of owning a hassle-free vacation home with numerous amenities and the potential for fun and to appreciate."
B. "Buyers come from all over the U.S. and the world including countries in Latin America. Despite the fact that the Securities and Exchange Commission prohibits selling condo hotels as investments, many buyers do understand the investment potential along with the vacation home aspect when making a condo hotel purchase. They want a second home that they will enjoy, but they also appreciate the diversity that owning real estate can provide in their investment portfolio.
C. "The best time to purchase a condo hotel unit is in early phases. Most properties experience three to six price hikes before completion. Those buyers who get in when the condo hotel first comes on the market, or even better during the "word of mouth" phase, realize the greatest appreciation of their condo.
D. "Prime vacation destinations continue to be the most popular areas for condo hotel development. Buyers want a location that is convenient to local attractions, shopping, restaurants and a major airport."
E: "Many condo hotel projects take reservations of more than half the total project long before purchase contracts. This means that many of the best units are reserved months before any money changes hands. They also must cope with project delays, such as getting into condo documents approved by the state."
F. "Condo hotels are adding to the quality of their product in many ways. They add state-of-the-art technology such as hard wired as well as wireless internet access and plasma TV's. They incorporate designer furnishings and finishes like granite countertops, tile and marble flooring, crown molding, brand-name appliances and using European styling. They put in name-brand amenities wherever possible like fully-equipped business centers."
G. "According to Lodging Econometrics, a hospitality research group, the market for condo hotels is expected to stay hot. The current pipeline for condo hotels over the next few years is estimated at approximately 30,000 in approximately 100 hotels. About 75% of these units are new construction, with the remainder converted from existing hotel guest suites.
H. "Financing a condo hotel unit has become easier for buyers. There was a time when banks and mortgage companies were not familiar with the term "condo hotels". They now recognize the viability of these properties. With more competition lenders are more accommodating."
I. "One of the next big trends within the condo hotel market is the conversion of existing hotels into condo hotels. Many smaller independently owned hotels and many grand old hotels are welcoming individual owners."
J. "Hotel owners are using the conversion process as a way to finance improving their property with updates in amenities and services to become more competitive in the market. Selling units as condos to individual buyers allows the developer to finance the upgrade without increasing debt or putting in additional equity. A hotel may be sold off unit by unit for more than an outright sale of the whole property, and the operator can still retain an income stream."
K. "Another reason why we are seeing conversions of existing hotels and resorts to condo hotels is simply that there is limited desirable land on which to build new structures. The owner is faced with the decision of demolishing an old building and starting fresh or simply renovating and upgrading the existing structure. The latter strategy is a less costly and much quicker option. An existing structure is often less dense meaning fewer units per acre of resort land and as a result more desirable to the condo unit buyer. The owner must decide if that is the best use of the land."
L."Just as the condo hotel market has grown in the past year, we see more fractionals, private residence clubs and destination clubs coming on the market. Nonetheless condo hotels seem to be the way to go in the current market. Hotel condos are making big strides compared to timeshares."
12. Q: "How can buyers choose a good condo hotel unit?"
"Research on the internet or work with a real estate broker who specializes in condo hotels and can discuss the pros and cons of all products currently on the market. Buyers should look for the following elements:
A: Location. Real estate is all about location. Select an area where you can expect to have business driven to your property such as near a major convention center, a large metropolitan area, theme parks, freeway, or resort areas.
B. Compare management companies and their rental sharing program. Also, it is worth noting that an established management company does world-wide marketing and has a state-of-the-art reservation system that will help ensure your unit is rented as much as possible."
13. Q: "What are some important tips to a condo buyer to consider when purchasing a condo hotel unit?
A: Contact the Condo Hotel Management Company and a third party such as the national association of condo hotel owners ( NACHO) to learn more about historical data.
B: Make sure your purchase is fee simple and includes an undivided interest in land and public areas.
C: Make sure your condo hotel includes amenties important to you and your desired hassle-free lifestyle.
D: Ensure your HOA includes your utilities(electric, water, gas) and cable plus extras such as high speed internet and local and long distance phone.
E: Buy a condo hotel unit in a desired vacation area.
F: Pick a condo hotel with a known regional or national name or reservations affiliation.
G: Purchase a unit with good proximity to restaurants, airport, transportation (freeway) and services.
H: Good value can come to those that purchase early in the development of the project.
I: Purchase a condo hotel unit that you and your family and friends would enjoy using yourselves. If you enjoy the areas, those that rent will also enjoy and seek the area.
J: Choose a Management Company that handles marketing and reservations to ensure your unit is rented as much as possible when you are not in residence.
"In summary, the hotel condo concept is hot and for good reason. Be well informed in your decision but do not delay too long!"
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