As published in Living Barbados Volume 2 Issue 1 March – August 2008

Portfolio diversification is at the forefront of all savvy investors’ minds at present. Real estate purchases in secure, stable, socio-economic environments have become the most attractive investment alternative. Developers in Barbados who have their finger on the pulse of the industry are introducing a hybrid to satisfy the most discerning investor – the condominium-hotel ownership structure.

Although a relatively new concept in Barbados, the condo-hotel structure has been successfully used in many U.S. hot spots such as the Florida coastline and Las Vegas as well as the Mediterranean Riviera. Ultimately, a condo-hotel purchase provides owners with the benefits of a vacation or second home while being afforded the luxury of services and amenities of a resort.What is a condo-hotel?

A condo-hotel purchaser has title to a specific unit and is responsible for the taxes, insurance and maintenance fees that surround a normal condo purchase. The owner puts their unit into a hotel rental program and receives rental revenue which helps defray the cost of ownership. Condo-hotel owners are able to vacation at luxury resorts for a fraction of the price of a traditional holiday!

What are the benefits to owning a condo-hotel?

Flexibility and freedom are the most attractive aspects of purchasing this type of property.

  • A condo-hotel is the hassle free approach to foreign home ownership – the pleasure of a vacation home without the concern of maintenance and management. An experienced management company leverages their expertise and resources through mass advertising, contracts with international tour operators, centralized reservation systems and cost-control to maximize the return potential for owners.
  • Condo-hotels create a sense of freedom and satisfy the desire for a vacation home by allowing owners to decide the timing and duration of their visit.
  • Currently, condo-hotels are experiencing high capital appreciation on the international market due to the escalating demand for alternative investment options. Local experts are confident that this global trend will have a trickle effect on the Barbados market based on success rates of the condominium sales on the island. As such, units under this structure are in high demand and re-sale is not only feasible but also financially attractive.

What are the key characteristics of a successful condo-hotel?

  • Location plays a pivotal role in the success of the hotel aspect of a condo-hotel. A beachfront location that has a wide array of amenities and services is not only attractive to purchasers but also increases rental interest and rates.
  • A respected developer who is familiar with condominium buildings and infrastructure as well as one with a vision and plan for the hotel side of the business lends itself to a well balanced and structured condo-hotel.
  • An experienced management team that is familiar with hotel operations is crucial to the profitability and longevity of a condo-hotel. Prospective purchasers should place special emphasis on this aspect of the purchase and request details on the marketing and operations plan for the hotel to ensure that their investment is effectively managed and promoted.

What is the rental income potential for a condo-hotel?

All condo-hotel developments should provide you with projections on rental income and a schedule of deductions and expenses that will be levied towards maintenance and management. Prospective purchasers should scrutinize these figures carefully to ensure that the developers are using realistic occupancy levels and room rates.

As a point of reference, the high season in Barbados is considered to be from December 15th to April 15th with the remaining 8 months classified as low season. The rates between these two periods are significantly different so pay close attention to rates and the periods to which they are applied. Occupancy levels during the two periods also differ, so to ensure that you are receiving the most accurate projections request the disclosure of occupancy levels used in the calculations. What is available in Barbados?

There are a couple projects currently under development in Barbados that are using the condo-hotel ownership structure. Ocean Two, a 4 star condo-hotel that is currently under construction is located on the south coast of the island on a secluded beach within walking distance of the popular St. Lawrence Gap. All units at Ocean Two will have ocean views and a visit to the showroom which houses a model unit and scale model of the development is a must!

The condo-hotel ownership structure is ideally suited for investors and homeowners alike who are looking for a tropical retreat without the logistical hurdles and headaches of overseas property ownership and maintenance. Flexibility, freedom and financial profits are the returns on the condo-hotel hybrid, why not diversify today?