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• Design elements to discourage long term occupancy

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

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

Condo Structure Speed Bumps

• The “air only” condominium• Common elements v. shared areas• Approval of budgets• Condominium litigation opportunities

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

Rental Program Speed Bumps

• Who “sells” the rental program?• Securities violation for selling an “investment”• Maintaining brand standards• Managing unit owner expectations