This concept, began in Europe in 1958, combines the rewards of condominium ownership with the privileges of a hotel. Once popular only in well-established resort markets, today, condo-hotels can also be found in Central Business District locations including New York, Chicago, Los Angeles, Boston, Washington D.C., Seattle and San Francisco.
In a condo-hotel, a buyer makes a fee-simple purchase of a deeded condominium unit/guestroom. When not occupying the room, the owner may make the unit available to guests at the hotel through a rental management program or a leaseback program. Room revenue that is generated through the hotel rental program is shared between the unit owner and the developer/managing partner. The condominium can be sold or transferred at any time.
Condo-hotels, which are often managed by the hospitality industry operators, such as Hard Rock Hotels, Ritz-Carlton, Starwood Hotels & Resorts, Holiday Inn, Travelodge and Howard Johnson, are transparent to hotel guests. They provide a host of tangible benefits for condominium owners including a deed to a physical room, an opportunity to utilize a 1031 tax-deferred exchange and access to all hotel amenities and services. Owning a condominium unit not only creates an exciting opportunity for business executives, leisure travelers, second-home owners or suburbanites looking for a city retreat, but it is also attractive for non-traditional real estate investors.
Unlike other condo-hotel developers who have developed condo-hotels from the ground up, PHG specializes in purchasing existing hotels and renovating/repositioning the properties into condo-hotels. This strategy allows the company to capitalize on the market's demand for condo units by delivering the product immediately. The firm's objective, to find under-valued assets in prime locations and reposition them in order to maximize value to owners.
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