|Hotel residences have been geared towards the super rich, but now more people are calling them home. CNN's Mary Snow reports.
SALEM, Ore. (CNN/Money) –You don't have to be an heiress with the last name Hilton to have your own private residence in a five-star hotel.
Condominium hotels and hotel residences are the development du jour.
When it opens in 2007, the 90-story Trump International Hotel & Tower in Chicago will have more than 400 residences and 200 condo hotel units.
The Mandarin Oriental in New York's Time Warner Center – CNN/Money's headquarters – opened its doors this year with about 250 hotel rooms and 66 luxury hotel condos. The W Hotel in Dallas will have more than 70 residential units as well.
"These days it's more unusual to hear about a hotel project that is not going to have some units sold as condos," said Joel Greene, president of Condo Hotel Center, a site that specializes in the sale of such property.
Hotel condos aren't a new concept, said John Fair, a resort developer in Turks and Caicos and La Paz, Mexico. But they've become popular recently because developers are finding it difficult to line up traditional financing. Rather than pay for the entire project with loans, developers are selling units in their hotels to individual investors.
Hotel residences – which typically don't allow for short-term rentals – have traditionally catered to the very wealthy. Now, they're being developed with empty nesters and busy professionals in mind. One- and two-bedroom condos at the Salem Waterfront Hotel, in Salem, Mass., for example, are selling for about $500,000 to $800,000.
At the same time, condo hotels – which can be rented out on a nightly basis – are becoming a popular alternative to the traditional vacation house. Owners don't worry about maintaining property, have access to high-end hotel amenities and can help pay their mortgage with their share of the rental income.
A two-bedroom condo in Paraiso del Mar in La Paz, Mexico, for example, is selling for a little over $200,000 with monthly maintenance of about $250, according to Fair, who is developing the property.
If that unit is rented out one third of the year at an average rate of $250 a night, the owner's share of the revenue – 50 percent is typical – will be about $13,000 before taxes, or about enough to cover the mortgage and maintenance.
So far, these condos don't seem to be a shabby investment either.
Three-bedroom hotel condos at the Viera at MonteLago Village in Lake Las Vegas are reselling for 50 percent more than the developer's original price, and the next phase of the development, Luna di Lusso, is already sold out, according Doug Ogilvy, regional vice president for Intrawest, which developed MonteLago Village and other destination resorts, including the ski resorts of Whistler-Blackcomb, B.C. and Mammoth Lakes, Calif.
Financing is available for such property, according to Greene, though interest rates are usually about 1 percentage point higher that with a traditional condo.
Just one catch...
Five-star service has some strings attached.
First of all, there is the monthly maintenance, which is typically 50 cents to as much as a dollar a square foot, according to Greene. That fee usually covers building staff and upkeep, amenities, cable, electric and local phone service. At the Ritz-Carlton Residences in Washington D.C. monthly maintenance is 72 cents a square foot, or about $4,000 for one of the largest condos.
In the case of condo hotels, most property managers give owners the option of renting out their units. Others, according to Intrawest's Ogilvy, require that you rent your unit or limit the number of nights you can stay in the property.
When it comes to furnishing and decorating the property, you may have to defer to the property manager, at least if you want to rent out your condo. Most condo hotels come fully furnished from the living room sofa down to the kitchen utensils and the art on the wall.
"You might be able to make some changes to the art or furnishings but if someone deviates dramatically from the typical offering they may not be included in the rental program," said Ogilvy.
"From the hotel guest's side, you try to make the experience no different from a traditional luxury hotel," said Fair.