The SEC has legitimate concerns about some condo hotel developers selling units in their projects based solely on the 'forward looking investment potential'. If developers were left unchecked, with a pile of spreadsheets touting income potential, every condo hotel unit in the country might cash flow at remarkable levels, on paper, and every small real estate investor would have a PhD in condo hotel lingo. This is the fear.

I believe we are not giving the consumer enough credit, but I understand the fear. ADR, Occupancy, RevPar, the language of the hospitality industry can appear sexy at first glance. Nightly rates, rack rates and Average Daily Rate (ADR) can vary widely. Occupancy at a hotel has so many variables. Hotel management is one part science, and one part art, but it is all business. Real estate salepeople and developers are not licensed to sell business interests and this is the crux of the dilemna.

SEC rules require that securities or business interests are sold with complete and proper disclosure, but disclosure is such a slippery slope. Afterall so many other real estate properties are sold for their investment potential, like apartment buildings and warehouses, why are condo hotels treated more conservatively?

Consumers, while on vacation, buy condo hotel, not savvy seasoned investors. Again, I think we are giving the consumer far too little credit and information.

Consumers who look to purchase a condo hotel, are told to consider it just as simple real estate. To attempt to ignore the rental income potential and make their purchase more like a second home or vacation residence. But the income potential is still a large part of the decision. When the consumer is told by the real estate sales representation that they cannot in any way discuss income or income potential, time and again the consumer feels something is being withheld. I have witnessed as the potential condo hotel buyer asks "why?"

The consumer deserves an open dialog about risks and rewards in condo hotel ownership. Attempts are being made to create a firewall between real estate sales and hotel rental management departments but it is still disjointed and spooks consumers trying to understand their purchase decisions.

As CPAs, financial advisors, bankers and other trusted consultants better understand this new real estate product, its potential and risks the gap in the information for the consumer can be bridged.