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Drawbacks to Owning a Condo Hotel

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    As with all things, nothing is ever guaranteed and even the best things in life come with some drawbacks. Although condo hotels appeal to many people and their benefits are plentiful, it’s always best to know the whole story. Listed below are the major drawbacks to condo hotel ownership.

    1) The condo hotel unit may lose value over time. Just like traditional real estate, appreciation is never guaranteed. This very scenario most recently occurred in Las Vegas. Several of the more notable condo hotels have sold for less in the resale market than they did during pre-construction.

    2) Local governments typically limit the amount of time owners may use their hotel room. This is done to assure room availability for visitors. In particular, you’ll often find limitations on the condo hotels located in cities. The Hard Rock Hotel San Diego, for example, limits owner occupancy to just under a month.

    3) Financing is generally costlier than for a primary residence. Your rate may be a full point higher.

    4) You will need to give notice that you’ll be staying in the hotel. Condo hotels are located in major travel destinations and are often booked up well in advance.

    5) You may not be able to use your room if it has been reserved by another guest. The hotel may not be able to relocate someone from your room to another room – even if another room is available.

    6) If you buy pre-construction, you may have to wait a year or two before the condo hotel is completed and ready for operation. This means you won’t be able to stay in it the moment you buy it.

    7) You might have to pay extra for daily housekeeping and other services when you’re staying at your place.

    8) There will be a monthly homeowner association fee. Although this is hardly uncommon for anyone familiar with condominium real estate, just be aware of all your potential costs. Some condo hotels can have low monthly HOA’s and some can be exceedingly high.

    9) Rental income from hotel guests is at the mercy of travel patterns and may decline. Rental income should always be viewed as an added benefit and never something to be counted on.

    10) You may have to buy extra insurance to protect against liability claims and some types of damage or loss.

    11) Not all condo hotel rooms have storage lockers, so you may not be able to keep any personal possessions in the very room that you own.


    Extra Reading:

    How Condo Hotel Rental Revenue is Split

    Introduction to Condo Hotels



    External Resource

    Premium Condo Hotels


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    • Last edited November 26 2007
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