“LEADING NEW DIRECTIONS IN HOSPITALITY REAL ESTATE AND HOTEL CONSULTANCY”
THE SUCCESS OR FAILURE OF CONDOTELS & APARTMENT HOTELS
The risk of some Condo-Tel and Apartment hotels failure are unique but not a big risk.
By Frederick van Ravesteyn
The unfortunate outcome of one could have been prevented if the project developer and their associates would have done their homework. On the first day the project was unveiled it reminded me by attending a case study at the Cornell University that the project was doomed to fail
During that period of time I was employed by HILTON International and later on I managed SHERATON and ACCOR Hotels in Australasia and Indo-China including a WYNDHAM’s Apartment Hotel.
The risk of investing in Apartment hotels is not big when selecting the right project in the right and strategic location, built by a reputable developer including an experienced management company in place who can prepare the cash-flow of the estimated medium and long-term return on the investment.
The difference of Condo-Tel and Apartment Hotels are the commitment of high profits at high risk on long-term basis or between the properties Developer who guarantees the commitment of 5 years at a reasonable return on investment higher than bank’s interest and afterwards a profit on an 80-20% basis.
The Resort Real Estate often looks at the commitment to pay high returns on investment, but do not make it clear where the money might come from, but only experienced Hotel & Apartment Management companies can prevail in detail on how and where the generated profits come from which is based on occupancy, room rate and expenditure and not during the project pre-opening and first years of operation.
Profits are not generated by developers but by professional Hotel Management companies.
The Condo-Tel & Time-Share concept derived from Europe but was changed by the USA to make the changes but not for the better and created the Condo/Time Share concept. The European Apartment hotel concept became very popular in Australia where I managed the flagship of 11 large International Apartment hotels on the Gold Coast. The developers did not commit or guaranteed any returns on investment but handled them over to a reputable Hotel Management company who made sure that the owners or secondary investors received a better return on their investment versus bank’s interest.
Today’s is quite different the estimated high and long-term returns are based on the selling prices of these apartments and sometimes by not credited property developers including not having a reputable Hotel/Apartment Management company in place which could result into achieving a low room occupancy, low room rate, high expenditure which result a low investment return and high risk to secondary investors.
“We adhere to the quality of possessing high moral principles and professional standards combined with the characteristic of being fair and truthful in dealing with all customers”.
Eurasia’s Boutique Real Estate company & Hotel Management Consultancy co-operate with developers who shares our belief, our philosophy is based on the original European Apartment hotel concept which proved to be successful in sharing the generated profits.
“There’s nothing wrong with doing things right for the interest of all in contrast by others it’s quite the opposite for the interest of a few”