A Fractional by Any Other Name…May Be a Timeshare

Zoning laws that limit the length of stay or the size of a hotel unit are creating problems for developers of condo-hotels and fractionals in parts of the Florida Panhandle

Pensacola Beach Developers hope to replace a Clarion hotel*, damaged by Hurricane Ivan, with a new 216-suite fractional resort. Each unit in the resort property would be sold to eight owners, who would individually pay to use it six weeks per year. When the owners were not using it, the suite would be available for rent to short-stay guests as a hotel room.

According to Joe Endry, owner of JME Realty, as quoted in a Pensacola News Journal article of April 12, 2007, each of the fractional or hotel units would average 1,250 square feet in size and would rent for $275 to $300 per night. By comparison, a traditional hotel room is between 300 and 450 square feet in size and generally rents for $150 per night (or less) in that particular geographic location.

The crux of the problem is that some officials say visitors who stay longer and have the use of a kitchen and dining area will utilize these in-suite amenities and thereby dine out fewer times than short-stay guests who do not have access to kitchens and eating areas. The critics say that a fractional or condo-hotel component added to a project essentially turns the property into an apartment unit, rather than a hotel, creating a difference that would be felt sharply by local restaurants.

As legislators, including the Santa Rosa Island Authority and Escambia County commissioners, attempt to sort through the distinctions that define one type of property as a hotel, another as a timeshare, a third as a fractional, and still another as a condo-hotel, they are considering hiring a hotel consultant to assist them.

One thing is certain, as resorts more frequently become multi-use properties, this issue will have to be ironed out in board rooms and meeting halls across the country.

* Note to readers: While the Pensacola News Journal identifies the site in question as being that of the hurricane-damaged Clarion hotel, other sources have said that it is the site of an old Best Western motel or and old Holiday Inn.