Condotel Sales Struggling

A few years ago, condo-hotels, or condotels, practically sold themselves. With real estate prices marching upward, the idea of owning a condo unit on the beach and covering some of the expenses through hotel rental payments seemed irresistible. Today, the market has sobered up. Condos aren’t selling and condo-hotels are caught in the same downdraft. For tourism, the downshift could signify that some buildings financed by condo-hotel speculation weren’t necessarily good ideas. It could also delay the construction of new hotels announced but not yet started. A rule of thumb among hotel developers is that to be profitable rooms should rent for a tenth of 1 percent of their building cost. If a buyer acquires a unit for $500,000, that translates to room rates of $500 a night.

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