HOTEL RENTAL PROGRAM OVERVIEW AND OVERVIEW FREQUENTLY ASKED QUESTIONS
1. What is a Condominium Hotel?	A condominium hotel operates as a hotel but also adds the legal and financial structure of a condominium. The Hotel Guestrooms at Mandarin Oriental, Chicago offer qualified investors the chance to purchase an elegant and exquisitely furnished room or suite in a five star, luxury hotel in the heart of Chicago's new East Lakeshore neighborhood. Since it is a real estate purchase, a buyer receives a deed for a real property interest that the buyer can in turn sell whenever he/ or she chooses. And, because the condo unit or room is a real property interest, a prospective buyer should consult his/her a tax and investment advisors to explore the potential for tax benefits and appreciation which should be like those available in any condominium purchase. When the condo unit owner stays at the hotel, he/ or she has access to all of the hotel's amenities, including its two restaurants, lounges, meeting facilities and a world class spa, as well as exercise facilities. When the owner is not using his/her staying in the room, it can be made available to rent through the hotel's voluntary, rental program.
2. Who Manages the Hotel and the Rental Program?	The Mandarin Oriental, Chicago is managed by affiliates of Mandarin Oriental, the Hotel Group (“MOHG”), under long term management agreements with the hotel's owner. MOHG companies operate 22 hotels around the world, including five properties in the United States. MOHG will operate not only the hotel's voluntary rental program, but will also manage the hotel in a similar manner to their other exceptional properties around the world. Services generally provided under Mandarin’s management would include marketing the hotel to the public, operating the front desk, taking reservations, maintaining the property, serving food and beverage in the restaurants, room service and meeting rooms, provide and via room service, and providing group meeting and convention services in the hotel’s meeting areas. MOHG would also provide all of the other services that guests expect in world class, luxury hotels, likesuch as housekeeping, concierge, bell desk, and telecommunications services. For more information on MOHG and the hotels it operates, please consult the company's website at www.mandarinoriental.com
III3. What are the expenses of a Condominium Hotel?	Each owner of a room will receive a monthly invoice to cover a proportionate share of the costs of utilities, repairs and maintenance, sales and marketing, general administration, accounting, insurance, labor and other operating expenses of the hotel. In addition, each owner will receive a monthly assessment to cover common area expenses incurred for the property owned by the condominium association, and will be responsible for paying his/ or her own mortgage and real estate taxes. As part of the monthly charges assessed under the unit maintenance program, the hotel will establish (and collect) a reserve for future renovations to the rooms and the public spaces of the hotel.
IV4. May I Furnish my Own Room?	All rooms at the Mandarin Oriental, Chicago are being sold completely furnished. In order to maintain consistency as a luxury class hotel for the public, all room owners must participate in the hotel's furnishings program, whether or not the room owner is a participant in the voluntary rental program. The furnishing program of the hotel provides for repairing and replacing furniture, fixtures and equipment as necessary, as well as for future renovations of the hotel rooms and public spaces. Charges for the furnishing program, including future reserves, are assessed monthly as part of the hotel's unit maintenance program.
V.5. Are all of the rooms in the Mandarin Oriental, Chicago being sold as condominium units?	AllYes, all of the 252 guest rooms and suites in the hotel are being offered for sale.
VI.6. Where can I find more information about the hotel business in Chicago?	The Chicago Convention and Visitors Bureau and the Greater Chicago Chamber of Commerce have statistical information about the historical results of hotel operations in Chicago. In addition, buyers should consider consulting with financial advisors who have experience in the hospitality field for more specific advice.
VII.7. What are the Benefits to of being a Room Owner in a Condominium Hotel?	The most important benefit is hassle-free ownership. When the owner wants toTo use his or her room or suite, he/she simply callsan owner needs only to call the hotel to schedule a stay. Unlike a conventional condominium, all of the normal hasslesissues of upkeep and maintenance are taken care of for the owner by the hotel's management company. In addition, when not using the room, the owner has the opportunity to have it rented through the hotel's rental program.
ABOUT THE RENTAL PROGRAM
VIII.8. Is participation in the Rental Program mandatory?	No, participation in the hotel's Rental Program is completely voluntary. No owner is required to include his/ or her unit in the program, and may use other means, like such as brokers, to rent his/her the unit. However, anyone staying in the room must go through the hotel's reservations office and check-in at the hotel's front desk.
IX.9. If I put my room in the Rental Program, can I still stay in it when I want to?	Although the management company will try to assign owners to their own units or rooms whenever possible, sometimes when the hotel is very busy or when the owner calls for a reservation on short notice, the owner's room might already be reserved for rental to a member of the public. In that case, the management company will attempt to accommodate the room owner in another owner's room. Whenever a room owner stays at the hotel in his/ or her room, or in someone else's, the owner will be charged a discounted rate to cover the costs of the housekeeping, linens and other operating expenses incurred by the hotel as a result of the owner's stay. The initial charge for owner stays at the Mandarin Oriental, Chicago will be $125 per night.
X.10. How does the Rental Program Work?	The rental program is entirely voluntary. It allows the owner of a unit to make it available for rental to the public through the hotel's management company. If an owner decides to participate in the program, he/ or she enters into a unit rental agreement with the hotel's manager that provides for marketing and rental of the room as a hotel room by the manager in return for a rent to be paid to the room owner. In order to maintain control over the hotel's room inventory, the unit rental agreement provides for a minimum number of days that the owner must make the room available to the manager for rental to the public.
XI.11. How does my Room get Rented?	Every room that is in the voluntary rental program will be placed in a special, electronic reservations system that the hotel will implement in its reservations department. The system is designed to rotate room rentals among all unit owners so that revenues are spread fairly among all room owners. Specific requests of customers for specific types of rooms or price points may affect the rotation system's ability to ensure that all rooms are rented for an equal number of nights. The manager will be solely responsible for determining the nightly room prices offered to the public, as well as for food and, beverage and meetings prices.
XII.12. How is Rent Calculated?	As explained in more detail in the unit rental agreement, the hotel manager collects the room revenues paid by persons staying in an owner's room, and first pays costs of sales, likesuch as credit card, outside reservations systems, commissions or similar charges, to arrive at net room revenue. After then deducting a management fee for the hotel of ten percent, the manager pays the direct operating expenses of the room, likesuch as housekeeping labor, linen, and supplies. There are two programs available for owners. The first program is for a room owner who agrees to make his/ or her room available to the program for 336 nights a year and, with the hotel payspaying rent to the room owner equal to eighty percent of the revenues remaining. In the second program, if the room owner has agreed to make his/ or her room available for rental 351 nights a year, the rent to the room owner is one hundred percent of the then remaining revenue. The hotel manager will keep books and records for each room owner who elects to enter into the voluntary rental program and will pay rent every month based on the revenues of that room (but not including anyon other revenues such as food and beverage, meetings, telecommunications, and pay-per-view or other revenues) every month. ). For more information on the calculation of rent, please see the unit rental agreement.
XIII.13. How long is the Unit Rental Agreement?	The unit rental agreement is structured like a lease and is for an initial term of five years. As explained in more detail in the unit rental agreement, a room owner may terminate the agreement after three years upon payment of buy-out damages to the hotel. When a room owner sells his/ or her unit, the buyer receives the benefit of and must assume the unit rental agreement.
XIV.14. Where can I find more information about the rental program?	The unit rental agreement contains much more detailed information about the rental program and its terms and conditions. Buyers who are interested in the rental program should consult their attorneys or financial advisors about the unit rental agreement. Since it is legally impossible to rent out a property that one does not own, a buyer will be allowed to enter into a unit rental agreement only after entering into a binding contract to purchase a unit in the Hotel, and the unit rental agreement will be contingent upon the closing of the purchase.