The hottest trend in new hotel development these days is condo hotels. "They are all over the place," says Patrick Ford, president, Lodging Econometrics, Portsmouth, N.H., including major convention cities like Chicago, Las Vegas, and Orlando.
With condo hotels, either all or some of the units are owned by individuals, who essentially buy the use of the room as a vacation spot for between two to four weeks per year. Developers like the model because it provides a front-end revenue stream, which lowers the initial investment, making it easier to borrow, says Ford.
When owners are not using them, they are turned over to the management company, which rents them out to guests. If the owner sells the room, the agreement carries over to the new owner.
The individual owners, in most cases, can't add any personal touches to the room, as it is required to look like other rooms within the brand's portfolio. In some instances, the owners get a cut of the profits made off the room, but that's not typical nor the expectation of most unit owners. "The investment in a condo hotel unit is not designed to provide competitive returns," says Ford. "It's designed for your utility."
Because the construction of public areas, such as meeting space, adds a layer of complexity (and cost) to the individual owner agreements, you won't see many self-contained meetings held at hotels that are completely owned by individuals. But if the condo hotel is in a downtown area, it's very likely that it will be part of a room block for citywide conventions. At condo hotels that are just partially owned by individuals, however, it's a different story. In Las Vegas, for example, a 4,000-room W Hotel is being built with a good portion of the units individually owned. It also has 300,000 square feet of meeting space.
Meeting planners should know that the number of available rooms at condo hotels could be affected, depending on how many owners are using their rooms at a given time. In high season, it's likely that fewer rooms will be available to groups because more owners will be using them.