Condotel investments offer guaranteed ROI

CEBU, Philippines - Investing in condominium hotel can be a very smart choice to convert one’s hard-earned money into a tangible asset and generate decent and immediate earnings in the future.

But to achieve this, one must think the right decision upfront when buying property investment and  picking the good company, said James Montenegro, the area general manager of Quest Hotel, a member of the Aston international chain of hotels.

He said investment-savvy people now have a new easy-profit opportunity to own a unit of a condotel as a home buyer and later on earn from its price appreciation and occupancy rate. 

Also known as hotel-condo, a condotel is a condominium high-rise building but is operated as a hotel, offering short-term rentals to passing domestic and foreign travelers and corporate clients.

The hotel’s high room occupancies would make good revenues to both condotel unit owners and the property firm.

“The structure of this condotel concept is that a developer builds a property,” the manager explained. “After developing, sell the units to potential investors to reinvest them.”

The concept allows home buyers and business-minded people to own a piece of the condo-hotel business and receive a rent share from the operation, he further explained.

Rental income rise

For instance, Grand Cenia Condotel, a project of Filinvest Land Inc. and operating as Quest Hotel, has reported a 40% annual increase on the rental income share of its investors who have acquired condotel units.

The Quest is part of the 25-storey Grand Cenia located in Archbishop Reyes Avenue across the Cebu Business Park comprising of 119 residential condominium units and 432 condotel units. 

The unit owners are getting their earnings hassle-free from this property investment because it is the hotel operator that manages the maintainance of the unit and the rental deals, Montenegro told reporters in conference Tuesday.

He said the hotel quarterly distributes rental income to each qualified condotel unit owner.

Since it operated commercially in the last quarter of 2012, the hotel has reported an all-time high returns during this year’s first quarter due to the increase on its occupancy rate which is at 80 percent.

He attributed the rise to events such as the Sinulog Festival, Chinese New Year and Valentine’s Day which all  had happened during the Q1 and attracted guests.

“A lot of people are doing this concept now,” he noted, “but I think we are one of the few people who have consistently been able to distribute income.”

He said the challenge in this industry is the operator’s honestly and diligence in distributing income.

Condotel investors that include foreigners, Overseas Filipino Workers and even locals are assured of continuous profit at times when they not using their property, making up for the ownership costs, the manager noted.

Montenegro further said unit owners are only allowed to personally use the unit in just 14 days.

Condo-hotel, a development made for business, is a trend in the hotel industry specifically in second home ownership and is operated by in-house hotel management operators.

Pros and cons

Like any other investment product, pros and cons should always be considered.

The main advantage in diving into this kind of real estate product is the ownership and longevity of the asset and the worry-free nature of the investment because the hotel firm takes charge of the maintainance and sourcing of business deals, Montenegro noted.

“The longevity of your asset is maintained properly,” he said, adding that this is definitely a safe venture unlike having an apartment where there is the risk of people stealing the property.

On the other hand, he cited the drawback of the condotel system is the possibility of having no income-generating factor in the absence of tenants and that a buyer’s rights would be limited.

That’s why he advised, “You have to invest in the company that is transparent in their income and is willing to give you the real picture.”

Meanwhile, the hotel’s director for sales, Sarah Mascariñas is confident Quest remains competitive among other existing hotels in the city.

The main driver to this is the strategic location of the hotel which is near the the business center where the Business Process Outsourcing  firms and corporations are situated.

Montenegro said the Quest is now preparing for the imminent influx of tourists during the slated Eucharistic Congress in 2016. (FREEMAN)