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Hospitality Lawyer: Condo Hotels — Room Inventory is Vital

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15 September 2006
Adequate and predictable room inventory is critical to the success of a condo hotel project. Without adequate hotel rooms to accommodate the normal flow of guests, the project simply won’t work as a hotel. Large groups and conferences tend to reserve up to 24 months in advance, so the hotel has to have predictable inventory.

But to ensure hotel room inventory, you need enough unit owners to sign long-term rental management agreements. A viable condo hotel regime will have about 80-to-90 percent of the condo units participating in the rental management program. This involves an intelligent use of “carrots” and “sticks” and it can be a bit tricky. You have to give the unit owners incentives to participate in the rental management agreement and disincentives – like reasonable charges – if they don’t.

But, you must go about this in a way that avoids having condo unit sales labeled as a “security” by the Securities and Exchange Commission. I’ll be writing more on that tomorrow.

Our Perspective. We represent developers, owners and lenders. We have helped our clients as business and legal advisors on more than $87 billion of hotel transactions, involving more than 3,900 properties all over the world. For more information, please contact Jim Butler at or 310.201.3526.

Jim Butler is one of the top hotel lawyers in the world. GOOGLE “hotel lawyer” or “hotel mixed-use” or “condo hotel lawyer” and you will see why.

Jim devotes 100% of his practice to hospitality, representing hotel owners, developers and lenders. Jim leads JMBM’s Global Hospitality Group® – a team of 50 seasoned professionals with more than $87 billion of hotel transactional experience, involving more than 3,900 properties located around the globe.

Jim and his team are more than “just” great hotel lawyers. They are also hospitality consultants and business advisors. They are deal makers. They can help find the right operator or capital provider. They know who to call and how to reach them. They are a major gateway of hotel finance, facilitating the flow of capital with their legal skill, hospitality industry knowledge and ability to find the right “fit” for all parts of the capital stack. Because they are part of the very fabric of the hotel industry, they are able to help clients identify key business goals, assemble the right team, strategize the approach to optimize value and then get the deal done.

Jim is frequently quoted as an expert on hotel issues by national and industry publications such as The New York Times, The Wall Street Journal, Los Angeles Times, Forbes, BusinessWeek, and Hotel Business. A frequent author and speaker, Jim’s books, articles and many expert panel presentations cover topics reflecting his practice, including hotel and hotel-mixed use investment and development, negotiating, re-negotiating or terminating hotel management agreements, acquisition and sale of hospitality properties, hotel finance, complex joint venture and entity structure matters, workouts, as well as many operating and strategic issues.

Jim Butler is a Founding Partner of Jeffer, Mangels, Butler & Marmaro LLP and he is Chairman of the firm’s Global Hospitality Group®. If you would like to discuss any hospitality or condo hotel matters, Jim would like to hear from you. Contact him at or 310.201.3526. For his views on current industry issues, visit

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