Condotel or condo hotel is a commercial property, along with sea villas, those two are grouped as tourism property.
Condotel typically is high-rise buildings including condominium units, which are developed and operated as luxury hotels, mostly gather in major cities and tourist destinations.
Generally, investors will not use the condotel for residential purpose, but using the leverage marketing and operating from a management agency (which is offered by the builder) to maximize their annual income, and simultaneously the investors will be received a timeshare program for their personal enjoyment annually.
Condotel definition firstly appeared in 1980s decade from Miami Beach, and started to be commonplace around the world in the early decade of 21st century. Condotel recently is customized bigger, usually have enough kitchen, extra beds, baths and a lot of amenities. Nowadays, a lot of franchises such as Marriott, Hilton, Starwood are associated with condotels management and the prime location such as Hawaiian Islands, Las Vegas, Miami pushing a high price tag, for a typical unit may cost from 200,000 – over 1M$.
After the revolution at Miami, condotel starts expressing more than 100 nations around the world such as USA, Singapore, Phuket (Thailand).
At Vietnam, condotel first enters into the market since 2015, from the coastal city- Nha Trang, and spreading all the tourist destinations from North to South such as Ha Long, Danang, Phu Quoc, Nha Trang, Phan Thiet..
. Condotel allows customers to purchase the ownership and “right of use” for their personal vacation.
. Condotel is handovered as the luxury hotel standard with fully-furnished.
. Being a commercial property, thus the ownership term is limited.
. Investors applied for profit sharing program.
Rental revenue is based on profit sharing program between investors with the management company. The management costs normally maintain arounds 30-50% of total business income, which will be depend on the standard of management agency; the cost mostly is split into: – Management costs: include fee associated with the personnel management, hotel operation management or the cost of hiring a hotel management unit (if any), costs of communication, advertising, marketing. – Operating cost: include the bills of electricity, water, regular maintenance of the condotel, costs of repairs or purchases equipment, periodic replacement of furniture.
Along by the investors need to pay for some exist tax such as income tax.
Depend on builder, condotel will be split into warrantable or non-warrantable.
. For warrantable units: investors will be receive fixed annual profit as fix, which can last long from 3-10 years period.
. For non-warrantable profit: investors will base on profit-sharing program to split income with management agency.
. Stably annual income.
. Flexible cash flow.
. Price increasing tendency
Overally, condotel or tourism property is a revolution for Vietnam’s property, diversifying investment methods, bringing stable income, flexible cash flows, and the tendency of price. However, due to a type of property, condotel is also affected by macro-factors such as economic, government plans, occupancy rate and property situation, thus investors need to have an overall evaluation and target for a long-term investment.