Close to where I live, there are quite a few condo hotels and it seems like people have done well with them. Although the revenue isn't that great, if you get a good location, and a good management company behind it (ie. Westin, Hilton), the unit should appreciate.
That's a couple of big "ifs".
You also need to know how the units are utilized- are they in a "pool"? What is the vacancy rate for that pool? Or will you be renting it out through your own independent efforts? What is the financial condition of the building ownership (HOA or is it primarily hotel owned, or ?). Here, I manage several individual condotel units, and everything was rosy until the HOA determined they needed to start charging a significant maintenance fee. OOPS! (This was after a change in ownership of the overall operation.) Do you, as a private owner, and more importantly, your tenants, have access to all of the building amenities? This varies... In fact, some hotel operations are downright unfriendly towards the tenants of individually owned units!
In re appreciation, are you buying on the upswing? or the downswing? and how long can you afford to hold to see the future appreciation?
...and another thing, those Big Hotel operations spend BIG $ renovating periodically to keep a fresh, appealing look for their clients. If your unit is to remain competitive, and particularly if its in the pool, you will need to also.
Definitely lots of stuff to think about.
The property I am thinking about is a Westin in Blue Mountain Ski Resort Ontario and is managed by Intrawest. They seem to have a pretty good track record, but yah, I need to do quite a bit more research I think.
Thanks for the tips
The property I am thinking about is a Westin in Blue Mountain Ski Resort Ontario and is managed by Intrawest. They seem to have a pretty good track record, but yah, I need to do quite a bit more research I think.
Thanks for the tips
Westin is a hotel brand owned by Starwood. Starwood has a number of brands.
Starwood operates fractional ownership condo hotels. I am not sure if they have condo hotels that are not set up on a fractional basis. I am slightly surprised to hear of a Westin that is managed by Intrawest. Check the details. It could be the property is owned by Intrawest and they brought in Westin to manage the hotel aspects. If this is a true condo hotel it will eventually be fully sold and owned by the condo owners. They will have an owner's association that overseas the management company that runs the day-to-day operations (Westin or some other hotel management company).
At some level all of the above can be ignored. The critical factor is your comment about appreciation. Why do you think there will be any appreciation at all? Fundamentally the property is a commercial property that has almost zero value other than from the cash flow stream after expenses. Hence the future value is heavily tied to the free cash flow.
A secondary issue that can impair the value of the property is financing. Until there are many lenders competing to offer loans to individual buyers the financing is limited. When financing is limited then the opportunity for buyers to to buy is impaired. Most buyers can not afford to pay cash. If there is a limited number of buyers or the financing is bias towards those with a large down payment you will see the value lag.
John Corey
PS. I own part of a fractional ownership property operated by Westin in HI. I think it is a great deal but not because of appreciation.
Hi John,
Your insight is interesting as I rarely hear a Owner's perspective.
My company actually provides the Owner Website and Owner Accounting software for Intrawest's Condo-Hotels, and I can confirm for a fact that they manage at least 4 Westin Condo-Hotels. (you can google Owner Relations Technology : Can't post the address as I just signed up).
The properties are Westin Trillium House Blue Mountain, Westin Tremblant, Westin Monache Mammoth, and Westin Imagine Orlando. All those properties are whole ownership.
Starwood started Franchising the Westin Brand a few years ago, and most of the new Westin Condo-hotels are franchises now.
I can't comment on the appreciation part, but I do know that another Westin Condo Hotel in Whistler British Columbia has seen a healthy appreciation since it opened. The Olympics coming in 2010 probably don't hurt either.
????,
Good to have you on board as there are not many folks with your experience.
Update your profile so we know where you are located. You can also put your website URL there so the WWW button appears.
Is there a name you prefer we use when addressing you? Given the professional photo I expect your business card says something other than
for the name field.John Corey