The idea behind buying a condo hotel was having a place one could call home, yet having help making their mortgage payments.

The recently opened Palms Place and Trump International are the latest additions to Las Vegas' condo hotel market, and there has been a lot of buzz about them. But the concept is taking a hit and isn't expected to be as prominent during the next wave of development.

People enter the Trump International condo hotel during the official opening in Las Vegas on April 11. STEVE MARCUS / STAFF PHOTOGRAPHER

With a condo hotel, buyers essentially own a hotel room that they can use when they visit Las Vegas. When they are not here, they can place it in a rental pool that is leased out per day like a hotel room.

The problem is the expectations of the buyers of condo hotel units aren't being met with revenue from the city's first two projects - the Platinum and Signature, a partnership of MGM Mirage and Turnberry.

That led to a lawsuit by more than 40 investors who claim they were defrauded because they were promised profits from rental income and told by sales agents how the value of their units were likely to increase.

The publicity about that lawsuit in Las Vegas and similar problems across the country have soured investors on condo hotels. Lenders have also soured on the concept, analysts say.

"It is not a concept for this time," said Paul Murad, a real estate broker and author of "Manhattanizing Las Vegas." "It is a very difficult to finance if you are a developer and much more difficult for end users. In some cases, it is nearly impossible. Lenders are asking people to double their down payments."

Murad said he has talked to investors who are planning to walk away from their deposits on condo hotels because the units have already depreciated and won't be the investment opportunities once imagined.

Las Vegas real estate analyst Steve Bottfeld said he expects much of the interest in condo hotel projects in the future will be those associated with gaming rather than stand-alone hotels. Those have a better chance of attracting tourists and generating the revenue that will make buyers happy.

Some gaming companies appear to be reluctant to pursue the concept because it has created some hardship among buyers.

"I think we are looking at the end of an era for now," Bottfeld said. "I don't think you will start seeing it announced again until 2015 and 2016. No. 1, you have the problem with the equity markets and that makes it difficult to build. No. 2, the concept has had very bad press."

Murad, who recently hosted a condo hotel symposium in Las Vegas, said a lack of understanding by lenders is contributing to the problems. Unlike a straight condo project, there is the variable of a hotel and that raises questions about how it will be managed.

"Buyers are much more difficult to find," Murad said. "A lot of people have been burned on other condo hotel projects. The problem is their revenue expectations were unrealistic. They were caught up in the hype."

MGM Mirage spokesman Alan Feldman said the lawsuit is unfounded and no promises were made to buyers who made overly aggressive assumptions on their own.

"Part of the challenge of condo hotels as a product type is that it is being positioned by some people as an investment," Feldman said. "I don't know that is an accurate thing to do. This is a real estate purchase. You are getting a luxury, hassle-free vacation home that has one of its attributes being a rental property."

Murad doesn't blame developers for the most part because they have to stay within Securities and Exchange Commission guidelines and not promote the units as an investment. Investment clubs, real estate agents and blogs have lured people to purchase the units, he said.

For those who keep their units, not only do they have their mortgages, there are maintenance fees that can run hundreds of dollars and even more than $1,000 a month. Some fear the condo hotels will generate even less revenue with tourism slowing and the nation's economy slumping.

Despite the complaints about some of the original condo hotels that have opened, Murad said it remains to be seen if that will occur with the opening of Palm's Place and Trump International.

"Palms seems to be doing a lot better job of at promoting (its) units," Murad said. It has "done a great job of marketing, and there is a good demand ... That might be successful yet. We will have to see how it progresses."

The hottest condo hotel project is the Vdara at CityCenter, which is attracting worldwide interest from buyers who find the acquisitions cheap because of the decline of the dollar.

Some other projects in town include Cosmopolitan, which has had problems with its financing while it's under construction. Pinnacle Las Vegas, across from the Orleans, has been canceled.

A studio suite inside the Palms Place condo tower. STAFF FILE PHOTO

Despite opening the first tower, Trump has delayed construction of its second tower while the economy remains slow. It is still accepting reservations.

"It is not completely done now, but it coming to a slow pace," Murad said of the condo hotel market today. "It is like driving through a school zone. There are a lot of bumps."

Unlike Bottfeld's prediction of a lull until 2015 or later, Murad suggested that could change in three to four years when the real estate market rebounds. People have short memories and easily become part of a herd mentality, he said.

Luxury Realtor Bruce Hiatt said he recalls the heyday of the market in 2005 when everyone wanted to jump into the market as an investment. He said he declined to take on many of those clients because condo hotels are intended as vacation homes that give the buyer the potential to offset some of its cost.

Barbara Granati-Smedley, a residential real estate broker in Las Vegas, said she bought her condo in Trump for use when her children come visit, but she also views it as an investment. She said she hopes that having her unit in the rental pool will help cover a portion of the mortgage.

"I look at it as a great investment over a period of time," Granati-Smedley said. "It can't do anything but appreciate given that it is a quality Trump project. But this is not for someone who is not a risk-taker."

Las Vegas real estate investor Glenn Pantone said he has shied away from the concept, which doesn't make sense as an investment to him. If someone pays $500,000 for a condo and the owner and hotel split the revenue 50-50, the hotel would need a 85 percent occupancy at $225 a night to break even. That's counting a 20 percent down interest-only loan, he said.

"If it doesn't appreciate, there is no way to make money," he said.

The concept hasn't turned into what Phoenix-area resident Adam Goodman envisioned when he bought four units at Platinum. He said he learned it works for someone wanting to own a vacation resort and generate some income whenever they are not there.

Brian Wargo covers Real Estate and Development for In Business Las Vegas and its sister publication, the Las Vegas Sun. He can be reached at 259-4011 or at wargo@lasvegassun.com.