Yep, you heard it right. There’s another on condo hotel the way. Lost count yet? According to the Orlando Business Journal, the proposed 16-story, 350-room condotel is set to break ground in spring 2008 and should be ready in 2009 at a cost of some $140 million – which really meansÂ (if it gets built at all) thatÂ it willÂ come onlineÂ around 2011 at double that cost. Call me a cynic. But with most of the pre-construction condo hotel projects delayed or stalled, I’m only recommending those condo hotels that have either completed construction are have converted from other hotel ownership.
The Talon group are the folk in charge of Vista Royale and I wish them well. They have more balls than my local bowling alley. They claim to have taken $45 million in deposits on 110 of the condos. (AndÂ O.J. claims he didn’t do it.) Prices are said to begin in the high 300’s. The project will be run in conjunction with the Wyndham chain, a well known hotel brand – which is a definite plus for those looking for experienced and credible hotel management.
Like all the pre-construction condo hotels, there is a claim that the exclusiveness of the resort will be matched by higher than average hotel revenues for investors – and here’s where the logic breaks down for me. This is Orlando, and families who vacation here are not generally from a terrificallyÂ wealthy demographic. A Disney-based holiday is already wildly expensive, and luxurious hotel accommodation is not normally part of the package. Convention business? Forget it. Not at that price.Â I’ve seen little evidence to suggest that these very high end condo hotels will ever attract room rates of over $150 a night with any degree of regularity – although O.J. could certainly afford to sell hisÂ memorabillia fromÂ one.
So despite everything you may hear from condo hotel sales folk, in order to compete with the less expensive hotel chains, a large proportion of these fancy, new construction condo hotel rooms will wind up on Travelocity, Expedia and Priceline at heavily discounted prices leaving investors upside down each month.
Like I said, this is Florida. Vacation accommodation is cheap and plentiful. It was designed to be that way. In most cases, if you can break even each month with a condo hotel investment, you’re doing well. For investors,Â this leaves the upsideÂ in the hands of “pre-construction pricing” and in the appreciation of the bricks and mortar. And I’m not even going there. At least not today.