Condo hotels, done properly and in the right city, have the potential to yield astronomical returns on investment. As a shining example, look no further than The Grove Resort & Spa.
Located in Orlando, FL, one of the world’s busiest tourist destinations, The Grove presents investors a unique opportunity. As the old real estate adage goes, location is everything, says Garry Walmsley, senior global real estate advisor at The Orlando Agency.
“We have had some negative feedback from Canadians who have experienced this type of product, but the ones brought up to me have been based in the likes of Vancouver, and ultimately Orlando is a very different market than Vancouver,” he said. “For anything like this to work, you have to be in a major destination—not to say Vancouver isn’t—but we had 72 million visitors in Orlando last year. That’s like everybody in Canada visiting here twice.”
The number of tourists is a significant factor. An investor buying at The Grove would need above-average occupancy rates for it to be worthwhile, and with Disney World four miles away it is just that. With units starting in the low $300,000s, an 8% gross rental program ensures cash flow won’t be a problem.
Also mitigating worries is the property management company, Benchmark International, which manages 75 boutiques globally and is generally considered—as its name suggests—the industry’s benchmark for quality of service.
“You keep the property for yourself for a couple of weeks when you want to come down, and they still guarantee renting it 75% of the time, especially given that it’s Orlando,” said Alain Forget head of sales and business development at Royal Bank of Canada. “From an investment standpoint, for $300,000 to $500,000, those two bedrooms generate $1,000 net after all the fees.
“For a three-bedroom, it’s about 1,300 to 1,400 square feet, already furnished, and Benchmark takes care of everything.”
Hotel resorts are often associated with timeshares, however erroneously, but Forget assures that is not the case.
“It’s something we’ve seen around Southeast Florida, but we have to be careful not to mix it up with timeshares. That’s not what this is. You own this property.”
A crowning amenity at The Grove is its $15mln waterpark, which brims with families year-round. In addition to three large pools, it has a lush lagoon with surfing simulations, a two-storey playground pool, and Longboards Bar & Grill. It also has a 20-acre lake where guests can fish, kayak and canoe.
The superlative Escape Spa & Fitness Centre also provides parents with all the respite they need.
“It isn’t just the service level that’s impressive, it’s the way the properties are furnished and their cleanliness, too,” said Walmsley. “This condo hotel is the best vacation product for anybody because it’s hands-off—you don’t do anything, and that all comes down to the management company.”