Questionable Sales Practices by Some Condo-hotel Developers

The Illinois Securities Department says they are acting on a complaint filed by Unite Here Local 1, the labor union that represents some Chicago hotel workers.

According to an article recently published online by Chicago Business (, Tanya Solov, a spokesperson for the state regulatory agency, says, “We’ve looked at a number of these offerings…we haven’t taken any action, but we do have open inquiries.”

Solov’s comments referred specifically to the Shangri-La Hotel, owned by Teng & Associates, a major Chicago-based developer. The union alleges that the development company gave printed marketing materials that include monthly rental income projections for the condotel rooms to potential buyers of the condotel units.

Condo-hotels or condotels are a fast-growing concept in vacation ownership. They allow individuals to purchase a hotel room or suite, often bought during the pre-development phase. The unit is then available to the individual owner for their personal vacation and travel use, but can also be rented through the hotel in the same way hotel guests would rent any other room or suite.

Because the individual owner stands to receive roughly 40 to 50 percent of the room rental revenue, many purchasers of condotel units buy hoping to see a financial return for their expenditure. And while such prospects look good, the individual owner is also responsible for all on-going maintenance, taxes and other costs associated with home ownership.

The Securities and Exchange Commission views the sale of condotel units the same way as they view the sale of timeshare vacation units. Because these types of sales do not comply with the state and federal registration and disclosure requirements governing the sale of securities, no seller can legally represent them as a purchase to be made for investment potential.

Buy timeshare vacation property and condotel units as an “investment” in a lifetime of luxury vacations and a lifestyle committed to regular relaxation and rest. Invest in yourself and your own well-being. And as over-worked as many of us feel these days, that type of “investment” just might turn out to be far more valuable than any other you will ever make.