About 20 years ago on the high seas of south Florida's real estate market, many dated condo hotels lacked quality and prestige. The scourge of changing tax laws made them less attractive investments and many conversion projects were sunk.
In the late 1990s came
The Mutiny, an apartment building that took over the condo hotel concept, according to Joel Greene, president of
Condo Hotel Center, an Internet real estate broker.
The owners of the apartment building in Miami gutted their property and turned it into a condo hotel or
condotel, reintroducing the concept to the area and generating a pirate's plunder for its buyers, with unit prices increasing 10 times from beginning to sell-out. Other developers began following suit, revamping old hotels or constructing them brand new.
"Today there are approximately 60 or more condo hotels at various stages of development in Florida," says Greene. "By 2008, there will be several hundred condo hotels, located throughout the U.S. and around the world."
But before eager adventurers raid this ship, they must be aware of what they are getting into, says Greene, or be fooled by a treasure that falls short of the legend.
Condo Fever
A condo hotel, as defined by Greene, is a large, usually high-rise property located on prime real estate and operated by some of the biggest hotel names like
Trump(TRMP Quote - Cramer on TRMP - Stock Picks),
Marriott's(MAR Quote - Cramer on MAR - Stock Picks) Ritz-Carlton,
Starwood(HOT Quote - Cramer on HOT - Stock Picks) and
Hyatt. It is usually used as a second or vacation home.
Unlike a traditional hotel residence, however, the condo hotel unit allows individual owners to place their unit in the hotel's rental program when not in residence. The revenue generated from the rental program is split -- usually 50/50 -- between the hotel operator and the owner.
Despite the slowing real estate market, condo hotels are continuing to thrive, largely because 74 million baby boomers are looking for places to spend their money. "Condo hotels are part of at least 10% of every hotel project currently being built," Greene notes. Condo Hotel Center is contacted by at least three or four new developers each week.
Annika Mengisen
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