Hotel Law Blog

Author of www.HotelLawBlog.com
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.

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Author of www.HotelLawBlog.com
13 September 2006
Each condo hotel program has specific needs and considerations — there is no “one size fits all” situation. The design and allocations have to be designed for each project particularly as they become larger and more complex.

We quickly found out that the early revenue splitting formulas (e.g. 60% to the hotel and 40% to the unit owner) were really clumsy efforts to cover expenses that couldn’t really be allocated to either the hotel or the unit owner. Where hotel guests and unit owners both use the service, which should pay for its maintenance and benefit from its revenue?

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Author of www.HotelLawBlog.com
8 September 2006

Click here for the latest articles on Condo Hotels

Five keys to success with Condo Hotels

Along with the other hotel lawyers in the Global Hospitality Group® at JMBM, at the time of this article, my team and I have been involved in structuring more than 85 condo hotel projects over the past few years. When developers come to us with a condo hotel project — whether it is a new development or a conversion — we look at five key factors to assess the viability of the project.

These factors are:

1. economic fundamentals,
2. the condo hotel program’s design,
3. a condo hotel regime that will ensure adequate hotel room inventory,
4. structure and documentation to assure appropriate and consistent quality, and
5. not locking down the structure until you have a viable regime design.

And although I don’t include it in these fundamentals, you have to worry about SEC compliance for a deal marketed or sold to US buyers (See “Why does the SEC care about condo hotels?“). Today, I want to focus on the all-important economic fundamentals.

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Author of www.HotelLawBlog.com
7 September 2006

Click here for the latest articles on Condo Hotels

I’ve been reading some press items lately that suggest the condo hotel phenomenon is coming to an end. The stories point to a few specific markets, like South Florida and Las Vegas, that are saturated with capital and deals, or to specific projects that have gone awry.

Are condo hotels dead? No, they are alive and well. Will the super-heated boom continue? No. Consumer demand will normalize and be cyclical, but quality projects will continue to be successful, particularly in markets that have not been flooded with product.

In any event, we believe that condo hotels continue to perform a valuable role and have earned an enduring legacy in the hospitality industry. They make new hotel development feasible where limited financing and skyrocketing constructions costs would otherwise be prohibitive. And perhaps more importantly–at least over the long-term–condo hotels have changed the way we view hotels being mixed with residential other kinds of real estate projects.

From direct experience with more than 80 hotel mixed-use projects over the past five years, all of which involved a condo hotel or residential component, often with other commercial real estate uses as well, we have participated in a intense effort that has produced some break-through solutions to obstacles that held back many earlier mixed-use projects. This effort has created a new technology and a deep pool of practical experience that already paying huge dividends. This technology and experience is critical to the success of hotel mixed-use as it takes an ever more-prominent role in commercial real estate.

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