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Condo-Hotel Thread: Operations
I’ll try and touch on the operational idiosyncrasies of condo-hotel operations. The description will assume optional / non-exclusive / non-pooled revenues, bc those are 99.9% of projects, but will try to note where those concepts improve things
I’ll try and touch on the operational idiosyncrasies of condo-hotel operations. The description will assume optional / non-exclusive / non-pooled revenues, bc those are 99.9% of projects, but will try to note where those concepts improve things
First Challenge: Inventory. When you have an optional condo hotel, you have to enroll your units annually, and owners will opt in / opt out according to patterns unknowable to modern AI. Further, even if they opt in, owners will have usage rights that have to be navigated.
In short, you don’t have good long-term visibility into your inventory and you will have a certain % of units out at all times, but particularly impacted by owner usage in peak times. You may end up with 0 inventory for an entire critical unit type bc owners don’t opt in.
This is an area where having a mandatory program solves much, but not all, of the problem. Even w/ a mandatory program, owners still have usage rights and so your inventory will still fluctuate.
Second Challenge: Pricing. When your program is not exclusive, someone will ALWAYS think they can make more $$ outside your program. You’ll have units in your bldg on AirBnB, and AirBnB hosts have no clue how to revenue manage, so they’ll be undercutting you massively.
In many places, there’s a literal industry around managing these units for owners - I’m particularly thinking South Beach. There are SoBe hotels you’ll walk into and see an entire separate check-in operation for a company that manages 10 units in the bldg.
An exclusive program solves this problem entirely. You can try to limit this via key card systems (e.g. only hotel generated key cards have pool / fitness access), but that just sets you up for the third challenge.
Third Challenge: Guest Experience. Someone who booked a room on VRBO in your hotel has no idea they’re staying in John Doe’s condo rather than at the SHG Resort. You’ll get all the bad TripAdvisor reviews, your front desk will have to listen to all the complaints, etc.
Again, you can try to police this as owners renting outside the program shouldn’t have the rights to use the hotel name in their adverts (if the condo docs are even mildly competently written), but once a guest is on property they’ll get confused all over again.
Fourth Challenge: Accounting. You’ve got to maintain books & records, as well as AP / AR, for every single unit. This is a wild, unmitigated pain in the a$$. I hope I don’t need to explain any more than that. Which takes us to our fifth, and (in my view) largest, challenge...
Fifth Challenge: Owner Relations. A typical hotel has one “owner” and an asset manager to work with. The “owner” is the GP, who handles all the LPs without them bothering the operating team. They’re typically fairly to very sophisticated investors who understand the business.
OTOH, at a 200 key condo hotel, your ops team has 201 owners to deal with, most of whom are completely clueless about how hotels operate. They’ll complain their unit isn’t rented enough (even though you have software that randomizes reservations among like room types to ensure...
...fair rental); they’ll complain that their unit isn’t priced above the comparable unit a floor below - after all, they paid more for a higher unit (that’s not how hotels work); they’ll complain they don’t want to renovate... or do... or just do part... or have their spouse...
...design their unit. They’ll complain that they can’t use their unit on one week’s notice despite the contract. They’ll all complain about literally everything all the time. Your GM won’t have time to run the hotel, bc they’re fielding the dumbest q’s possible at all times.
In case you can’t tell, operators LOVE condo-hotels 
