March Blog

Spoke at two conferences in March; Urban Land’s Recreational Development in Orlando and Ragatz’s Fractional in San Francisco.

Here's the Important Stuff

ULI Meeting - Great perspective from Pete Halter on what to expect the next 2-4 years, to wit:


The Tough News

o Demographics are passé. Psychographics rule – the motives behind why one will buy vacation property today especially after what we are going through.

o The age of mass affluence is gone for some years

o Obama will do zero for our buyers; he’ll take away from them with higher taxes and fewer deductions, so the wealth effect is gone

o Our buyers will have more important issues in their lives than buying a fraction or vacation home

o Our buyers 401k is down, their home value is down, their job may be at risk

o They need to rebuild their wealth, then will spend on deferred things like a new car, home improvements – all this before a vacation home.

o Condo projects, if their loans are to be bought by Fannie and Freddie, now need a 70% presale, yes, seventy percent.

So, the ‘good news?’

o Time is the enemy of the boomer…each day lost with family and friends in a vacation home cannot be regained

o Regional resorts will do better as the purchase can be better justified

o Fractions will be the product of choice: green [8 or 12 owners per home], value [pay just part] and smaller ongoing costs [sharing them]

o Post sale costs, however, will be looked at very closely – not so much the entry price but the annual costs

o Buyers will want to best deal, so new-to-market projects can price themselves accordingly; those caught mid stream need to collaborate with their owners to have them understand why prices may need to be reduced

o Innovative marketing and sales – a specialty of fractional developers - strong on relationship sales, usage of data bases and ‘owning’ the customer, the sales center as a retail experience, web animation, let the buyer be participatory in the selling process.

Fractions will come back first as a resort product....this said by many speakers who might not know a fraction if they stumbled over it! So, logical thinking wins out!!!

From Ragatz - I went with limited expectations and came away with a lot of good stuff and a bunch of qualified deals:

o Dick reported that sales of both PRC and Fractional projects were lower than in 07 minus 24% for PRC and minus 46% for fractions

o Dave Bansmer, who has my undying gratitude for buying Worlds Finest Resorts from us and blending it into Registry Collection, now with posh Sea Island off the Georgia coast reported closing 30, million dollar each quarter shares in the 4th quarter of 2007 – Yup, that’s right!

o As usual Gary Derck was a champ with is presentation on the Purgatory Lodge with 3 products in the mid-rise; whole, fractional and PRC. On the pre-sale conversions last fall the PRC performed best, fractions second and the wholes a distant third

o Not surprisingly the finance panel was a non-event even though moderator Art Spaulding pushed and prodded as much as possible. Hey, financial markets are still locked!

o Mel Grant has launched a new site: www.FractionalCollection.com not as an exchanage site, but a classy lead generation site. That’s Mel of San Francisco Exchange Company – SFX

o Bill Orwig, fractional sales from day #1, finally admitted that some timeshares were okay and some timeshare sales folk can make it in fractions. Talk about a long digestive period, but congrats Bill!

o Marketing internet panel was a dud…just not the right mix or those who actually use the electronic media for lead generation vs. the generalists. Shudda had our Mac MacEwan on the panel!

o Registry Collection, in the 4th quarter of 08, had their best ever affiliation count, so Gregg Anderson was a happy camper

o Sherman Potvin has launched a national franchise operation for single homes, Fractional Homes International, which I still don’t get, but that’s not the point. He’s off and running

o Howard Nusbaum, CEO of ARDA, stood his ground quite elegantly, amid some cries for a fractional association to bypass ARDA. His message got through at ARDA is a big-tent, so join and be part of the process. Steve just won’t give up!

o Jim Marmorstone predicts that fractions will evolve into points based programs.

o From ULI Rec Development Flights good to see Toni Alexander, Dennis Hillier, Gary Derck, Lynn Cadwalader, Geoff McGuire, Paul Courtnell, Ed McMullen Sr in addition to our Ash Offermann.

o Dick had about 400 folks there, so a darn good showing considering …

o I was bumped off the ‘meet the experts panel’ this year, so I don’t know what that says about your scribe. Well, gotta try harder next year.