Is Recent Condo-Condemnation Justified? Jean Robert Reznik Responds

June 18, 2008 - PRLog -- A few stones have been thrown at the condo-hotel industry recently, particularly in Las Vegas and Florida, where commentators say that they’ve become a dangerous investment with the developers cleverly shifting the financial risk to the individual unit owners.  With Duchy Estates currently promoting Kasamia’s condo-hotel Pueblo Acantilado Suites near Alicante in Spain, it’s an opportune moment to see if these criticisms are justified.

One man with all of the answers up his sleeve is Kasamia’s Chairman, Jean Robert Reznik.  Former CEO of Club Med and Accor and one of the most successful tourism entrepreneurs in the world, Jean Robert is currently advising the Moroccan Government on its touristic plan for the country.  In response to the condo condemnation Jean Robert comments, “It’s unfair to just throw a stone at this sector when there is a sense of crisis across global real estate in general.  Too much construction, too many people doing the same thing at the same time, and the same applies for hotels.  What this short term crisis will do however is wheedle out the unprofessionals who have overpromised and have no serious management company in place to ensure the ongoing success of the hotel establishment.  It is these unprofessionals who have tainted the marketplace.”

Jean Robert continues, “Condo-hotels are still an excellent investment but clients need to be certain who is managing and who is marketing the product.  Take Kasamia for example, when we took over Pueblo Acantilado Suites it had already been a successful hotel operation for 15 years and post our 10-million euro refurbishment we will become partners with the existing management team on a minimum seven-year renewable contract.  We never make agreements with people who are already planning their exit, only with those who remain responsible for the site and the customers.  Hotel services should be offered at fair prices and there must be a strong distribution system in place to attract guests.  Kasamia has a close relationship with all GDS systems which link more than 600,000 travel agencies worldwide as well as 50 of the world’s best reservation websites such as LastMinute, Expedia and Opodo ensuring best occupancy.  Likewise an agreement with travel agency association Alliance.T which boasts Carlson-Wagonlit and Selectour as major shareholders.”

Regarding the unprincipled in the business Jean Robert comments, “People who ask ridiculous square metre prices for the units are, and will remain, out of the market.  Those who are offering the hotel services such as housekeeping and laundry too expensively are offering no incentive for people to become suite owners; they may as well be hotel guests.  And most importantly those who guarantee rental returns up to 7 or 8% either don’t know the business, are inflating the asking prices or are dreamers.  At Kasamia we will never guarantee a rental return, instead we will be fair to our clients and be safe in the knowledge that we’re doing what we do best – selecting the right locations and marketing the product to a wide captive audience.  If people choose to believe the high promised rental returns of other condo-hotel operators, then sadly they too are dreamers.”

Jean Robert concludes, “From next year the hotel accommodation business should pick up, the economic signs are not so bad.  Investors should have the goal of covering their costs this year (maintenance of the unit) and then if rentability happens to be good, see this as a bonus.  If you kept your money in a bank a return of 3% to 4% per annum would be reasonable and the objective should be to match this.  However every example I have over my decades in the condo-hotel industry comes out a little higher.  And of course there’s the bonus of capital appreciation afforded from freehold ownership of the unit.  I cannot think of one example of real estate that has not increased in value over a ten year cycle – with the right condo hotel investment, you cannot lose.”

The SIPPs-ready Kasamia Pueblo Acantilado Suites in its idyllic clifftop location with a wealth of on-site facilities from swimming pools, Spa and gymnasium to a five star concierge service, is priced from 180,280 euros (144,022 pounds) for a freehold one bedroom suite.  Gross operating profit is split 90-10 in favour of the owner on a pro-rata basis according to the property owner.

For further information contact Duchy Estates now on spain@duchyspain.com, visit www.duchyestates.co.uk or telephone UK freephone 0800 849 8089 or call the Spanish office on 00 34 952 906 944.

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