Condo/Hotel Hybrids a Rising Trend

Condo/Hotel Hybrids a Rising Trend

Condotel, a company that rents and sells serviced apartments for short term use in Indonesia, has found that its business model is more successful than expected. The original location in the capital city of Jakarta is now one of many branches. Others are located in major cities like Surabaya, Medan, Bandung and on the island of Bali.

So what exactly are these condominium/hotel hybrids? Each unit is sold separately, like a condo unit. Once the unit is bought, it is owned by the buyer, but under a set of conditions set forth by the hotel/seller. So a hotel with 300 units might have 300 owners. An owner can choose to stay in their condo or they can enroll in the hotel’s rental program. The hotel will then rent the room to guests like a regular hotel and service it just like a hotel room. Many condo owners see this as an investment because they receive a percentage of the revenue from the hotel as well as gaining any equity that comes with ownership of their unit. Many condominium/hotels require that owners allow the hotel to rent their condo a large percentage of the time.

Because of the unique ownership situation, Condotels are able to operate and be profitable even in tough economic times. The Ritz Carlton and Shangri-La Jakarta have also gotten into the condo-hotel game. Aston International Hotels is the country’s biggest player, right now. It will be developing and managing more than 30 new properties by the end of 2009.

Developers get a quick return on their investment because they generate revenue from sales rather than waiting for the hotel to become successful and generate profit through room rentals. Owners of the individual units can join in the profit making because they receive a portion of the rental fees generated when their condo is rented.