Answer the Following Case Study (40 points)

In recent years, several new lodging brands have been introduced by leading hotel chains to the market. Among the names of these brands are DoubleTree, Candlewood Suites, Homewood Suites, Mainstay, Spring Hill Suites, and so on. In addition, there is Hyatt, which recently purchased AmeriSuites, which it has renovated and now calls Hyatt Place.

A hot trend in lodging development is condo hotels. With condo hotels, a developer can more quickly raise the funds necessary from investors than from other traditional sources such as banks and finance houses. As a result, it makes sense for developers to encourage investors by offering an arrangement for owners to have exclusive use of the unit for a fixed number of days a year (typically 30-60 days) and for the hotel company to rent out the units/rooms for the remainder of the year. The cost of development is high and ranges from an average of $800 to $900 per square foot up to $1,400. Projects such as the Residences at MGM Grand Las Vegas, which sold more than $ 1 billion, or the Hard Rock Hotel and Casino, also in Las Vegas, which launched 1,300 units in less than ten weeks are amazing. Other areas of the United States are good existing or potential markets for condo hotel development.

Despite the rave reviews on Wall Street for condo hotels, there are some unresolved issues. With time, who will develop and pay for the replacement of furniture, fixtures, and equipment (FF&E)? What are the association duesand what form will the relationship take between owners, the developer, and the hotel company? There are the additional complexities for the hotel operatorsuch as space for meetings, restaurants, and recreationand how many rooms will be available on any given night. Yet, the payoffs for both individual investorsowners and hotel operating companiesare good to great. With 78 million baby boomers ready to retire, the prospects look very good to all concerned.

Discussion Question

1. So what is in a name? Is Hyatt right to use the name Hyatt Place?

2. Is InterContinental or Hilton wrong not to include their name, as in Hilton Hampton Inn or Hampton Inn by Hilton? What is your opinion?

3. Which other areas of your country are good potential locations for condo hotelsand why?

4. Will condo hotels split into various segments like other lodging properties have?