November Blog

Greetings all you practitioners of fractional interests! Keeping the faith?

Just back from ULI and the Recreational Development Council meeting. The best reports were that sales were 50% of projected sales reduced as they year went on, but the great majority of projects just had one sale here and one there over the summer all as hard as heck to get closed.

Lots of prospects coming up to the bar but backing off - similar to our experiences at SRG.

Some comments:
*The major banks are firmly being controlled by their credit departments, so no new loans are going out unless its to a 'platinum-plated' repeat customer.
•A major SE resort doing a St. Kitts project now going hard on deposits: 135 reservations >> 30 conversions.
•A comment from a multi resort developer - on one hand no use spending marketing dollars, but can't go invisible, so still putting some money in their markets.
•Tales of lender defaulting on construction loans.
•Tales of no buyer loan money and no hypothecation loans.
•Naturally a great time to planning a project and a louse time to be in sales.
•Marginal hopes of winter 09 and not much better for summer 09. Will we be surprised?
•All eyes on 2010
•From Paul Volker: the capital markets won't come fully back until the trust and confidence is restored between banks worldwide. As that trust has been smashed he feels it will take two or more years to fully come back.

On the more positive side of things: another report from a research company on wealth as of September 23rd. Conclusions? The top 10% of wealth is not buying anything let along resort real estate. Maybe some interest in bottom feeding for investment real estate.

•Last year these wealthy segments were in a psychological recession. Now, they acknowledge that it's a real recession.
•They plan to cut their spending by an average of -6%
•Only family-oriented spending will hold up.
•If the past years were 'I want it'
•Then the most recent period was 'I need it'
•Now it's 'We need it' -- reflecting that family hunker down approach.
•This opens up avenues for sales to focus on 'what's real' for family use which goes to service, usable amenities and robust activities.

And, hey, these folk are still optimistic on America…they believe 09 will be a better year for them than 08 and also for America.