How Do Condo Hotels Work?

Given the fast rise of an ever-changing world economy and growing population, housing and accommodations have been a challenge for real estate developers as they build hotels, luxury condominiums, and subdivisions. To fill this gap in the rising demand for hotel accommodations, luxury condominium companies have come up with something that will offer hotel accommodations for clients and at the same time entertain investors to rent units. Merging the luxury of hotels and the convenience of condominium units, real estate companies came up with luxury condo hotels.

Luxury Condo Hotels | Photo from Unsplash

What are Condo Hotels?

Luxury condominium hotels or informally referred to as “condotels” are basically condominium establishments that operate like a hotel due to their nature involving short rental income services among other facilities usually found in hotel services.

Aside from usual amenities like a pool, gym, and entertainment among others, condo hotels have concierge services where real guests can inquire about a hotel room, a cleaning service, extra beds, other facilities, bookings about their check-in date and check out, other units available, and rental prices offered by the specific establishment.

Condo hotel units are usually used as vacation houses or lodging, particularly for tourists. Some people choose to stay in a condo hotel for its cheap price compared to usual hotel reservations which are expensive especially when the hotel is located in a tourist attraction in major cities.

It may sound simple and easy when it comes to how it works, but there is more to the operation of condo hotel units than that.

Condominium hotels have stark differences from residential luxury condo units.

First, in terms of appreciation of their values in the real estate market respectively, luxury condominium houses are already common. Therefore, residential luxury condo units appreciate slowly. As for the luxury condo hotels, they appreciate faster since the demand for them is low, and are newer to the real estate market when compared to luxury condominium housing units.

In terms of marketing, a condo hotel is sold to investors as a secondary home instead of being marketed as a primary residential unit like that of a typical condominium. Under an agreement with the condominium management company, these condotel units can be rented for hotel reservation to clients who wish to avail luxurious hotel accommodation.

Condotel Ownership

Condotel units are registered by companies as a condominium business. What distinguishes it from hotels and condominiums is that condominium units in most condo hotels are sold to investors who are welcome to use these condos as their vacation home whenever they like and at the same time, the unit owners can also place them under an organized rental program in cooperation with the condotel unit management.

Keys to your new condotel | Photo from Unsplash Website

Under an organized rental program, the owner has the right to consent on any rental or sale of the condotel unit.  On the other hand, it is the condominium management that takes care of the maintenance and transactions with clients interested for rentals while the unit is under the rental program.  Aside from the maintenance and transactional management, the company is the one also in charge of providing the  services usually found in hotel services like gyms, entertainment, concierge and food and beverages. Also, it is the condominium operators that primarily market the units for hotel reservation.

Expenditures and Earnings

When it comes to the partition of earnings from the rental income or rental revenue, the amount distribution depends on the agreement settled by the management and the investor.  Expenses on property maintenance, amenities, and services are usually first settled before both parties divide the earnings among themselves.

In addition to that, there are financial obligations that each party settles. The owner is usually responsible for paying the real estate taxes and insurance fees involved. Capital funding also is shouldered commonly by the investor.

As for the condominium hotel management,  the company is the one that pays for  the labor and equipment for maintenance, front desk concierge, housekeeping, administrative and marketing departments.

However, since equipment, amenities and the unit itself  are luxurious in nature, the cost for maintenance can be quite pricey. But, since the expenses are split between the condominium management company and the unit owner investing in the property, a good balance can ease that burden of providing the highest standards of maintaining a condo hotel unit.

Hygiene measures and maintenance are top priorities on condotels | Photo from Pexels

Despite their expensive cost, especially in hygiene measures and other expenses, most condo hotels are a very good investment. It serves as a passive income since it is the hotel management that does all of the dirty work and marketing while the owner just simply needs to subject their apartment under the rental program of the condominium management company.

Location

Condominium hotels are usually found along vacation areas nearby beaches and the countryside. However, there are also a few luxury condo hotels that can be found in urban areas.

Urban district centers and tourist spots are the usual areas where luxury condominium hotels thrive since these places are where people spend days having fun at a pool, beaches, clubs, parks, resorts, forests, and rural communities. Aside from leisure places, luxury condo hotels are successful in these places since people are looking for hotels whenever they attend events or business meetings. A luxury condo hotel concept is very efficient for business people.

One of the best prime locations for luxury condo-hotel units is near the Ninoy Aquino International Airport since it is one of the major international gateways tourists and balikbayans enter through. Near the Ninoy Aquino International Airport, people and travelers can go to government offices along Metro Manila for their legal obligations, roam around big malls such as the SM Mall of Asia, and travel to historic sites in Manila such as Intramuros, Rizal Park, and Binondo.

Urban districts also prime locations for luxury condominium hotels. Condo hotels near the airport have a clear advantage since it has access roads near the urban districts, leisure spots, offices, and shopping centers which are essential for people having a staycation here in the country.

Condo hotels are also perfect for famous places such as Baguio City, Vigan, Boracay, Cebu, Zamboanga, Bicol, and Pampanga. A lot of resorts, parks, amusement centers, and museums are accessible in these areas where people can travel with their families, friends, and loved ones.

Philippine Laws Concerning Condo Hotels

Since condo hotels are registered as condominiums, these are subject to the Condominium Act of the Philippines or the Republic Act 4726.

RA 4726 or known as the Condominium Act defines the parameters and sets rules on how condominium management companies and unit owners own and operate condominium units.

For starters, foreigners are limited by the Philippine government when it comes to land and real estate property ownership. However, under the Condominium Act, foreigners are now allowed to own at least forty percent of the total available capital stock of a registered corporation which should be fully owned and operated by a company whose management is composed of purely Filipino citizens. To make it simple, foreigners can own and operate condo hotel units subject to this law and others that concern the real estate and hospitality business in the Philippines.

When it comes to selling condominium units, no such provisions restrict the act itself. However, things get complicated as one goes through the law.

Philippines is quite strick for condotel selling to foreigns | Photo from Pexels

First, selling a condominium building must be done to potential buyers who are Filipino citizens or corporations that are owned and operated by an all-Filipino admin or at least sixty percent of the management are pure Filipino.

As for renovations, the law allows it provided that such activities are done within the boundaries of the unit owned by the tenant.

Another thing, Condominium operators cannot sell the condominium or at least a condominium common area without the consent of the majority of the registered owners as per the Corporation Code under Republic Act 7899.

Overall, laws in the Philippines are quite strict for foreigners owning properties like condo hotels due to concerns about national security and favor towards its citizens. As for the locals, they just need to follow these rules and everything will be fine.

Is it worth it?

After all that has been tackled in this article, investing in condo hotels is a good investment any individual can venture into during these times.

Since condo hotels are new to the market, availability is still quite scarce with respect to the growing demand. Condo hotels are what we call the flavor of the month when it comes to the real estate industry. Demands for it are high because tourism is slowly reopening again after two years of lockdown due to the COVID-19 pandemic and people are flocking again to beaches, parks, and recreational centers, particularly in Metro Manila and other tourist destinations here in the country.

Condotels are good investment | Photo from Pexels Website

Owning a condo hotel unit is hitting two birds with one stone. It can be a passive income for busy professionals who also want a highly profitable business venture and also provide a vacation home whenever one wants to enjoy amidst stressful work demands. Aside from that, owning a property like a condo hotel, in general, can be a good investment especially when the time comes that financial constraints happen like an emergency since it appreciates quickly in the market.

As the old proverb says, strike while the iron is hot. Modern life can be enjoyed most when one can strike a good balance between smart work and a good life. One of the best ways to achieve that is by investing in things that are passively generating potential incomes, like condo hotels.

So what are you waiting for? Invest now in purchasing a condo hotel in a prime location near you and grow your financial assets while enjoying the best days of your life.

Beautiful environment at Alpine Villas | Photo from Brittany Website

Invest with Brittany!

Brittany Corporations offers luxury condos that are better than hotels. They also have house and lot properties for sale that you can also check. When it comes to location, it is situated to the best sites in the Philippines. Most beautiful houses in the Philippines are usually from Brittany Corporations such as house and lot near Nuvali, luxury house and lot in sta. rosa, Laguna, and luxury house and lot in Metro Manila.