October 2007

Hawai'i Fractions:
Just back from the second, Ragatz/Pacific Rim/Trans Pacific Mortgage Hawaii seminar on fractions. Following their July seminar Pacific Rim and Trans Pacific are committed to educating the Hawaii market to fractions, so as the offerings grow they will grow with intelligent development, marketing and sales.

The one, very major impediment to a fast start to projects is the exemption for six interests or less, but use has to be for sixty consecutive days. So, sell two, fixed 60-day periods, sell two, rotating sixty-day periods, but sixty days it must be. Owners, however, can internally trade within those blocks of time, but that ability to trade can't be a material part of the offering. This probably rules out 70% of the easy market for sales.

Registration under the timeshare act is occurring with a few projects and more need to come along, so use plans can be designed commensurate with a broader market demand.

Dick Ragatz, as usual, gave a compressive update on the fractional business and it's explosive growth.

The One-Off House

Old Republic Mortgage has a database of some 40 one-off houses being offered as fractions on the 1/6 exemption basis. So that's 240 potential sales. They list 15 in escrow.

Dick Ragatz will have a pronouncement on this one-off product by or at his upcoming March conference. But in the meantime my take is that while some of these houses in the $10-14 million dollar category, so shares are being sold in the $2.5 to $3 million range; others are in the $85,000 range, and all in between; the systemic problem is post-sale management. Who's going to provide and at what price? Some buyers may be okay with standard property management services, but the upper-end will need the specialized and dedicated service that only a 'project' can offer. So, whadda 'ya do?

•Snowbird's Night in New York event was two weeks ago, and over 250 showed up in midtown on a weekday night! Real loyalty. Our sales team met with all reservation holders in that market, naturally, to secure their deals.

•Up at Meriwether Ranch Josh Potvin, Sherman's son, has emerged as our top salesperson for 2007. Congrats.

• Also at Meriwether Dede Bacon, fresh from her excellent results at Kirkwood, has been filling in, to meet mini vac demand, this fall. She has, naturally, snagged her share of sales. Thanks, Dede!

•At Vallarta Gardens, in PV, Ron Frank, Mac MacEwan and Ash Offermann are moving ahead to get that project structured for fractions, amenitized, marketed and set-up for sales. Fortunately, the project's location, on the Bay of Banderas, is exploding, so opportunies are now available for local lead generation programs.

•Star has sold the Nautical Inn, Lake Havasu, to its investor group on a pre-arranged purchase agreement. So, we are out of the muscle-boat business.
And, out of the condo-hotel and timeshare businesses, too.

When does Mel Grant's fractional exchange company open up?

Rolling into the fall from a busy summer…at Mt. Superior Club - Snowbird, Dave Ruff, our new sales manager has made superb progress getting solid on our reservations, thereby getting to the next price levels and preparing for the “Snowbird Comes to Big Apple” event.

Mt. Superior also released a handful of whole units with one being snapped up at $3.3 million and two others in process.

Dave is backed up by Ash Offermann, and he in turn by the crack Snowbird resort team of Bob Bonar, Tom Jones and Jerry Giles. The NYC event has over 400 respondents, so far and that means the sales team will be very, very busy.

Trans-Pacific Bank is sponsoring a second Ragatz one-dayer on September 27th. in Honolulu. This follows their successful seminar in July. The invited guests here will be realtors. I have the opportunity to speak, again, on marketing and sales. It will be interesting to see how the real estate community responds, and to if they really want to make a business out of fractions in the Islands. Certainly, all indicators are that fractions are ’made’ for Hawaii.

Destination Clubs…the Wall Street Journal had an article last week about consolidation and self-regulation. I wonder what Steve Peterson, who heads the ARDA club regulatory group, will have to say about ‘their’ view on regulation vs. what the hurdles shared ownership industry has to jump over. Not one mention of Exclusive in the article, so congrats to them for keeping their head down.

Back from Croatia and their Dalmatian Coast on the Adriatic Sea. Just gorgeous water and weather, and great hiking on the islands. One RCI sign for a resort. Now that Croatia is on the other side of the war development money is pouring in from all over Europe, and vacation villas are everywhere, so fractions will follow at the appropriate time for the European market. It’s a long commute from the US.

August was my opportunity to join the ranks of ‘air service does not work’ in America team. All four segments from Kalispell to Providence and back to SFO either did not go or did not work to any timeframe that was expected. Hell, I got to Croatia faster than I got from Rhode Island to San Francisco!