Condo hotels are being cited as one of the hottest products in today’s real estate market and not just in the United States, though this is where the majority of developments currently are.

Condo hotels like the 70-storey Four Seasons Miami (pictured) convert a portion of their rooms and suites into condominiums and make them available for sale to the public. The benefit to the hotel chain is that it helps provide the finance to construct new properties.

The most popular locations in the US for condo hotels are: Miami, Las Vegas, and New York City. Similar developments are underway in Dubai, London and many other exciting locations.

Once a unit is bought, owners can enjoy their new luxury condo and/or choose to rent it out via the hotel chain. Owners receive a percentage of any rental proceeds and hotel management takes care of maintenance and cleaning.

The vast majority of buyers want condo hotel units primarily as investments and are focused on the potential for appreciation with the side benefit of hassle-free ownership. They see the ability to actually use their condo hotel unit as a vacation home as important but secondary to their goal of investment diversification. The average buyer is 35-50 years old.

The established hotel chains are all developing condo hotels and they tend to provide better opportunities to the investor than some of the new entrants into the market despite the high-profile marketing of some of the newcomers.

“A big name or personality on a project does not guarantee success,” says Steven Roszell, owner and broker of CondoHotels.com and HotelsForSale.com. “Ivana Trump, George Clooney, Michael Jordan, and even the Hard Rock Las Vegas project are some of the most recent examples of scraped projects. And just recently announced, Nicky Hilton is also getting into the game.”

“Big brands, seasoned developers and management companies are a better indication on a project's success. Four Seasons, Ritz Carlton, Marriott, Hilton, Westin, St. Regis, W, Sheraton, Donald Trump, Falor’s, Turnberry, Millennium Partners. We tell investors, a Condo Hotel purchase is a lifestyle investment. Buy in locations where you want to vacation for the next 5 to 25 years,” says Roszell. “There are a limited amount of location, location, location areas that can be built, and in time those locations will be harder to get a room in during the peak season.”

“When I sell a hotel or resort, the buyer is looking at several factors” Roszell added “Location, growth and future income. The same should hold true when investors are purchasing individual units in a hotel.”