Buy a condo inside a hotel. Drop it into the rental pool. Let the hotel manage everything — booking, housekeeping, maintenance, guest services. Collect checks. It sounds perfect on paper. And in Los Cabos, where Four Seasons, Montage, Park Hyatt, and Auberge all operate residence programs, the pitch is everywhere. Here is how condohotel programs actually work — the revenue splits, the restrictions, the real returns, and the questions most buyers forget to ask.
Key Takeaways
- ✓ Revenue splits in Los Cabos condohotels typically range from 50/50 to 60/40 (owner/hotel), but itemized fees can push the effective hotel take to 45-55% of gross revenue.
- ✓ Net returns to owners after all expenses typically run 3-6% on purchase price — lower than self-managed Airbnb but with zero management burden.
- ✓ Personal use is usually limited to 30-90 days/year with blackout periods during peak seasons.
- ✓ FF&E reserves (3-5% of gross revenue) and periodic renovation requirements ($50K-$150K+ per cycle) are real costs that reduce net returns.
- ✓ The brand premium supports strong resale values — Four Seasons and Montage residences in Cabo have historically appreciated 4-7% annually.
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Contact MeHow the Condohotel Model Works
The condohotel model is straightforward in concept: you buy a condominium unit that is part of a hotel property. When you are not using the unit, it enters the hotel's rental pool and is rented to hotel guests at the hotel's standard nightly rates. The hotel manages everything — booking, marketing, front desk, housekeeping, maintenance, room service, and guest amenities. You receive a share of the rental revenue.
In Los Cabos, the major condohotel or hotel-residence programs include:
- Four Seasons Residences at Costa Palmas — Costa Palmas, East Cape
- Montage Residences — Twin Dolphin, The Corridor
- Park Hyatt Residences — Cabo del Sol
- Auberge Residences — Chileno Bay
- Palmilla — One&Only Palmilla resort residences
Each program has its own structure, revenue split, and contractual terms. They are not interchangeable — the specific agreement you sign determines your economics.
Understanding Revenue Splits
The "revenue split" is the percentage of rental income that goes to you (the owner) versus the hotel operator. But this number is more complicated than it appears, because different programs define "revenue" differently and layer various fees on top.
Gross vs. Net Revenue
Some programs split gross room revenue — the total nightly rate charged to the guest. Others split net operating revenue — gross revenue minus operating expenses (housekeeping labor, laundry, guest supplies, booking platform commissions). The difference can be 15-25% of gross revenue. A "60/40 split on net revenue" can deliver less to the owner than a "50/50 split on gross revenue." Always calculate the dollar amount, not the percentage.
Fees Beyond the Split
On top of the revenue split, condohotel programs typically charge:
- FF&E reserve: 3-5% of gross revenue set aside for future furniture and fixture replacement
- Marketing fund: 1-3% of gross revenue for property marketing and brand marketing contributions
- Maintenance reserve: 1-2% of gross revenue for common area maintenance beyond what HOA fees cover
- Management fee: Some programs charge a flat management fee in addition to the revenue split
- Owner association dues / HOA: Standard monthly fees for common area maintenance, security, and amenities — typically $800-$2,000+/month for luxury branded properties
The effective owner's share — what actually hits your bank account after everything — is typically 40-55% of the gross room revenue generated by your unit.
What Returns Actually Look Like
Here is a realistic model for a $2 million condohotel unit in a Los Cabos luxury branded property:
| Line Item | Annual Amount |
|---|---|
| Gross rental revenue (avg $650/night × 180 occupied nights) | $117,000 |
| Hotel management share (45% of gross) | –$52,650 |
| FF&E reserve (4% of gross) | –$4,680 |
| Marketing fund (2% of gross) | –$2,340 |
| HOA / owner association dues ($1,200/month) | –$14,400 |
| Property taxes (predial) | –$1,500 |
| Insurance | –$2,400 |
| Fideicomiso annual fee | –$800 |
| Net Cash Flow to Owner | $38,230 |
| Cash-on-Cash Return (on $2M) | ~1.9% |
Add appreciation of 4-7% annually (consistent with luxury Los Cabos branded properties) and the total return picture improves significantly. But the cash flow alone is thin — this is an appreciation play with lifestyle benefits, not a cash flow machine.
Compare this to a self-managed Airbnb rental in a similar community, where net yields of 6-10% are achievable but require active management (or a management company taking 20-30% versus the hotel's 45-55%).
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Book a CallPersonal Use Restrictions
Every condohotel program limits how much you can use your own unit. The specifics matter:
- Annual cap: Most programs allow 30-90 days of owner use per calendar year. Exceeding this limit may trigger penalties or removal from the rental pool.
- Blackout periods: Peak revenue periods — Christmas/New Year (typically December 20 through January 5), Easter/Semana Santa (varies), and sometimes US Thanksgiving — are usually blacked out for owner use. These are the highest-revenue weeks of the year.
- Advance booking: Some programs require owners to book their own unit through the hotel reservation system with advance notice (often 30-60 days). This prevents owners from spontaneously deciding to use their unit during a high-demand period.
- Owner rates: Some programs charge reduced nightly rates for owner stays (covering housekeeping and amenity costs). Others provide complimentary stays within the annual allocation.
The personal use restrictions are a genuine tradeoff. If you plan to use your Cabo property 4-6 months per year, a condohotel is the wrong model — buy an independent unit in a community like Pedregal or Querencia and hire a rental manager when you are away.
The FF&E Renovation Cycle
Hotel brands maintain quality standards. Every 5-7 years, your unit must be refreshed to current brand specifications — new furniture, updated fixtures, refreshed finishes, and sometimes new flooring and bathroom updates. This is not optional; it is a contractual requirement of the rental management agreement.
Costs for a luxury unit renovation cycle:
- Soft refresh (furniture, bedding, drapes, accessories): $30,000–$75,000
- Full renovation (soft goods plus bathroom updates, flooring, kitchen): $75,000–$150,000+
The FF&E reserve fund that you contribute to annually (3-5% of gross revenue) is meant to partially offset these costs, but it rarely covers the full renovation. Expect to write a check for the difference every 5-7 years.
When a Condohotel Makes Sense
The condohotel model is right for buyers who:
- Want zero management burden. You never think about bookings, cleaning, maintenance, or guest complaints. The hotel handles everything.
- Value the brand. Four Seasons, Montage, Park Hyatt, and Auberge affiliations provide genuine lifestyle benefits — access to hotel amenities, restaurants, concierge services, and a community of like-minded owners.
- Plan to use the property 30-60 days per year. If personal use is moderate, the rental pool generates income during the remaining 300+ days.
- Prioritize appreciation over cash flow. Branded residences in Los Cabos have historically appreciated faster than unbranded properties due to the brand halo effect on resale.
- Can absorb the FF&E renovation costs. The periodic renovation requirement is a real expense that cash-flow-oriented investors may find unacceptable.
Questions to Ask Before You Sign
- What is the exact revenue split — and is it calculated on gross or net revenue?
- What additional fees (FF&E reserve, marketing fund, management fee) are deducted beyond the stated split?
- What are the personal use limits and blackout periods?
- Am I charged for my own stays? At what rate?
- What are the FF&E renovation requirements and expected costs per cycle?
- Does the hotel have a right of first refusal on resale?
- Must the new buyer assume the rental management agreement?
- What happens if occupancy falls below projections? Is there a minimum revenue guarantee?
- Can I opt out of the rental pool and manage the unit independently?
- What is the term of the rental management agreement, and what are the exit provisions?
Frequently Asked Questions
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Contact MeFrequently Asked Questions
What is a condohotel in Los Cabos?+
A condohotel (also called a condo-hotel or hotel residence) is a condominium unit located within a hotel or resort property that the owner can place into the hotel's rental pool when not using it personally. The hotel manages the unit — booking guests, housekeeping, maintenance, and guest services — in exchange for a percentage of the rental revenue. In Los Cabos, condohotels are associated with brands like Four Seasons (Costa Palmas), Montage (Twin Dolphin), Park Hyatt (Cabo del Sol), and Auberge (Chileno Bay).
What is the typical revenue split for a condohotel in Cabo?+
Revenue splits vary by property and brand, but the typical range in Los Cabos is 50/50 to 60/40 (owner/hotel). Some luxury brands take a 50% management share covering marketing, booking, housekeeping, maintenance, and guest services. Others charge a lower percentage (35-40%) but add itemized fees for housekeeping, maintenance reserves, and marketing contributions that effectively bring the total take to 45-55%. Always calculate the net-to-owner after ALL fees, not just the stated split percentage.
How much can I use my condohotel unit personally?+
Personal use restrictions vary by program. Most Los Cabos condohotel programs allow 30 to 90 days of personal use per year, with blackout periods during peak seasons (Christmas/New Year, Easter/Semana Santa, and sometimes summer holiday weeks). Some programs require owners to book their own unit through the hotel reservation system and may charge reduced rates for owner stays. Read the rental management agreement carefully — personal use during peak periods directly reduces rental income.
What returns do condohotels actually generate in Los Cabos?+
Net returns to owners (after the hotel's management share, maintenance reserves, FF&E reserves, housekeeping, and operating expenses) typically range from 3-6% on the purchase price for luxury branded properties. The Four Seasons, Montage, and Park Hyatt residences in Los Cabos target the upper end of this range during strong occupancy years. These are lower than self-managed Airbnb returns (6-10%) but come with zero management burden, hotel-grade maintenance, and the brand premium on eventual resale.
What is an FF&E reserve in a condohotel?+
FF&E stands for Furniture, Fixtures, and Equipment. Hotel brands require periodic renovation of rooms to maintain brand standards — typically every 5-7 years. Condohotel owners contribute to an FF&E reserve fund (usually 3-5% of gross rental revenue) that pays for these renovations. This is a real cost that reduces net returns but protects your unit's condition and rental competitiveness. Some programs require the owner to fund a complete unit refresh at their own expense every renovation cycle, which can cost $50,000 to $150,000+ for a luxury unit.
Can I sell my condohotel unit independently?+
Yes, but with conditions. Most condohotel agreements include a right of first refusal for the hotel operator, meaning the hotel has the option to match any outside offer before you can sell to a third party. Some agreements also require the new buyer to sign the same rental management agreement. The resale market for condohotel units in Los Cabos is active but more limited than for independent condos — your buyer pool is restricted to people who want the hotel-managed model. The brand premium (Four Seasons, Montage, etc.) typically supports strong resale values.
Aaron Cuha
Real Estate Advisor & Los Cabos Market Expert
Real estate advisor and founder of Living In Cabo. 15+ years helping families navigate complex real estate decisions. Strategic partner with Ronival — Baja's largest brokerage.
