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Condo hotels have been one of the fastest growing categories of the U.S. lodging industry, accounting for nearly one-fifth of all hotel rooms under construction. Some markets, such as Las Vegas and Miami, are already overbuilt. But the concept is just getting started in Europe where firms such as London-based GuestInvest are actively marketing them. The company’s first hotel in Notting Hill sold out within weeks and GuestInvest recently unveiled Nest, a luxury 170-room hotel in the central London neighborhood of Paddington.
Condo hotels work like this: investors buy the rooms, which are all indentical in decor and use them like condos when they are in town. When they’re not, the investor allows the hotel operator to rent them out to other guests just like hotel rooms. Units at the Nest start at $477,000 and the company hopes to have them ready for occupancy by early next year. The U.K. market had some significant differences from the U.S. GuestInvest is guaranteeing a 6% return to investors, a no-no on this side of the Atlantic where Securities and Exchange Commission rules prohibit developers from making claims about room rates, occupancy and projected returns. In addition, GuestInvest is capping the maintenance costs at $900 per year for the first seven years. That too never happens on this side of pond.
BusinessWeek editors Chris Palmeri, Prashant Gopal and Peter Coy chronicle the highs and lows of the housing and mortgage markets on their Hot Property blog. In print and online, the Hot Property team first wrote about the potential downside of lenders pushing riskier, "option ARM" mortgages and the rise in mortgage fraud back in 2005—well ahead of many other media outlets. In 2008, Hot Property bloggers finished #1 in a ranking of the world's top 100 "most powerful property people" by the British real estate website Global edge. Hot Property was named among the 25 most influential real estate blogs of 2007 by Inman News.