PRIMER ON CONDOTELS Rental Pool, Earning Opportunities, and The Grand Cenia Hotel 1. The “Condotel” Concept The concept of a “Condo Hotel” or a Condotel is relatively new. The condotel is an amalgamation of the features of a condominium and a hotel, as the derivation of the name suggests. A buyer is purchasing a condominium unit that is intended to be part of a hotel. The condotel units shall be pooled and operated as part of a functional hotel, managed by a hotel operator, and complete with amenities a full-service hotel provides. The buyer is essentially buying a hotel room which he can generate income from. The condotel, then, is primarily an investment tool. The income generated by hotel operations, basically from renting out the pooled condotel units, will then be subdivided to condotel owners on a per square meter basis. 2. Benefits of Owning a Grand Cenia Condotel Unit Condotel owners of the Grand Cenia stand to enjoy three major benefits – a unit in a very prime location, a very good return on investment, and hassle-free, global standard hotel services. The development is of course located right across the Cebu Business Park, easily accessible to the business hub, the convention centers and commercial areas. Early return on investment is as good as guaranteed because of the booming tourism, and subsequently booming Cebu hotel industry. The hotel made up of the pooled units would be managed by an international hotel operator who would also handle the distribution of the rental pool income to the condotel owners. The condotel unit owner can just sit back, relax and watch his investment bear fruit. 3.The Condotel Rental Pool As all condotel units are required to be entered into the rental pool for hotel business operations, there would be a total of 432 condotel units in the rental pool. Typical condotel units will have a standard size of 24.54 sqm, There are special condotel units on the 7th and 8th floors which will feature open patios to take advantage of their view of the city, the surrounding mountains and the swimming pool deck and landscaped area. There are also a number of condotel suite units which feature a hotel bedroom separate from the room receiving area. These units are sold and delivered bare of finishing and furnishing. All condotel units, upon payment of the mandatory joining fees, would then be furnished and equipped with all the necessary and standard features of a Grand Cenia Hotel room. Some condotel units will be converted to twin-bed rooms (double single beds) or single-bed rooms (queen-size). Bigger hotel rooms and adjoining units can be transformed and offered by the hotel as deluxe or suite rooms for guests. The furniture, fixtures and equipment shall be part of the unit to be turned over to the rental pool. Owner’s right for the usage of building common areas shall also be signed over for the use of the hotel guests. No condotel unit will be excluded from the rental pool assignment for hotel operation usage. The perpetual assignment of the condotel units to the rental pool for hotel operation use will be annotated on the title of the condotel units and shall form part of the unit’s usage restrictions. Condotel unit owners are not required to purchase parking slots since the parking slots shall be part of the areas that will be leased by the hotel operation business from the project. The rental pool income from hotel operation will be generated from the leasing out as hotel rooms of all the units within the rental pool. Share from the income of the hotel operations (less maintenance, operating expenses and other service fee charges) shall be assigned quarterly to the members of the rental pool and shall be divided proportionately based on each of the unit owner’s condotel unit area and unit usage income. 4. The Grand Cenia Hotel The hotel operator shall handle the everyday operations of the hotel, which includes but is not limited to the marketing of the hotel to guests, taking reservations, hiring and managing full hotel staff, providing services to guests such as housekeeping, laundry, food and beverage functions, maintaining the condotel units, payment of hotel utilities and other necessary expenses and a multitude of other functions necessary to keep the hotel smoothly running. The hotel operator shall be charging service fees from the rental pool for management services, as well as operating expenses for the hotel business, and maintenance of the condotel units. The hotel operator shall also set the hotel room rates, which will reflect current hotel industry standards. The Grand Cenia Hotel will provide concierge, valet parking, and housekeeping services to its guests. Although room service is not offered, the hotel will house several restaurants at the ground floor, which will be commissioned to deliver a variety of cuisines to the guest’s hotel room. 5. Condotel Unit Owners and their Units as Part of the Rental Pool Pre-Identified Nights for Owner’s Use The condotel unit owners are given 14 nights per year of free stay in the hotel and 14 nights per year of usage at a special discounted rate. For the 14 free nights, 4 nights are usable during pre-identified peak seasons, 5 nights are usable during high season, and 5 nights are usable during low season. For the 4 free peak nights, each owner will get rotating priorities annually (“totem pole” system) to choose which peak period he will avail for the incoming year. The reservations on the peak days shall be done during the first month of the year. Initially identified peak periods are as follows: Christmas to New Year (7 days), Sinulog Festival (Local Fiesta) (7 days), Holy Week (7 days), Nov.1- All Saints’s Day (7 days) and the Chinese New Year (7 Days) may be considered for inclusion as peak periods. Use of free nights and special rate nights may be extended to the Condotel Unit Owner’s kids, siblings and parents. For corporations only nominated bonafide employees will be entitled to avail of the benefits due to a unit owner. Each corporation shall be entitled to not more than 3 nominees. These nights shall be on a “use it or lose it” basis. Updated payment of association dues is necessary to avail of the benefits as listed above. Use of rooms is subject to availability, but if a Condotel Unit Owner would like to ensure accommodation, he must book 30-60 days ahead of the intended dates of use. Reservations will still be done through the hotel operator. To maximize the earning potentials of each condotel unit, the condotel units would have to be given to the hotel for its hotel operations for the remainder of the year. This will help the hotel operator in marketing internationally for tours and other tour packages for the hotel. A condotel owner may not be given his specific purchased unit (in the event that it is occupied by a hotel guest) and may be given another equivalent room in the hotel. Condotel unit owners can also avail of bigger rooms, if available. The condotel unit owner will also not be entitled to a share of the profits for the number of days he made use of his unit. The hotel operations shall be all year-round except for an estimated 14 days that will be allotted for maintenance and repairs of the hotel floors. Special Usage Charges for Condotel Unit Owners A condotel unit owner would be given a special usage charge as his room rate for 14 nights – 10 nights of which are usable during the low season and 4 nights of which are usable during high season. This usage charge will cover operating expenses such as power, housekeeping, linen, labor and other expenses related to his stay. This ensures that those who make their units available for hotel business for more nights will not be at a disadvantage by being burdened by the operating expenses incurred. The special charges shall also apply should the condotel owner opt to avail of bigger suite rooms or rooms with patios. If the unit owner decides to stay beyond the 14 free nights and 14 discounted nights allocated for his usage, the condotel unit owner would have to pay the normal hotel rates and these shall also form part of the hotel income that will be shared by all condotel unit owners making up the rental pool. Aside from the fees and expenses being charged by the hotel operators within the rental pool for the hotel business operations, the condotel unit owners are also intrinsic members of Grand Cenia Hotel and Residences, and therefore are members of the Grand Cenia homeowner’s association. Monthly association dues shall be charged and collected to each of the condotel unit owners. If possible, the hotel operator can advance the payment for these charges, from the share of the rental pool income of the condotel unit owners. Bank financing and the condotel unit title as mortgage collateral Any condotel buyer can avail of bank financing with any of his preferred bank. The condotel unit’s title, since it is a condominium certificate of title, will be an acceptable form of collateral for the mortgage. However, the bank has to note that the condotel unit being used as collateral has a restriction since it can only be used for the hotel operation and has to be brought as part of the rental pool. 6. Earning Opportunities Earning from the Condotel Unit The condotel unit owners shall enter into a rental pool agreement with the developer and subsequently turn over their units to the rental pool. A hotel operator will then manage the operation of the rental pool into a functional hotel. At the start of hotel operations and upon full payment of the condotel unit, the condotel unit owners will earn from the resulting profit of the hotel operations. Rental Pool Income Computation The income to be allocated as the Rental Pool Income is derived from the proceeds generated from Hotel Business operations of the Rental Pool less the service fee of the Hotel Operator, operating expenses, and other expenses relevant to the hotel operation. This cash value net of hotel operation expenses will be the total income distributable to the rental pool The condotel unit owner’s individual share of the income shall be distributed quarterly. Not yet included in the deductions are the association dues that the condotel unit owners would have to pay as part of the Grand Cenia Condominium Corporation Association. The hotel operator has the right to deduct these association dues from the income of the rental pool instead of collecting it from the individual units owners. The condotel unit owner will not receive income from the facilities and amenities offered by the hotel. The asset contributed by the rental pool is limited to the rooms being utilized for the hotel operations. The hotel developer will retain titles to the food and beverage areas and manage it to complement and enhance hotel operations. Condotel Unit Owner’s Share of the Rental Pool Income A condotel unit owner’s share of the Rental Pool Income is computed on a per square meter basis. A square meter of actual condotel unit area is equivalent to full square meter for purposes of income computation. Such as 25 sqm of actual condotel unit has 25 square meters of area share. The formula for the computation of a condotel unit owner’s share of the Rental Pool Income is as follows; A= Quarterly Rental Pool Income B= Number of Days Condotel was Operational for the Quarter C= Total Contributed Area to the Rental Pool per unit owner D= Total Area of Rental Pool (all the member’s units combined) E= Number of Days the Unit is in the Pool The Individual’s Usages Income shall be computed as follows: A x C x E B D Note: The rental pool agreement shall not provide any guarantee of income or proceeds to the rental pool members. In the interest of fairness, the condotel unit owner will only be entitled to income for the days when his condotel unit is made available for Hotel Business and therefore will not receive a share of the profit for the number of days the condotel unit owner made use of his own condotel unit. Rental Pool Income would be distributed to the condotel unit owners on a quarterly basis. | 
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