Understanding Condo-Hotels In Daytona Beach. Condo-Hotels vs. Condos. Management is the third installment in the series about condo-hotels. Previous two were Understanding Condo-Hotels In Daytona Beach. Condo-Hotels vs. Condos and Understanding Condo-Hotels In Daytona Beach. Condo-Hotels vs. Condos. Safety of your Investment

Condo-Hotel management is confusing.

Condo management, even in the most expensive residential condominium projects, is relatively simple. They either hire a manager and maintenance people, or they hire a management company. Both scenarios proved to be working OK. Like everything else, it depends on the people in charge (The Board), and, unless their stars do not align, they do fine.

Condo-hotels can also either hire a manager or hire a management company. What is the difference then? The difference is that condo-hotels have a rental component and it also has to be taken care of. And it can be run by a hired manager or a management company. So, in a condo-hotel you can have more than one management company or none, if they are self managed.

Let's look at self managed concept. The idea comes to Board Members usually after they feel disappointed by a hotel management company they had, if it was not the best, or it comes as a desire to get extra income if it is a successful Hotel management company. Logic often rests on condo-hotels. This is the only reasonable explanation that I have for the desire of the Board of Directors of the Condo owners Association to go into the hotel business.

I guess, Food and Hospitality business attract us as magnets and are perceived as the easiest in the world. Everybody eats, and everybody needs a lodging in a tourist destination. So all the Board needs is a large barrel to shovel in all the money. In reality everybody eats in other places, and rooms stay empty even in the hot season. Hotel/motel business lives on such narrow profit margins, that only highly skilled operators achieve the stability and success. Well, what's the problem to hire a manager and let him/her run the Hotel part? Only one, no supervision. Usually all Board members are out of town or even out of state residents and come once a month for meetings. Even if they know something about the hotel business, it is not enough to really oversee the operations. But they do not know.

It should not come as a surprise if they have mediocre management (remember, the whole idea is to save money, and they usually do not pay top dollar for top dogs), who does a substandard job. This is how a well intended move may turn costly. If you have a management company running hotel operations and it is a dead season, and the hotel is empty, they, not the association is responsible for paying the cleaning crews, Front desk and maintenance people. But self managed condo-hotels have to pay people out of either income (ideally), or the Association fee, and this is the unintended result of good intentions. 

Residential condos do not have that hotel component, plus, in addition, the Board are people who live there, and many owners live there.

The Board in condo-hotels may find itself owning a liquor license. Yes, a liquor license. Daytona Beach area condo-hotels with only 2 exceptions were hotels prior to conversion to condominiums, and some of them used to have a liquor license as hotels. They have converted to condominiums but they still have a liquor license that comes with the territory.

So, what can they do with a liquor license? If there is a bar on the property, can they use the hotel's liquor license? If yes, and the bar is caught doing something wrong (drugs, serving alcohol to minors), and the liquor license belongs to the association, do they become liable? And if the Association takes over the bar, then they find themselves in another wonderful business that would bring money to everyone, except to the association.

To make things even more entertaining, some developers created mixed properties, with condo-hotel being one part (whole owners), and time-share (fractional ownership)- another. From the management point of view this weasily turns into a nightmare and for the purpose of our today's discussion I will omit it. Maybe in another blog.

In a nutshell, condo-hotel management is more complex, and more susceptible to volatile market conditions on the one hand, and they are usually run more ... what's the right word... adventurously than residential condos.

Did I mention that if the Association fee for a 370-385 SF studio in a condo-hotel is the same or higher than for a 2 bdr oceanfront residential condo? And this is true.

Have questions about Daytona Beach area condos or condo-hotels? Call me at 386-405-4408.

www.BeautifulFlorida.com,    www.AtlanticCondos.com     www.DaytonaCondoHotel.com