Effectively Managing FF&E for Condo Hotels
By Cary Tyler Schirmer Chief Executive Officer, The Higgins Group | August 07, 2010
Condo-hotels, also known as condotels and apartotels, are taking the hotel industry by storm. Initially made popular in the Miami area throughout the 1980s, these residences are back in a big way, allowing biggest names in luxury hotel brands to create a whole new real estate market. By uniting the public's desire to invest in real estate with the travel industry's quest for new properties, the condo hotel has reinvigorated the hotel construction business, altering the skylines of gateway cities from San Francisco and Las Vegas to Boston and New York.
These residences are typically high-rise, luxury properties in outstanding locations associated with well-known names in the hotel industry such as Ritz Carlton, Hilton, Starwood, Trump and Sonesta. They offer a great opportunity for a hotel to leverage and extend their brand into a luxury residence, where buyers can enjoy all the amenities of staying in a hotel, with the added benefit of owning a piece of the real estate. Most condo-hotels feature incredible amenities and guest services of four-star caliber or better, including full-service spas, work-out facilities, room service, housekeeping services, resort-style pools, restaurants and access to concierge services.
Mixed use residences like this come in many flavors: condo hotels, residential clubs, timeshares, and fractional resorts are all elements of this booming trend that's impacting the hotel, luxury travel and vacation industries. Those managing the procurement of FF & E are presented with a unique challenge of understanding what these types of residences are, the various needs of each, and the current trends in the industry.
Here is what hotel executives need to know to maximize their investments for each type of mixed use residence:
Unlike time shares, where owners have the right to visit a property for a few weeks a year, or traditional condominiums, where individuals own the units and can do what they want with them, condo-hotels are a hybrid. It's a condominium with hotel-like features and amenities (F&B, spa, concierge, etc.). Condo owners place their units into a rental pool, which is managed by a hotel company. Investors own a specific condo and pay property taxes, insurance, and maintenance fees. Hotel management companies rent out the rooms, rotating reservations among the various units and splitting the revenue fifty-fifty with the owners. In many cases, the hotel company will also own some units. The customer experience is typical of a luxury hotel, but with larger units.
What you should know: