The traditional financial schemes which project developers have been using are time share and mixed use; hotels are now facing steep competition in Puerto Penasco, Mexico. More attention is now towards a condominium due to its popularity in the beaches of Mexico. As a result, the experience at the beach village is attracting tourists from across the world, which was not possible in the mixed use or time share hotels. The main objective of this paper is to explore the viability of various financial schemes in developing a new project on the beach in Puerto Peñasco, Mexico.
A condominium is more advantages over the other financial schemes due to its limited initial capital investment. The owner of the hotel-condominiums is entitled to use his or her units for a period not exceeding two weeks in every one year according to the Internal Revenue Code. Registrations of time share are so expensive in the recent years, so that developers now have their condo hotels as securities (Hastings, n.d.).
Also, in a condominium, a smaller amount of capital is required for investment than that required in the time share and mixed use. During the non peak seasons, a condominium can be rented out to students and other people, so that a constant cash flow is realized by the owners throughout the year. However, condominium has insufficient luxury as well as fails to provide room service, which is advantageous to the traditional forms (Puerto Peñasco Post, n.d.)
Although, time share, hotel-condominium and mixed use are some commonly known financial schemes for a new a project developer in the beach in Puerto Peñasco, Mexico, the most preferred scheme is a condominium, due to mainly limited initial capital. The other financial schemes also have a number of benefits such as room service, which attracts tourists.