Always dreamed of owning a second home? Now you can, in a perhaps unexpected way.

Ownership in condo hotels is fast becoming an ideal way to purchase an enviable vacation or second home without all the responsibility.

When you buy a room or suite in one of these luxury resorts, not only will you enjoy the life of a pampered guest, but you'll have the opportunity to reap financial rewards as well.

A real estate venture that's existed quietly for decades, condo hotels, or "condotels," are attracting private investors who want a great vacation spot or second home that will generate revenue, both to offset ownership costs and provide a future return on their investment.

Typically, condotel owners have the option of occupying their units for a certain number of days per year, then entering them into the hotel's rental program for the balance of the time.

The resulting revenue from other hotel guests is split between the unit owner and the hotel's management company, and can offset maintenance and other fees.

At Your Service

You are always treated like a guest when you check in to your condotel unit. The rooms are frequently located in mixed-use hotels and resorts that also house traditional hotel rooms and offer amenities such as deluxe spas, pools, housekeeping and concierge services.

The new W Hotel that's under construction in Las Vegas, for example, promises to deliver all of the services and pampering that guests have come to expect from this luxury brand.

With 4,000 rooms, a 75,000-square-foot casino and 10 restaurants and night clubs, this hotel is being built in true Vegas style. Its design incorporates the signature W entrance that's more living room than lobby and features posh retail shops, including Fred Segal.

While the hotel's developers look forward to welcoming their first overnight guests, their attention now is on buyers of the project's condo hotel rooms.

These rooms come equipped with features like plasma TVs and Sub-Zero refrigerators, and the hotel offers luxury services including a concierge, valet parking and a Bliss spa.

Starting at $650,000 for a 500-square-foot unit, the first 500 rooms have already sold out, and the second 500 are going fast.

"The W brand is one of the biggest contributing factors to our success in the condo hotel market. People have a lot of faith in the brand, and they want to buy into it," says Maggie Feldman, spokeswoman for the hotel's development partners the Edge Group and

Starwood Hotels and Resorts

(HOT)

.

But the growth of condotels is not focused solely on new development.

In New York City, the famed Plaza Hotel is closed for renovations, and when it reopens in 2007 it will include 152 condotel units. The Plaza's rich history and prime location -- bordering Central Park and Fifth Avenue -- make it one of the most coveted parcels of real estate in the country.

"In purchasing at The Plaza, you are purchasing one of the great buildings in the city. It's an icon known around the world," says Lloyd Kaplan, spokesman for Elad Properties, owners of the Plaza Hotel.

The new hotel residences will feature a butler on every floor, and occupants can use in-room touchscreens or the concierge service to order Broadway tickets and make restaurant reservations.

Guests will also be surrounded by restored elements of the Plaza's original architecture, including a 1,200-square-foot stained-glass skylight that adorns the ceiling of the hotel's Palm Court.

A Growing Trend

"Condo hotels are not really new; it's just that the bigger players are involved now," says Jan Freitag, vice president at Smith Travel Research, a leading information and data provider for the lodging industry.

According to Freitag, interest in condotels began to rise around 2002, when the concept hit the radar of bigger hotel chains. "It's like time-shares. It wasn't until

Disney

began offering them 15 to 20 years ago that they became mainstream," he explains.

A 2006 report from Smith Travel Research indicates current development of new condotel units has far surpassed other lodging options.

Of 249 projects, with a total of 99,283 reported rooms, now in development, 53.3% are planned as condotel rooms, 32.6% are traditional hotel rooms, 12.6% are nonrental residences and 1.4% are time-share rooms.

Unlocking Value

While some buyers are drawn to condotel projects associated with recognizable brands like

Marriott

(MAR) - Get Report

-owned Ritz-Carlton,

Hilton

(HLN)

,

Trump

(TRMP)

and Starwood, others are drawn to lesser-known names, many decidedly off the beaten path.

Phoenix residents Bill and Connie Hopkins purchased their first condotel unit at Crystal Mountain Resort in Topsonville, Mich., in the late 1980s. "We went up there every weekend, and when we weren't using it, we put the room in the rental program," Hopkins explains.

The unit wasn't purchased as an investment, but Hopkins says he and Connie soon recognized its economic potential.

They began buying units in other condotels, like the Tamarack golf and ski resort in Donnelly, Idaho, and the Suncadia golf resort in Roslyn Cle Elum, Wash.

The couple looks for hotels and resorts with no local competition and that offer recreation components and conference centers. "It's got to have something going on!" Bill Hopkins says. "If I buy into a concept, I want to know there's a good chance of appreciation."

Hopkins feels the potential for financial return from condotels is good -- as long as buyers understand what they are getting into.

"The biggest misconception is that you can make lots of money. A more realistic view is that you have potential to break even on cash flow," he says.

Bill Hopkins also serves on the Board of Directors of the newly formed

National Association of Condo Hotel Owners (NACHO), an advocacy organization whose mission is to ensure best practices and support and educate consumers and developers entering this fast-growing market.

"Condo hotels today are the best economic choice for vacation and secondary residences that exist, but they are not an investment in the short term," says NACHO President and CEO Dante Alexander.

"If you buy a unit and expect it to pay for itself, it won't. We see these properties producing money to offset expenses like management and homeowner association fees, property taxes and liability coverage."

"The majority of condo hotel unit buyers are the 'rational rich' -- they have specific monetary and geographic parameters and want to understand what their net cost of ownership will be," he explains. To help understand those costs, the NACHO Website provides a return-on-investment calculator that covers the country's top 50 markets.

NACHO also monitors national trends. Currently, Florida has the highest number of condotel projects in development, but Alexander warns that the Orlando area and South Florida are nearing saturation.

Areas that Alexander says are good at the moment include Las Vegas, New York, Chicago and San Diego, and he sees emerging markets in cities like Boston and Washington, D.C. "We also love what we call '2½-hour, drive-to locations' when they are priced right, such as the Napa Valley, Mexico and sites between N.J. and Maine," he says.

Regardless of where they buy, Alexander advises those interested in condotels to view their purchases like any other real estate investment. "Expect to pay above and beyond your mortgage," he says. "How you do on appreciation of the property will depend on the market at the time of sale."

Enjoy the Good Life? Email us with what you'd like to see in future articles.

Anne McDarby is a freelance writer living in New Jersey. Her professional experience includes work as a newspaper reporter and editor in northern New Jersey and more than 15 years in health care public relations and marketing.