It seems that after the real estate market is starting to recover in Europe, the condo-hotel model is getting some traction in leisure destinations over here.
We have recently seen a number of resort opportunities in the Mediterranean where the pre-crisis hotel-price expectations still did not make sense for some property owners via a conventional hotel transaction. However, turning these deals into condo-hotel operations seems to be a compelling proposition for hotel owners right now.
A high-quality resort located in an established Mediterranean destination with a majority of demand generated in Northern and Eastern Europe, with the right mix of one-bedroom and two-bedroom units, can generate real estate sales revenue 20% to 25% above the current residential real estate market price points in the same location.
The time horizon for a condo-hotel sales campaign can last up to two years with the size of resorts that can be found in this region. Of course it is key that the owner reaches an inventory purchase-back agreement with the sales and marketing company to guarantee the sales pace and calendar are met. This is because it remains challenging to have the sales and marketing company sharing the development risk (in the case of new-built units).
Last but not least, finding the right brand to operate the property is important in order to be able to complete the whole consumer value proposition. One of the pillars of the condo-hotel format is the marketing appeal and the level of exclusivity that the hotel brand should command to achieve an optimum sales level. But not all operators are willing to manage condo-hotel properties because managing multi-owner contracts seems complex at first. In fact, in practice it is quite the opposite.