Homewood Suites Goes Condo In Miami

SUNNY ISLES, FL— Hilton Hotels Corp. has taken a bold step in a new direction with its Homewood Suites brand, carving the first condominium hotel franchise here, with an eye already fixed toward doing more. The $19.5 million, 100-unit project— originally built strictly as a condominium— was “sort of an experiment for Hilton and for us,” said Carlos Rodriguez, chairman/CEO of Miami-based Cardel Hospitality Group. Owned by the Marina Bay Club Condominium Association, it was Rodriguez who helped Florida developers Lauris Boulanger and Mark Rousso secure the Hilton brand franchise, and the firm now manages both the property and the condo association, of which it is a board member. With eight properties, seven in Florida, one in Costa Rica, Rodriguez has several Hilton products in the portfolio. “We’ve been very selective about what we’ve let into the brand,” said Jim Holthouser, senior vp/brand management, Homewood Suites by Hilton, noting with “99%” of product purpose built, conversions can be “tricky.” The need to grow and tough financing, however, has “caused us to get off the box a little bit.” Hilton was “very helpful and very excited” about the concept, said Rodriguez. “We definitely tried new ground. We had to adapt the franchise agreement and a lot of paperwork to mold it to the type of product that this is.” Before Hilton got into all the legalities and how the operations would work, Holthouser said he took a step backward and asked: Can this fit within the brand? He concluded it would, particularly given its coastal location, a site that would not be easy to acquire for a new build. The 13-story project offers one-, two- and three-bedroom residences, some with offices, as well as penthouse suites. Each suite has a fully equipped kitchen and individual laundry facilities. Traditional Homewood Suites amenities, such as a business center and 24-hour “Suite Shop,” are in place. “It looks, feels, smells and behaves just like a Homewood Suites,” said Holthouser. “The fact that it has a very different type of ownership structure should be invisible to the customer.” Seventy percent of the units are in the owners’ rental pool, with approximately 60 units available at any given time; however, a challenge from both the franchisor’s and operator’s side is the rooms pool can fluctuate. “One year we might have 100 rooms for sale, another year we might have only 80, and other year back up to 90,” said Rodriguez. Owners, who sign up annually to participate in the rental pool, may occupy their units for only a certain time each year — usually 45 days— paying $30 per day for housekeeping and other Homewood amenities, e.g., continental breakfast, manager’s reception, during their stay. The time allowed “depends on what you sell as a developer,” said Rodriguez. “I’ve seen 30-90 days that people can stay. If they want to stay more then they pay regular hotel rates. Remember: a big chunk of that goes back to the owner himself.” In terms of ROI, Rodriguez said owners are “looking for the unit to pay for itself, generating enough money to pay for the mortgage. They get a ‘free’ vacation every year and they get the depreciation of the unit. They’re not really looking for a 15%-20% yield.” Hilton takes 4% in royalty fees as it does with typical Homewood franchises. Holthouser’s voiced some concern over the possibility of rental participation dropping, which might cause the property to become a drain on the system. However, he also anticipates an influx of leisure guests from South America will ratchet up the average 4.5-night stay pattern to three-four weeks, surpassing even the average extended-stay, which is 14 nights. “In fact, most of the units are owned by South Americans,” he noted. Rodriguez said owners are sold a Homewood Suites FF&E package which they cannot “personalize.” This includes art work, television sets, etc. If some item gets broken, it’s the owner’s responsibility to replace it. Those not participating may