Ronald Lim, a mechanical engineer who started investing in condominium units while he was a teenager, led the development of the ‘condotel’ industry in the Philippines amid the real estate boom over the past decade.
Lim, now 46, wants to take another step to remodel the accommodation sector, by introducing the ‘cabintel’ concept, a studio-type condominium unit that is designed into a cozy hotel room for up to six guests.
“Cabintel is the future of accommodation. Future travelers are budget-conscious and it is the new segment of the market that is the real people—the commoners who started to travel to explore the world. They really look for good deals,” Lim, the president and chief executive of Pacific Concord Properties Inc., says in an interview at his office along Shaw Boulevard in Mandaluyong City.
Lim says cabintel is the next evolution of the condotel industry, which he helped transform by applying his engineering background and deep understanding of the real estate industry.
A father of two young professionals, Lim leads a total of nine companies, including Lancaster Hotels Manila, which operates the hotel component of Lancaster Suites, the 42-story condominium building project of Pacific Concord. His son serves as assistant resident manager at Lancaster Hotel while a daughter also works for Pacific Concord.
Early investments
Lim started investing in real estate as a student at Saint Jude College and later at De La Salle University. By age 28, he bought 50 rooms in a condominium project in Cebu, but the 1997 Asian financial crisis happened.
His family went to the United States, where his two children studied. There, he received an e-mail from an Australian friend based in Japan who offered him to look for investment opportunities in the Philippines. Thus began Pacific Concord Properties.
Pacific Concord is the developer of Lancaster Suites, the first high-rise building built in Metro Manila after the 1997 Asian financial crisis. In 2001, he signed a contract with a landowner in Mandaluyong City and in January 2002, he established Pacific Concord Properties when he was 33 years old. “I think this was the first or one of the first buildings or projects launched after the 1997 financial crisis,” he says.
Believing that the real estate sector would subsequently rebound, Lim also invested his own money in the project, which would become known as Lancaster Suites. “I also bought a lot of units in the project. I have personal investments as I believe that real estate will bounce back based on previous cycles. I believe in its recovery after the downturn, and by 2004, it recovered. By then, I was already invested,” he says.
Lim says from the start, he planned to build a condotel project. “When we sold this, we sold this as a condotel. People bought units as investments. We sold them to America. We became the first developer to reach out to Filipinos in America and Canada. That’s why Pacific Concord became well known in the US,” he says.
Tower 1 of Lancaster Suites was completed in 2007 and the hotel began its operation in 2008.
“Lancaster Hotel is one of the few brands that are Filipino. We have Filipino management team,” he says.
Lancaster Hotel manages the units of Lancaster owners who agreed to surrender their units for fit out and design following Lancaster’s high standards. “All condotel rooms are similar,” Lim says. “You think you are in a hotel, but actually the units have different owners, but with the same fit out.”
Lim says this was the concept behind the first professionally managed condotel in the country.
More than six years after it opened in 2008, Lancaster Hotel’s 150 suites were fully booked in January 2015, as the hotel accommodated big groups looking for spacious hotel rooms complete with amenities. It is a part of Lancaster Suites Tower 1, which has a total of 390 rooms.
Next year, the 42-story Tower 2 called Lancaster Atrium will be opened, with 600 condominium units. Of the total, about half or 300 rooms will be a part of Lancaster Hotel. This will bring the hotel’s total capacity to 500 rooms, making it one of the largest in Metro Manila.
Evolution of condotel
Lim says the ‘condotel’ concept was an “offshoot of the apartel and pension houses in the late 1980s.”
After graduating from DLSU, Lim worked for a developer who was building a project and who bought 44 rooms in another residential condominium project. Lim was asked to manage the 44 rooms.
“I was hired by a developer who also had an investment in another building. I was told to operate the condominium units. Through that experience, I thought about the ‘condotel’ concept. When I had the opportunity to build Lancaster Suites, I applied this condotel concept,” he says.
“The condominium used to be considered only for the chosen few such as the rich and politicians. It even had a bad reputation as the home of mistresses then,” he says. “There was a point condos became non-performing assets, after the mistresses left, for example. The owners then rented out the units for one year, but if there were no takers, they would offer six months or three months,” he says.
The unit owners would ask the building administrators to look for tenants. To lure more tenants, the building administrators offered monthly, weekly and even daily rates, he says. “But the problem with the system then was that there was no check and balance. There were no support facilities that would run the operations professionally,” he says.
Maids were asked to clean the condominium units, but issues arose when some renters complained about lost items and even cash. “The building manager and unit owners were not answerable, and blamed the maid for the lost items. Those were the weak points of apartel operation,” he says.
Lim says apartels were also equipped with old appliances and amenities not being used by unit owners. “I saw all of these. Another problem was that there were a lot of inconsistencies or sort of favoritism, or you could even say corruption among the building administrators. Once the unit owners surrendered the units to building administrators, the power shifted to the building administrator who had the power to choose which units would be offered to the renters. Some unit owners had zero income,” he says.
“Building administrators started charging commissions, normally about 10 percent of the rates. Units whose owners refused to pay commission or tips were not given occupants,” he says. “Things turned worse when the building administrator, the one hired by unit owners, became the authority in the building. He held the inventory for leasing. Not content with 10-percent commission, he conspired with the accountant to underdeclare the income.”
“For example, a unit was occupied for 30 days, but it would be declared for only 20 days. I estimated that normally 30 percent of the income was not declared by the building administrator. The underdeclared income was distributed to all employees in the building, so that nobody would sing. The unit owners, who were not staying in the building, were not aware,” he says.
Changing the system
Lim says he saw the need to change the system and decided to study the accommodation sector. “I started attending seminars offered by five-star hotels. I attended seminars on housekeeping, front desk, back of the house, accounting, banquet, F&B, culinary and others, ranging from two weeks to one month per course. It took me about a year or so to complete, until I was educated to run a hotel. In 1992, I applied my engineering background to reengineer the apartel into condotel. It is a condominium being run as a hotel, with a hotel back of the house,” he says.
“That was the evolution of the condotel industry,” he says.
He also transformed the 50 rooms he earlier bought in Cebu into Lancaster brand. The project is located in Lapu Lapu City in Mactan Island near the airport.
Future projects
“Right now, I have two upcoming projects, one in Bacolod. The other is in Tagaytay City,” he says.
The Bacolod project is an 87-hectare development that has coastal frontage called marina and inland component called the hacienda. “It will be a mini-township with condotel, house and lots, sports and country club, water park, commercial and retail, business district, marina and board walk. It is a complete development called South of Bacolod,” he says.
The Bacolod project is being prepared for groundbreaking in February 2015, with a P3-billion investment budget. Lim says he partnered with landowners to build the project.
Lim says he hired Budji Layug and Royal Pineda to design South of Bacolod. “There, I will introduce my newest condotel creation called cabintel. “It is like a cabin in the ship. It will have double-deck bed. For a small 18-square-meter room, it can accommodate up to six people or a whole family. It is an affordable investment, but you can it operate it as a hotel for up to six people,” he says.
The cabintel
He says cabintel’s time has come. “The popular hotels in the past are five-star hotels like Manila Pen or Intercon. But now, the more popular ones are budget hotels like Tune Hotel, Go Hotel and Lancaster Hotel. We have a new generation of travelers,” he says.
Aside from Bacolod, Pacific Concord will also launch a major project in Batangas, near Tagaytay City. “I am shying away from high-rise developments and decided to go horizontal in popular destinations. There were less risks in horizontal, because you can develop it in phases. High-rise projects have higher risks, because you cannot develop them in phases. You have to finish the whole thing in four to five years,” he says.
Pacific Concord is developing a 40-hectare property in Laurel, Batangas near Tagaytay City, right after Canyon Woods. “It will also be launched this year,” he says.
“Next year, I will launch another 18-hectare project along Taal Lake in Laurel, Batangas, facing Taal Volcano,” he says.
Lim says he will introduce the cabintel concept in all three developments. “Aside from affordable, but high-end house and lots, we will offer cabintel units, which are affordable to own and operate as part of a hotel. It will be very attractive to the market,” he says.
“Cabintel can accommodate a whole family or six people. This is the newest product line that we will launch this year,” he says.
“This is the future of the hotel. The five-star hotels will always have its niche market, but the growing market belongs to the cabintel. It is like airlines, which are either legacy or budget airlines. Passengers who traveled on Piso fare are not expected to pay the rates for five-star hotels. They also look for value-for-money accommodation. People who travel are the same market looking for hotel accommodation,” he says.
“If the travel market looks for piso fare, we better be ready that our hotel can accommodate their budget. It is the direction I am looking at,” Lim says.