Sentinel Staff Writer

April 6, 2006

An Orlando development group plans to build a 325-unit luxury hotel close to Walt Disney World, adding to a wave of new construction that could add thousands of pricey rooms to the regional resort market.

The group plans to formally break ground today on the Regency Suites, a $102 million project on Regency Village Drive about a mile from Disney near the Premium Outlet Mall.

The hotel, a mixture of efficiency, one- and two-bedroom units, doesn't have an affiliation with a hotel group. Instead, the developers plan to use a local management company to operate it.

Like several other recently announced resort projects, units in the Regency are being sold to investors as condominiums. Carlos J. Bonilla, an Orlando attorney who is part of the development team, said 190 units have been sold at prices ranging from about $200,000 to $400,000. He said many of the buyers live overseas.

"It will run and feel like a luxury hotel, but the units are owned by individual buyers," Bonilla said. "We expect that none of the units will be occupied by the buyers, but it is likely many will come for a week or two a year on vacation."

Bonilla said his group, Regency Suites I LLC, needs to sell 210 units to secure a construction loan. He said his group is beginning preliminary work on the 5.4-acre site and expects completion in 18 to 20 months.

Bonilla said the hotel would cater primarily to tourists, but would also draw visitors attending events at the Orange County Convention Center.

In the past two months, two other large condo-hotel projects -- the Blue Rose on Universal Boulevard and Palazzo del Lago on International Drive at Lake Bryan -- were announced.

Condo hotels accounted for 12 percent of the 115,000 hotel rooms under construction nationwide in January, according to Smith Travel Research.

Mark A. Lunt, a hotel industry analyst with Ernst and Young LLP in Miami, said developers have used the condo hotel model for decades, but the financing method has become popular lately. The financing technique helps developers raise cash needed to snag construction financing.

"Condominium hotels do the best in markets where real estate prices have gotten out of hand," Lunt said. "Construction costs have gone up so much that they have forced some developers out of the market. That helps explain why condo hotels have exploded in the U.S. in the past five years or so."

Christopher Boyd can be reached at cboyd@orlandosentinel.com or 407-420-5723.

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