From Eloise to Elaine Stritch, hotel living has long been something of a New York tradition. But lately, we've been hearing a lot more than usual about hotel apartments, whether it's the trio of penthouses at the Ritz Carlton on the market for $118 million, the three-floor penthouse at the Pierre Hotel available for $95 million, or Tommy Hilfiger's opulent digs at the Plaza with the, ahem, modest price tag of $80 million. With such eye-popping asking prices, it would seem the world is beating down a door to live with perks like turn-down service, dedicated staff, pools, spas, and all the other amenities that earn high-end hotels their five-star ratings. Particularly for frequent travelers (or anyone else in the market for a pied-a-terre), owning in a hotel can make life far easier than a typical residential building.
But buying a place in one of these buildings is not all concierges and pillow mints. We nosed around listings and spoke with brokers and appraisers to get the scoop. From our research, five key takeaways:
1. A "condotel" is different than a condo in a hotel
By and large, apartments in hotels fall into two categories: condo buildings that include a hotel, usually in the lower half, and "condotels."
In condotels, there's generally a limit on how many days per year you're allowed to stay in the apartment, and for the rest of the time, the hotel's management will rent the place out as a normal hotel room, and give you a cut of the profits (generally around 35 to 50 percent). In the Trump Soho, for example, the limit on your residence is 120 days per year. One thing to keep in mind: this also means you'll have to take it furnished, and clear out your stuff when you're not staying there.
"Usually people who do this are looking at the investment potential," explains Donna Olshan, a broker who works with luxury properties around the city. "The super-rich aren't generally looking to sublet" and prefer an apartment they have access to year-round. "They want their own furniture—not the hotel's—and don't want to have to move their things out of the room when they leave town."
Owning a condo atop a hotel, meanwhile, is more or less the same as owning a run-of-the-mill condo, only with access to hotel amenities. But beware, while the maintenance charges are somewhat less exorbitant than their co-op counterparts (there are fewer hotel services automatically included with the monthly cost in condos), these types of apartments do go for higher asking prices than co-ops and condotels, in no small part for the freedom from the constraints of a co-op board or a limit on days you spend in residence.
2. The rules for co-ops are even more complicated
As a rule of thumb, apartments in older hotel buildings like the Carlyle and the Pierre tend to be co-ops, while options in newly constructed luxury buildings like the Mandarin Oriental at the Time Warner Center are condos.
As with all co-op buildings, you'll have to get approval from a board (and disclose a lot of personal financial details) before closing the deal, but there's another twist. "In some buildings, the hotel controls the board," notes Miller Samuel President and CEO Jonathan Miller, which can make sales difficult when you're ready to leave, creating extra hoops to jump through.
The flip side of this is that in the Pierre, for example, co-op ownership means you'll have shares in the building, and potentially turn a profit. Also, "co-ops tend to trade for less money than condos because of the extra hassle involved," says Elizabeth Sample, a high-end broker who's also a resident and board member at the Mandarin Oriental.
The bottom line? Ask a lot of specific questions about the building's ownership structure and the relationship between hotel management and apartment owners or shareholders, because nearly every building does it differently. "You can't paint in broad strokes" about how ownership in a hotel will work, says Olshan, and nearly every hotel residence has its own specific set-up. For instance, Olshan says, a lot of co-ops won't allow you to rent your apartment out as a hotel room when you're not there, but then there's the Lombardy, which bills itself as having an "open rental and owner usage program."
3. For hotel-like amenities, there are options besides hotels
While we all fantasize about having room service or spa access at our fingertips 24/7, the reality is that in today's amenity-crazed market, there are plenty of regular residential buildings that offer similar perks to hotels, if not more. "Right now, so many condo buildings have amenities to begin with, that the biggest real difference with hotels is having the built-in maid service," Olshan notes.
If you're willing to pay extra for the convenience of having your apartment managed while you're out of town, then the set-up pays off, but if it's just pampering you're after, there are often better deals to be had in standard residential buildings.
4. Your monthly charges may be (a lot) higher
In most hotel residences, extras like beauty treatments, room service, and sometimes even the maid service come a la carte, while common areas like the building's gym or pool will be factored into your common charges.
As Miller puts it, "In New York, nothing is ever free," and in many hotel buildings, the common charges for both condos and co-ops are far higher than you'd find for a comparable apartment in a residential building. At the Carlyle, for instance, common charges on a $725,000 one-bedroom are $8,440 a month, as opposed to this similarly priced co-op nearby on 78th Street, where maintenance charges are a fraction of the cost, at $1,748 a month.
5. It may take longer to sell the place
If you're looking at the apartment as something of a short-term investment property, know that when you decide to sell, the process may not be lightning fast. While hotel booking rates and luxury development seem to keep on booming, "any time you start to winnow down the potential audience for a sale," it gets more difficult to find a buyer, says William Raveis Managing Director Paul Purcell. In other words, just because you're happy to spend your common charges on masseuses and bellhops doesn't mean you'll find a ton of buyers willing to do the same.
Particularly in "condotels" where you're only allowed to be in your apartment for part of the year, Sample says, "those sales are always much more complicated because of the restraints on occupancy." And while buyers in this market are often wealthy enough that they don't need mortgages, if you (or your potential buyer) need financing, remember that banks tend to be wary about lending towards purchases in hotel buildings; in condotels, the bank won't be able to sell the loan to Fannie Mae, and with regular hotel condos, there's the added risk that comes with attaching your purchase to a business—i.e. the hotel—that could hypothetically go under.