Misconceptions of the Philippine Condominium Hotel Industry

For several years, the Philippine condominium hotel industry has been a viable marketplace for vacation home buyers and property developers. Unfortunately, there are still some misconceptions about the industry that have led the ill-informed to see the condo-hotel business strategy as problematic.

In an effort to clear misconceptions about the industry, Lancaster Hotels, Land & Properties Inc a leading full-service condo hotel management organization with Condotels in Manila and Cebu, explains the five top misconceptions of condo hotels.

1. Condominium Hotels are a flawed business model

Condominium hotels have been and continue to be a stable business concept when implemented correctly. A balance between the goals of the developer and unit owners has to be achieved for the project to succeed. Condotel projects can run into problems when one side gets too greedy or the location does not make sense from the standpoint of it being a viable second home, business or vacation destination. The downfall of a property typically occurs when developer promises are not delivered and/or when purchasers have their own misconceptions about what they are actually buying.

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2. Condominium Hotels are an investment opportunity to make a quick profit or at least pay for themselves

While condo-hotels are able to achieve rental revenue to offset certain ownership expenses, they are meant to serve as a second/vacation home first and foremost. This means those interested in purchasing a condotel unit should be in the market for lifestyle enhancement properties, not solely for potential profits. The income acquired from the rental program should primarily be used to offset the overhead costs when the unit is not in use by the owner.

3. All Condominium Hotel units must be enrolled in the developers rental program

Condominium hotels vary across the board; however every property’s on-site rental programs are optional. Owners can choose whether or not to have their unit in the program to be rented as a hotel room while not in use. It is however, to the advantage of the owner to use the on-site rental program to maximize potential rental revenue as well as to take advantage of the numerous other services that often times are offered.

4. Condominium Hotels will work at any location that works for a straight hotel

Not all successful hotels would make for a successful condominium hotel. Since condominium hotels should primarily be viewed as a second home opportunity they primarily work best at locations that would be desirable and will be periodically used by the owner as a vacation or leisure destination.

5. Owners can only use their units on certain days of the year

In many condominium hotel rental programs this restriction does exist but it is always unjustified. Most condo hotel operators are concerned that the condo hotel unit owner will occupy their unit during all or most peak occupancy periods thus taking away potential revenues and management fees. This restriction however is unnecessary since most condo hotel unit owners are also interested in capitalizing on rental revenues during "high season" periods and will reserve their stays accordingly.

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