For any new construction condo or residential property, consider the Condo-Hotel Management Model to maximize units sales.
The Condo-Hotel Management Model combine the benefits of residential accommodations with the services and amenities of a first-class hotel. In this model, owners of individual units gain the opportunity to invest into the Condo-Hotel Rental Program, earning rental income from their unit. Guests benefit by receiving a first-class hotel operation with the amenities and services of residential units.
How it Works
Though each condo-hotel program differs, below is a general overview of the income and expense cash flows Unit Owners, Hotel Management and the Home Owners Association can expect to receive from the Condo-Hotel Model. Additional fees may be assessed depending on Unit Owner’s usage and the number of units in the rental program.
The Unit Owner
INCOME
Rooms Revenue Sharing %
EXPENSES
HOA Fees
TA Commissions
FF&E Reserve Fund
Unit’s Cable, Internet & Utilities
The Management
INCOME
Rooms Revenue Sharing %
Ancillary Revenues From Operations
EXPENSES
Direct Hotel Operations
Sales & Marketing
Hotel Administrative
The HOA
INCOME
HOA Fees From Unit Owners
EXPENSES
Public Facilities
Security
Insurance (Public Areas)
HOA Administrative
KHR Management Services
ACCOUNTING & OWNERS’ STATEMENTS
Preparation of Owner’s Income Statements and the Hotel’s Financial Reporting
HOTEL MARKETING/ WEBSITE DESIGN
Professional marketing services including website branding, digital marketing, distribution, sales & contracting, reservations and revenue management
FIRST-RATE HOTEL SERVICE STANDARDS
Four-& five star level service & product standards and procedures deployed in all areas of the hotel operation
UNIT MAINTENANCE & UPKEEP
Professional preventative maintenance services and processes ensuring the flawless upkeep of the Owners’ units
QUALITY ASSURANCE/VOC AUDITS
Periodic assessment of the property’s quality controls and voice of the customer reviews with improvement planners for consistent improvement
HOA REPORTING
Offering a wide range of dining and drink options, ensuring guests have access to diverse culinary experiences during their stay
The Condo-Hotel Model Benefits
Revenue Sharing
Owners may choose to participate in the hotel’s room revenue rental program, gaining significant rental income generated by their unit while still enjoying their unit throughout the year. The exact revenue-sharing percentage varies based on market and property, typically ranging from 40% to 75%.
Upkeep & Maintenance
Maintenance and upkeep are essential aspects and a key benefit of condo hotel management. The Unit Owner contributes a percentage of revenues (typically 2%-4%) to the unit’s FFE Reserve Fund. KHR draws from this account to ensure the regular maintenance, repairs and asset-replacement of the units in the rental pool. Well-maintained properties attract more guests and generate higher rental income.
Hotel Services & Amenities
Condo hotels are known for offering a wide array of amenities and services, similar to traditional hotels. These can include things like restaurants, pools, spas, fitness centers, and concierge services.
Improved Resale Value
Condo hotel units in the rental program have strong resale value due to their established rental income history, making them more appealing to potential buyers.
Business Case
Are you considering the Condo-Hotel Business Model for your project? We would be delighted to create a business case, offering a ten-year per unit income projection based on marketplace benchmarks and our overall experience in running condo-hotel operations.. Please contact us to schedule an introductory call.