Comeback with a luxury twist for hotel-condos
Earlier this decade, buyers could not get enough of hotel-condominiums. The concept, pioneered by Donald Trump in the late '90s and adopted by a number of other hotel chains, was a no-brainer: well-off travellers enamoured of a particular hotel - its decor, amenities, location - were given the option of buying a room, and everything in it.
When they were not using their suites, the rooms were put into circulation for paying guests. Owners got a share of the nightly rate and guaranteed access to their suite anytime.
But in the past few years, the concept - originally a uniquely American one that began popping up farther afield in cities such as Dubai, Jamaica and Panama - has lost some of its allure.
In the middle of the economic turmoil, new buildings that were setting themselves up as hotel-condos suddenly stopped construction, causing packs of investors to lose their deposits. Tourism slowed, room bookings fell off, and people who had bought a room in a beloved hotel found they couldn't sell it.
However, the cycle is beginning to turn again. Travellers who need to spend time in cities such as New York or Miami are exploring hotel-condo options again. What they are looking for is luxury, flexibility and hotels that feel like homes.
A year ago, the Trump SoHo opened in downtown New York offering a hipper, younger property in the Trump portfolio; the latest additions to the building are 11 luxury penthouses at almost US$9 million, although the smaller rooms go for about US$1 million. In March, the Palmyra Resort & Spa on Jamaica's Montego Bay announced its Private Residence Club, pitching villas as part-time second homes.
Next month, the Trump Ocean Club in Panama will open, offering about 370 condo-hotel rooms, 95 per cent of which are already sold. And in Miami, Marquis Residences invites potential buyers to 'test drive' a condo by treating it like a hotel for a month, using all the amenities, before deciding on a possible purchase.
'You're basically becoming a hotelier of one unit,' said Joel Greene, president of the Condo Hotel Center in Miami, which, until five years ago, handled about US$50 million worth of annual sales in the sector.
There is a growing number of property owners looking for turn-key homes, anything from show flats to fully furnished apartments to ready-made hotel units. What that means is they have to love the decor, because there is no room for personalisation; as elegant as that second home is, it's the same as the one next door.
'You're really buying into a lifestyle,' said Jim Petrus, chief operating officer of Trump International Hotels. 'We're forthright with the information, that the lifestyle you're buying can't be altered on an ad hoc basis. You can't bring in your grandmother's rocking chair.'
For a certain calibre of buyers, it seems a moot point given the high-end, sophisticated nature of the furnishings. Ivanka Trump, daughter of Donald, who worked on the Trump SoHo, said the design brief was to create hotel suites that had a homey, lived-in feel using custom-made Fendi Casa plush suede couches and a palette of sand, bronze and ivory. She says the design challenge was to create 'a modern translation' of hotel sophistication and luxury befitting the downtown market.
'Having worked on many uptown properties in New York, I was very excited to work on the design of a downtown property and create a completely different aesthetic,' she said.
The programme at the Marquis Residences is in conjunction with the Tempo hotel, which occupies 14 floors of the building. Those who want to try before they buy can select from one of four packages created by Miami-based TUI Lifestyle, which furnishes the unit within 72 hours.
Real estate broker Mel Lisiten, who has serviced the hotel-condo sector for years, said cities such as New York had a great attraction for buyers.
'It's a way for someone who comes to New York to have a space they might not otherwise get because it's booked up,' he said. 'But either you like a hotel or you don't. If you don't, you're better off buying a regular condominium.'
Timing is also important: Petrus says that those who bought at the height of the market 15 years ago have made 'off-the-chart returns on their investment'.
'The model works in select cities and destinations, in much the same way as luxury hotels do,' he said, citing such key factors as proximity to a top-rated golf course, beach or ski resort for leisure travellers, or a financial centre that would appeal to frequent business travellers.
Pricing, of course, is everything: luxury hotel-condos typically cost more per square foot to buy than a luxury condo. But at the new Trump resort in Panama, developer Roger Khafif said starting prices in the US$220,000 range for a 540 sq ft room made an attractive investment.
Given the inflated property prices in Southeast Asia at the moment, buying into a condo-hotel is almost a steal. At the Trump SoHo, owners are largely from Latin America and Asia, and sales executives recently visited Shanghai and Hong Kong. Greene is in talks with a real estate company in Singapore to present US condo- hotels in the city state later this year.
One buyer from Beijing bought a unit sight unseen: his broker checked out the Marquis Residences, e-mailed some pictures and layouts using an iPad app developed by the building's owners and the deal was completed without the buyer ever getting on a plane.