"At the same time, condo hotels – which can be rented out on a nightly basis – are becoming a popular alternative to the traditional vacation house. Owners don't worry about maintaining property, have access to high-end hotel amenities and can help pay their mortgage with their share of the rental income." -- CNN Money

"Unlike time shares, where owners have the right to visit a property for a few weeks a year, or traditional condominiums, where individuals own the units and can do what they want with them, condo hotels are a hybrid. Investors own a specific condo and pay property taxes, insurance, and maintenance fees. Hotel management companies rent out the rooms, rotating reservations among the various units and splitting the revenue fifty-fifty with the owners. " -- Business Week

A condo hotel is a building used as a hotel and a condo.

For owners, they can own a "second home" in a hotel -- with access to all the luxurious amenities when they use it -- and then rent the unit out as a hotel room when they are not using it to defray their investment costs. The bulk of the investment is usually through capital appreciation which depends on the market.

Developers are crazy about condo hotels because they can recoup up front some of their construction cost by having owners share in the investment's development costs, while retaining ownership of the facilities (meeting rooms, restaurants, spas, etc.)