CZP Article

Condominium-Resorts, The Hottest Trend in the Lodging Industry

By no means a novelty, the condo-resort model is showing resurgence due to the rising condo prices and the current “Midas Touch” perception of residential real estate. From Trump Tower in Chicago to the Hard Rock Hotel in Las Vegas to Provo’s Seven Stars condominium resorts have surfaced as the hottest trend in the lodging industry. Statistics in both the US and Turks & Caicos confirm it that the most successful model of condo-resorts to date are those built as a resort first and then as a condominium second. Examples of such full service condo-resort properties on Providenciales include The Villas at Grace Bay Club, Somerset, The Palms, and the much anticipated Seven Stars and The Watermark developments.

There are several advantages to purchasing a unit within a condo -resorts development. Buyers benefit from the twin advantages of owning a vacation residence with hotel services and amenities and, if they choose to place their unit in the rental program, the carrying costs of their home may be partially or wholly offset by the rentals. Typically, the unit owner receives 50 percent of the rental income remaining after paying the management company a management fee. 

By capitalizing on a hotel’s national affiliation, reservation system, brand recognition and management expertise, unit owners are more likely to receive a higher level of rental income through a rental agreement with a recognized professional operator, despite having to share a portion of their units’ revenues. As a recognized brand name can often give the property an edge in attracting nightly guests, a number of resort brands, such as Four Seasons Hotel & Resorts, Ritz-Carlton Hotel Co. and Starwood Hotels & Resorts Worldwide Inc. are managing condo-resorts and hotels projects across the U.S. and Caribbean.

Turks & Caicos has clearly taken the lead as one of the fastest growing economies in the Caribbean. Luxury condominium resorts have not only taken center stage in the destinations’ prime beaches, but a significant number of the most recognized resort brands are not hesitating to claim their mark. Molasses Reef, a Ritz-Carlton Reserve, will be the first-ever Ritz-Carlton Reserve, which will represent a new standard of excellence for this hospitality leader. 125-room resort, Molasses Reef, a Ritz-Carlton Reserve, and The Ritz-Carlton® managed Island Villas on West Caicos Reserve will offer owners and guests the ultimate in condominium resort living.

On Providenciales, The West Bay Club, scheduled for completion early 2008 has recently secured a management agreement with 10 Ltd an affiliate of DPS Club Management. A proven leader in the management of premier private luxury communities, DPS Club Management is also responsible for the management of other luxury properties including The Turks & Caicos Sporting Club on Ambergris Cay, and the world renowned icon The Greenbrier Sporting Club in White Sulphur Springs, WV. Seven Twenty Limited, the company responsible for the development of West Bay Club is thrilled with the new partnership. Mr. Bruce P. Miller, Development Manager, says, “I am confident that 10 Ltd. will bring added value to West Bay Club. This partnership of likeminded luxury providers is destined to set a new benchmark in Providenciales.”

From the future hotel guest’s perspective, the investment-oriented condo-resort concept also has numerous advantages. Suites offer more residential space and facilities while the public areas resemble that of a true luxury hotel. The architecture of condo-resorts also allow for greater flexibility as two, three or four-bedroom residences can be broken down into junior and one-bedroom suites offering guests more choice in suite categories.

For the condo-resort developer, the principal advantage is the immediate cash inflows from the sale of the condo-hotel units. The developer’s initial capital investment is rapidly recovered (with a profit) as the condo-resort units are sold. Additionally, a developer can benefit by marketing the hotel amenities to a buyer.

If the demographics of the baby boom generation are any indication, the outlook for condo resorts is good. According to Horwath Hospitality Investment Advisors LLC, during the period from 2001 to 2003, the number of people in the 55-to 59-year-old age group grew by 1.8 million. An additional 3.8 million boomers will join this age group during the balance of the decade. These are people who are reaching their peak earning years, whose children have recently left home, and who now have different priorities for their time and money. Buying a condo-resort unit to vacation in — and that may be wholly or partially paid off by a rental stream by the time they are ready to retire to it — may be just the ticket for more and more aging boomers.

Tina Lyra Stevens
published March 2007

Real Life magazine