One must look at the usage fees and see how they are calculated. A "free stay" can cost US$40 to $50 a night or more.
For those buying on guaranteed returns, it's important to understand what options are available on expiration of the guaranteed period and whether the options are contractually in place or subject to change.
Ideally, units sold on leasehold are on land subdivided from the hotel. This protects buyers in case of a bankruptcy, foreclosure by a financial institution or legal claims against the hotel. It also limits the hotel owner to leverage or borrow against units that have been sold.
For long-term planning, it's important to ensure that registered right of ways, easements for utilities, services and access, as well as rights of use are obtained from the hotel part of the project, as this will affect the ability to resell units.
Another consideration is whether the units that comprise the hotel will eventually be converted into residential units. Nothing lasts forever and hotel and residential product cycles do not run in parallel. What happens, years later, if the hotel fails? It's not easy to answer such questions as these types of projects are still early on the development curve. Contracts need to include provisions for such scenarios.
People buying units on the strength of a brand must be aware that for the most part international brands are not the owners or developers of the project. Usually, a management agreement has been entered into for a specific term and duration, which needs to be disclosed to the buyer.What happens when brand contracts expire, change or the project can no longer be branded?
Again there are no hard and fast rules here. Another issue is that when hotels are sold, there is a change of brand that may in turn affect yields.
Life style investments are a global phenomenon. These are substantial purchases and. as in any transaction. it's important to understand the tine print and what financial consequences are in a contract and then make a fully informed decision.
