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What is a Condo Hotel ?

What is a Condo Hotel ?. One or more buildings designed and operated as hotel where some or all of the rooms are sold as condominium units and the buyers are offered a rental program. Design Speed Bumps. Size of the unit Number of bedrooms Lockouts

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What is a Condo Hotel ?

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  1. What is a Condo Hotel? One or more buildings designed and operated as hotel where some or all of the rooms are sold as condominium units and the buyers are offered a rental program

  2. Design Speed Bumps • Size of the unit • Number of bedrooms • Lockouts • Design elements to discourage long term occupancy

  3. Operational Speed Bumps • Allocation of expenses • “Fair” rental rotation • Individual unit accounting • Owner occupancy policies • Stability in rooms inventory • Who is the “owner”?

  4. Allocation of Expenses – The Rubik’s Cube Range of Allocation Options: • Condominium common expenses – all unit owners pay pro rata share • Rental Program Common Expenses – only units in Rental Program pay pro rata share • Non-rooms revenue generating expenses – paid by owner of the revenue source • Non-condo shared expenses for shared areas – allocated between unit owners and hotel lot owner

  5. Condo Structure Speed Bumps • The “air only” condominium • Common elements v. shared areas • Approval of budgets • Condominium litigation opportunities

  6. Unit Sales Speed Bumps • SEC enforcement actions • “Sale of securities” lawsuits by Unit owners • Disconnect between unit sales prices and value as hotel rooms • Local regulations that restrict owner use of units

  7. Rental Program Speed Bumps • Who “sells” the rental program? • Securities violation for selling an “investment” • Maintaining brand standards • Managing unit owner expectations

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