Author of www.HotelLawBlog.com
8 November 2006
Condo Hotel Lawyer on “The Splits.” A few days ago, in a posting called The “Splits” — One size does not fit all, I emphasized the importance of achieving fair and realistic “splits” of revenue among all the stakeholders in a condo hotel or other hotel mixed-use property. These stakeholders might include condo hotel unit owners, timeshare or fractional owners, pure residential unit owners, and retail or commercial unit owners (e.g. the owners of the spa, waterpark, restaurant, parking operator or sundries store).
The key to getting the right splits and a viable condo hotel regime structure is a fair and reasonable allocation of all expenses and revenues involved in the project. As a starting point, you might allocate expenses on the basis of square footage use, revenues generated or other rational basis. But what items should be allocated to whom? How do accomplish a fair allocation?