Condotels in a nutshell

In recent years, there has been an alternative concept being offered to those seeking to get lucrative returns from their investments in the property sector.
The concept of “condotels”—coined to mean a condominium with hotel units and facilities—is emerging to be a more attractive, and a relatively hassle free way of making your real estate assets earn for you.
And it has even become more relevant now as the Philippine tourism industry sees a continued boom. This would thus require the construction of more rooms to accommodate the influx of tourists, both local and foreign.
Sta. Lucia Hotel Management Group general manager Imee S. Yu explained that more people are now realizing the benefits of investing in a condotel, particularly the overseas Filipino workers who cannot readily oversee their property investments in the Philippines.
“The target market of (Sta. Lucia Land Inc. president Exequiel) Robles was the OFWs. The condotel concept is a hassle free investment for them because even if you’re out of the country, somebody can manage it for you. Someone can market it for you. You don’t need to worry about unit maintenance and in fact, the amount that you can earn can also help pay for your dues, taxes and other expenses,” Yu said in an interview with Inquirer Property.
Practical, sound investment
According to Yu, there are a number of reasons why there is a growing preference for condotel units among buyers.
In the case of the OFWs, for instance, the condotel unit can serve as their second home whenever they go back to the Philippines for a vacation. And since they are in the country for a limited time, their units can meanwhile earn for them while they are abroad.
Yu added that others preferred their accommodation to be more luxurious, and at the same time, would want a worry free vacation since the hotel management group will ensure that everything in the unit is in order, just like a topnotch hotel room, upon their arrival.
In a nutshell, purchasing a condotel unit—provided that it’s from a trusted, credible developer—would mean no headache, no marketing, no cleaning, and no contracting with outside providers for maintenance, Yu said.
“Ownership is 100 percent hassle-free as all maintenance and rental issues are handled by hotel management company,” Yu noted. “At the same time, there is a cash flow or an income that can help pay for your expenses. Of course, how much you’ll earn will be subject to occupancy rates, inflation, and foreign exchange movements.”
Based on their estimates, Yu claimed that a condotel unit owner’s return on his or her investment can be 11 times better to a regular savings account in a bank, assuming even just a 35 percent occupancy rate.
These numbers were computed based on the potential earnings from the condotel operations of a Sta. Lucia development.
Currently, the company’s hotel management group oversees condotel operations in five projects namely Sotogrande Hotel & Resort and La Mirada Hotel, both in Mactan, Cebu; La Breza Hotel (Quezon City); Stradella Hotel (Cainta, Rizal); and Splendido (Tagaytay).
How it works
In their case, Yu explained that the group and the unit owner will have to enter a 15-year leased-back agreement. Under this agreement, the owner will receive a rent income based on the area of his unit.
A bigger unit commands bigger share on the net profit or dividends. Of the total net profit that will be earned by the condotel, 70 percent will be divided among unit owners. Dividends are payable on a quarterly basis, net of the condotel’s monthly dues and realty taxes.
Yu further said that unit owners will be entitled to 30 room nights a year. However, prior arrangement or reservation will be needed if you want to occupy the condotel unit for personal use.
Meanwhile, the hotel operator will manage the leasing of the hotel rooms, the maintenance, refurbishment and improvements, as well as their operating expenses, association dues, real property taxes, common area charges, utilities, insurance and other expenses.
“The best time to invest in a condotel unit is now, especially since the government is targeting to increase tourist arrivals. And Sta. Lucia is one of the best options in the market. The Sotogrande Hotel alone would hit 80 percent occupancy rate and that’s why some of our earlier investors managed to receive dividends within the same quarter that the hotel started to operate,” Yu said.
“Sta. Lucia can be your best option. Why? The company has been in this industry for over 40 years. It’s already a trusted brand,” Yu concluded.