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Have you ever thought about having your own home inside a hotel? Having a pool, spa, gym, cafĂ©, and so much more right at your fingertips? Well, this is entirely possible. Condohotels are the perfect blend of an apartment and a hotel room. If this topic interests you or youâre thinking about investing in one, keep readingâthis article will be extremely helpful.
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A condo-hotel is a hotel complex divided into individually owned units. Each unit is like a condo, with its own kitchen, living room, and bedroom. Owners can rent them out or use them as a second home.
These types of buildings are found in popular tourist destinations, such as beaches, city centers, or golf resorts, offering the opportunity to invest in a rental property in a highly desirable location.
You may come across the term spelled in various ways (condohotel, condo hotel, or condo-hotel), but they all mean the same thing. To understand what condo hotels are, it helps to start with the word âcondo,â short for condominium, a term widely used in the United States and Latin America. How does a condo work? In a condominium, each owner has exclusive ownership of their unit and shares ownership of the common areasâsuch as the entrance, gardens, or poolâwith the other owners, with the associated expenses divided among everyone, similar to a homeownersâ association in Spain. A condo-hotel is based on this same ownership structure but adds a hotel component: the common areas become hotel facilities, and a management company handles the tourist operations of the units.
If youâre interested in rentals and are from Spain, I recommend reading the article: Buying to Rent in Spain
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As a sort of hybrid between a hotel and an apartment, condo-hotels have a number of very specific characteristics that set them apart from other types of accommodations. These characteristics include:
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A condo-hotel operates similarly to a hotel but can be used just like a condominium. Unit owners can rent out their units or use them as their primary residence. Full services are provided, just as if you were staying at a vacation hotel, but the unit is also equipped for independent living.
The process of renting out a condo-hotel unit is usually straightforward. Owners can contact the complexâs management company to request that their unit be rented out. The management company will handle finding guests and managing the corresponding payments.
Condohotel owners have the option to rent out their units for short periodsâsuch as nights, weeks, or monthsâor choose to rent them out for longer periods, such as entire seasons or years.
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Condohotels offer a wide range of services, which vary depending on the resort and its level. The basic services typically offered are as follows:
This is a common question when reviewing the list of amenities. The all-inclusive packageâwhich combines lodging, meals, drinks, and often activities into a single priceâis most common at sun-and-beach vacation resorts, such as those in the Canary Islands, the Balearic Islands, the Mediterranean coast, the Mexican Caribbean, or the Dominican Republic. In a condo-hotel, the setup is usually different, and understanding how it works helps manage expectations: since each unit has its own kitchen, the owner or guest decides whether to cook or dine at the restaurant, and services such as dining, the spa, or laundry are typically billed separately. Some complexes that are part of larger resorts do allow guests to sign up for meal plans, so itâs a good idea to check the contract to see whatâs included in the maintenance fee and whatâs charged separately.
Investing in a condo-hotel offers a number of advantages that make this model an attractive option for many. First, they offer investors the opportunity to own a property in a prime location, which is generally very popular. Because they are located in high-demand areas, their potential for appreciation over time increases.
Another reason to consider investing in condo-hotels is the combination of private ownership with hotel services. Owners have the opportunity to enjoy their unit whenever they wish, but they also have the option to place it under the hotelâs management program when they are not using it. This allows them to earn additional profitable passive income through unit rentals, as the hotel handles the leasing and management of associated services.
In addition, they offer high-quality amenities, such as swimming pools, spas, restaurants, and concierge services. This combination of private ownership and luxury hotel services is a key differentiator for attracting investors or tenants seeking a unique and appealing experience.
Featured Article: Luxury Real Estate
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The amount needed to invest in a condo-hotel will vary significantly depending on the location, the size of the unit, and the amenities offered. However, in general, the entry-level prices for investment are typically more affordable compared to purchasing a standalone property in the same location.
In many cases, developers offer financing programs that make it easier for potential investors to get started. These programs often require a down payment and offer flexible financing options for the remainder of the unitâs cost. In Madrid, for example, the average minimum price for investing in a condo-hotel is around âŹ120,000.
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The profile of the ideal condo-hotel investor varies widely, but, at a minimum, the following characteristics should be met:
As with any type of investor, it is essential that they understand the legal and financial risks associated with purchasing a condo-hotel.
Although condo-hotels can offer attractive returns, these typically materialize over time, so a willingness to invest for the long term is required.
They must have the necessary financial resources to embark on a high-end real estate investment.
Since they are typically located in tourist destinations, it is essential that investors have a genuine interest in this sector.
As investors, they must be willing to entrust the management of the property to a company specializing in hotel management.
Flexibility is key, as they will need to adapt to potential restrictions on the use of the property and be able to adjust to different times when it will be occupied.
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Condohotels offer a number of specific advantages that make them particularly attractive as investment options, such as:
Condohotels are known for maintaining high occupancy rates, which translates into attractive returns. The combination of tourist demand in popular destinations and efficient hotel management contributes to a steady stream of income.
Condohotel owners enjoy the flexibility to rent out their units when they are not using them personally. This feature allows them to diversify their income streams, turning the property into an active source of additional income.
The prime locations of condo-hotels in sought-after tourist destinations significantly contribute to property appreciation over the years. Sustained demand for accommodations in these popular locations strengthens the investment, offering attractive potential for property value appreciation.
This includes day-to-day management, maintenance, cleaning, and marketing of the units, freeing owners from operational responsibilities and allowing them to enjoy a hassle-free ownership experience.
Owners or those residing in the property have access to the luxurious amenities and services offered by the hotel. This premium experience not only enhances residentsâ quality of life when they use the property but also adds appeal to the investment for potential tenants and future buyers.
This type of investment provides investors with the opportunity to diversify their portfolio, as it represents a unique combination of real estate and hospitality. Diversification is strategic for mitigating risks and capitalizing on different sectors of the real estate and hotel markets.
This benefit allows investors to combine their investment with personal enjoyment, using their unit for getaways and family vacations.
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Not everything is perfect. In addition to the advantages mentioned above, condo-hotels may also have some disadvantages, including:
To properly assess the main advantages, disadvantages, and risks of a condo-hotel, it is helpful to understand the terminology used in contracts and in reports from the management company:
With these concepts clear, itâs easier to compare resorts and read the fine print before investing.
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If youâre considering investing in a condo-hotel, we recommend keeping the following points in mind:
You might be interested in the following blog post: Senior Living
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The unique combination of private ownership and luxury hotel services is undoubtedly the most attractive feature of this type of property. Add to this the flexibility to personally enjoy the unit while simultaneously generating rental income, and a condo-hotel becomes an investment that goes beyond traditional conventions. In the dynamic world of investing, it stands out as an opportunity that defies expectations and offers a very promising future for those seeking to diversify their portfolios from a fresh perspective.
Continue reading: Coliving
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Pedro MarĂa Ric, 5
Funded
Target
âŹ550,012.94
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