What is a Condo-Hotel and How Does it Work?

by Tiffany McCoy / The Brooks Team

Investing in Condo-Hotels: What You Need to Know

As the travel industry rebounds and tourism surges, condo-hotels are becoming a more attractive investment opportunity. These unique properties offer the best of both worlds: a personal vacation haven with the potential to generate rental income. Let’s break down what a condo-hotel is and some of the basics that are important to know.

What is a Condo-Hotel?

A condo-hotel is a type of real estate property that combines the features of a condominium and a hotel. In a condo-hotel, the individual units are sold to buyers who can use them as their personal vacation home or rent them out to other travelers as a hotel room.

In recent years, condo-hotels in Las Vegas have experienced an evolution, marked by renewed investor interest and modernized developments. Projects like Palms Place and MGM Signature were initially booming in the early 2000’s, until the market faced a slowdown during the 2008 financial crisis. However now there is a resurgence driven by massive migration to Nevada, and a shift in economic stability among wealthy investors.

Recent trends post COVID-19 include sustainable practices in new developments and the introductions of fractional ownership models, broadening the investment appeal. Modern condo-hotels now offer enhanced luxury amenities, smart home technology, and flexible usage options, including extended owner occupancy and rental through platforms like Airbnb.

Las Vegas is a popular destination for both business and leisure travelers, and the condo-hotel concept has become increasingly popular in recent years. Many of the condo-hotels in Las Vegas are located on or near the Las Vegas Strip and offer luxurious amenities and services to guests.

How Condo-Hotels Work

In the condo-hotel business, individual units are owned by investors who can choose to rent out their unit when they're not staying in it. Whether they choose to rent it through the hotel's in-house rental program or a third-party management company, the guests will still have a seamless hotel check-in experience.The hotel management company is responsible for providing hotel services to guests, such as check-in and check-out, cleaning, and maintenance.

The rise of home-sharing platforms such as Airbnb has disrupted the traditional hotel industry, and the condo-hotel business is no exception. Many condo-hotel owners have started using platforms like Airbnb to rent out their units to travelers, bypassing the hotel management company and potentially earning more income.

This shift has created a dynamic landscape for condo-hotel investments, presenting both opportunities and challenges for owners. On the one hand, using home sharing platforms can offer greater flexibility and higher returns. Owners are able to set their own rental rates, control availability, and market their units to a global audience.

In-House Rental Programs

Some condo-hotels, such as the Platinum Hotel and Trump Tower, provide their own in-house rental programs. While owners are permitted to use third-party management companies, they are strongly discouraged from doing so by the imposition of additional fees when they opt-out. This arrangement can benefit those who prefer a hands-off approach, managing everything from bookings to property maintenance.

Condo-Hotel Benefits

In addition to rental income and having a personal vacation home, some other benefits for investors include appreciation, tax benefits, and diversification. Condo-hotels can appreciate in value over time, which provides a long term investment for the owner. In Nevada residents don’t pay state tax, and with owning a unit in the city, investors may be able to deduct operating expenses from their taxable income. Lastly, luxury condo-hotels offer a unique asset to a growing portfolio.

Click below to watch part 3 of our AirBNB series where our sales manager Dan Mortimer and our agent Luana Green discuss condo-hotels and why they are so popular.

If you’re interested in learning more about buying a condo-hotel, fill out the form below to get connected!