July 2009
Summertime Blues?
Does anyone with the money to purchase a vacation home have any degree of confidence that Congress or the Administration is looking out for them? I doubt it.
But, in my opinion, if either heath care reform or trade and cap gets permanently sidelined or undergoes major modifications then our buyers may feel that they can begin to come out from under their blankets.
On the retail side we are, basically, in limbo. Our domestic project, Whitefish MT, is a great product and pricing with a terrific location and amenities and we still feel we'll snag some sales this summer. The pipeline is filling up; the interest levels are inching higher. So, our gamble to begin a new project in 'these times' is still waiting for validation.
On the developer side we are seeing pretty robust activity - compared to 'back in the day'. Seven developers, some we have been working with for over a year and others for weeks, seem prepared to spend the money to move ahead with the planning phase to come to market summer/fall for 2010, or out and out getting into business for this winter 09-10.
What new out there with you?
Thursday, July 23, 2009
Sunday, June 14, 2009
Signs of fractional life? Yes!!! Finally, after all these months of darkness and some degree of despair the private residence club is coming back.
This week we had fractional sales, each, at Vallarta Gardens, Puerto Vallarta and at Anabui, Aruba. In each case the prospect had visited before. Our sales teams have worked hard to get customers back for a second look, and it has paid off.
Calls are beginning to come in, again, for ventures and or marketing assignments – another good sign. So far most of the calls are sub-par deals, but heck the phone is ringing! There are still a lot of fractional or shared ownership bailout schemes.
Also, a couple of deals we are working with who have bank problems are getting those sorted out, slowly, but moving ahead.
At Whitefish, our new project we began 60 days ago – we chose to be very contrarian with this start, and boy you should have seen the looks I got at ULI when I announced we were launching a new deal! It is 99% set and ready to go for the summer market.
The Registry Collection has been great to work with on Whitefish as we asked for a reassignment of some weekly values to fit the new use plan. Pat Hanes, shared ownership pro, via Teton Club, Front Four at Stowe, Fairmont in Dubai and Cordillera CO, our team. He lives in the area; a stroke of very good fortune for Star.
So, between Rick Abelson handling day to day sales and Bob Wengle as our project director backed up by Mac MacEwan for marketing, Scott Tracy for legal and escrow and Ash Offermann for quality control and cash flow we are throwing a lot of resources at this project. We believe in it!
This week we had fractional sales, each, at Vallarta Gardens, Puerto Vallarta and at Anabui, Aruba. In each case the prospect had visited before. Our sales teams have worked hard to get customers back for a second look, and it has paid off.
Calls are beginning to come in, again, for ventures and or marketing assignments – another good sign. So far most of the calls are sub-par deals, but heck the phone is ringing! There are still a lot of fractional or shared ownership bailout schemes.
Also, a couple of deals we are working with who have bank problems are getting those sorted out, slowly, but moving ahead.
At Whitefish, our new project we began 60 days ago – we chose to be very contrarian with this start, and boy you should have seen the looks I got at ULI when I announced we were launching a new deal! It is 99% set and ready to go for the summer market.
The Registry Collection has been great to work with on Whitefish as we asked for a reassignment of some weekly values to fit the new use plan. Pat Hanes, shared ownership pro, via Teton Club, Front Four at Stowe, Fairmont in Dubai and Cordillera CO, our team. He lives in the area; a stroke of very good fortune for Star.
So, between Rick Abelson handling day to day sales and Bob Wengle as our project director backed up by Mac MacEwan for marketing, Scott Tracy for legal and escrow and Ash Offermann for quality control and cash flow we are throwing a lot of resources at this project. We believe in it!
Saturday, May 02, 2009
Read Carl Berry, May, Points Program for Ritz?
ULI Spring Councils meeting in Atlanta
Lani Kane King, on a marketing panel, teed up their announcement for the Ritz Carlton Destination Club; a parallel offering to their site-specific fractions. I always told my team that if Marriott went to points, in the USA, then I’d go. They are so darn conservative. Well, I’m on the ‘points-trail’ now looking into them for our Las Vegas project.
Other good info at ULI. From the American Affluence Research Center:
•91% negative rating on the current economy
•67% feel the economy will be same or worse
•64% feel the stock market will be same or lower
•46% feel their incomes will be lower
•60% have preservation of capital as their investment goal
•67% have no plans for major purchases
•Interest in purchasing a second home = 25% of 2005 levels
From the Norden-Kelsey Survey of Developers
•64% say recovery is 18 Months + away
•65% say sales velocities will not recover for 5+ years, 16 % say never
•61% say values have declined 20-30%
•56% say HOA and club fees need to drop by 20-30%
•75% say price recovery will take 3 to 6 years
•93% say developer credibility requirements will escalate
•92% say all amenities will need to be in place
•81% say product will be smaller
With all this digested there was more optimism that in October when we last met. Developers have either reconciled themselves to a slog or their projects are fully stopped do to the credit markets still being frozen for resort development.
SRG was alone is starting a new project, The Whitefish Club, a PRC on Whitefish Lake, Montana. So, our necks are really out there. Will our chests be puffed out when ULI next meets in November!
ULI Spring Councils meeting in Atlanta
Lani Kane King, on a marketing panel, teed up their announcement for the Ritz Carlton Destination Club; a parallel offering to their site-specific fractions. I always told my team that if Marriott went to points, in the USA, then I’d go. They are so darn conservative. Well, I’m on the ‘points-trail’ now looking into them for our Las Vegas project.
Other good info at ULI. From the American Affluence Research Center:
•91% negative rating on the current economy
•67% feel the economy will be same or worse
•64% feel the stock market will be same or lower
•46% feel their incomes will be lower
•60% have preservation of capital as their investment goal
•67% have no plans for major purchases
•Interest in purchasing a second home = 25% of 2005 levels
From the Norden-Kelsey Survey of Developers
•64% say recovery is 18 Months + away
•65% say sales velocities will not recover for 5+ years, 16 % say never
•61% say values have declined 20-30%
•56% say HOA and club fees need to drop by 20-30%
•75% say price recovery will take 3 to 6 years
•93% say developer credibility requirements will escalate
•92% say all amenities will need to be in place
•81% say product will be smaller
With all this digested there was more optimism that in October when we last met. Developers have either reconciled themselves to a slog or their projects are fully stopped do to the credit markets still being frozen for resort development.
SRG was alone is starting a new project, The Whitefish Club, a PRC on Whitefish Lake, Montana. So, our necks are really out there. Will our chests be puffed out when ULI next meets in November!
Monday, April 13, 2009
April 2009
Launch a new fractional resort project now? You Bet!
There are contrarian investors, salmon swimming up stream, walking to a different drummer; all variations on the theme of not following the herd.
Star is launching a fractional real estate project in Whitefish Montana. Our team believes this is the moment in time for this product in this place and at the pricing we intend to offer. We have taken over a nascent offering and are in sales as of today.
The consensus of many in the resort business is that fractional real estate will be the product of choice as the market returns. We don't plan for a robust summer selling season, but we do plan to make the necessary sales to lead us into the ski and summer seasons of '09 and '10, and then really go to town with sales.
Whitefish Montana? Google it. We are right on Whitefish Lake, as in 20 feet from the water! Lakefront prices are still at $20,000+ a frontage foot.
We are right next to the premier resort in Montana, The Lodge @ Whitefish Lake. The Lodge itself a very successful condo hotel facility with a top lakeside restaurant and bar, spa, fitness center, marina and boat club with 85 slips, conferencing facility, etc. Our owners have access to all Lodge amenities as well as preferred access to Whitefish Mountain Ski Resort 10 minutes away. And all of this just 30 minutes from the West entrance of Glacier National Park, celebrating its Centennial. Montana real estate at it best!
This project is a venture of Vacation Whitefish, LLC and Star Resort Group, LLC.
Star has never been one to sit and mope. Are our frustration levels high with our currently selling projects? You bet! But, they will come back and we will continue to move on.
How many metaphors can Carl use?
Launch a new fractional resort project now? You Bet!
There are contrarian investors, salmon swimming up stream, walking to a different drummer; all variations on the theme of not following the herd.
Star is launching a fractional real estate project in Whitefish Montana. Our team believes this is the moment in time for this product in this place and at the pricing we intend to offer. We have taken over a nascent offering and are in sales as of today.
The consensus of many in the resort business is that fractional real estate will be the product of choice as the market returns. We don't plan for a robust summer selling season, but we do plan to make the necessary sales to lead us into the ski and summer seasons of '09 and '10, and then really go to town with sales.
Whitefish Montana? Google it. We are right on Whitefish Lake, as in 20 feet from the water! Lakefront prices are still at $20,000+ a frontage foot.
We are right next to the premier resort in Montana, The Lodge @ Whitefish Lake. The Lodge itself a very successful condo hotel facility with a top lakeside restaurant and bar, spa, fitness center, marina and boat club with 85 slips, conferencing facility, etc. Our owners have access to all Lodge amenities as well as preferred access to Whitefish Mountain Ski Resort 10 minutes away. And all of this just 30 minutes from the West entrance of Glacier National Park, celebrating its Centennial. Montana real estate at it best!
This project is a venture of Vacation Whitefish, LLC and Star Resort Group, LLC.
Star has never been one to sit and mope. Are our frustration levels high with our currently selling projects? You bet! But, they will come back and we will continue to move on.
How many metaphors can Carl use?
Sunday, March 15, 2009
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 pass̩. Psychographics rule Рthe 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.
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 pass̩. Psychographics rule Рthe 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.
Thursday, February 05, 2009
February 6, 2009
>If you read this blog two weeks ago - skip it. If not...
If not, there are some really excellent comments and predictions from experts in our business on when and how fractions will come back.
So, I'm sending again with the hopes that you may take a moment [it will take you a minute or two] to click through and read what they say.
If you're tired of me - this is not about me. It's about what others think of the business today.
Many thanks, Carl
January 23, 2009
So, here's the staying-in-business question: Once the market begins to come back will it be led by fractions? And, of course, WHEN?
This is a long blog, but I think the comments, below, are worthwhile reading. I hope you agree. Let me know?
Boy, that's the multi-million dollar question isn't it? To help clear up my crystal ball I ask a number of leading resort professionals what they thought. This is real time - in the past week. Where's Dick Ragatz? Good catch! He came out with a broadcast release last month stating that fractions would lead the comeback.
Now, I'm not the one to question Dick, but I thought I'd get a wider number of views than his ‘release-sponsor’ who was obviously generating business from the release.
So, among the respondents:
Greg Traxler of East West
John Veering fmr. Villa la Estancia and now Contact Development Corp.
Scott Burlingame of Vacation Ownership World
Greg Cory and Bob Chickering both of ERA
Mary Borgia of her own powerhouse consulting company
Dave Howe of Greenangels
Jeff Prostor of Brookfield Hawaii
Tom Goetchius - guru
Sherman Potvin of Luxury Fractional Guide
Dean Kneider of Resort to Resort
Tom and Bill Ward of Ward Financial
Jim Marmorstone of Tenstar and the inventor of points-based programs
Hart Rist of Bald Head Island at The Hammocks
Here are excerpts taken from their replies to the question: Once the market begins to come back will it be led by fractions?
>I believe more buyers will indeed consider fractional options as caution fades and market returns. One major factor in this opinion is the amount of consideration / interest we have seen with our fractional projects here through recent trends. As our prospects have discovered what previously was not an ideal purchase option, they have gained insight into the level of quality and benefits fractional projects offer
>The fractions really need to sold as a product that is thought out and is specially designed before the shovel hits the ground. It has to have particular elements that reflect product owned and used through the world but also the real estate investment and use to that particular local
>They need to be marked differently not cheaper but an alternative purchase in mix use and the only way to go in single use. Generous trade in policies are important.
>As affluent and semi-affluent consumers very slowly emerge from the fear and lack of confidence resulting from the steady drumbeat of dire news about the state of the economy, and get on with their lives and, in particular, their leisure lifestyle, they, I believe, will be more cautious and conservative about what they buy and how they buy it
>My gut check says yes…. We collectively thought there will be a whole segment of the baby boom market that will pass on the purchase decision altogether because they will be working longer and saving more to replace their paper and real losses in the market (me included). There will be another segment that will be risk adverse, and be looking for a lower priced alternative to whole ownership. There may be a moral suasion reaction too, where in an austerity environment owning the 'whole thing' may become viewed as wasteful and tacky.
>After all, Fractional Ownership was making a lot of sense before the economic collapse. Isn't it reasonable to predict that it makes even more sense in a post economic meltdown era.
>… that are no longer driven buy the Developer reaping the reward of a multiplier greater then 1.5 as the Greed factor in fractional was always the #1 reason for failure in my mind (along with poor use plans and high HOA fees, as close 2nd & 3rd)
>Fractional may lead as a value statement. Buyers may embrace the "buy only the time that you need" aspect of fractional ownership ( more of a statement and above Time Share still ) as they try to limit their financial obligations.
>The recession has made the barrier to entry come down in virtually every market, which was one of the key factors for fractionals in the first place.
>The fractional alternative will give the buyer all of the benefits of the vacation property but without the capital commitment of whole ownership. So when the US consumer finally does start to return they will behave differently and will be more financially conservative for quite some time to come. The fractional product will be a very good match for this new consumer behavior.
>As the market rebounds, a percentage of buyers will certainly find fractional products the product of choice...if it suits their family's needs... usage, size, location, price, etc... early buyers will be users and cautious as opposed to scavengers.
>… also believe there is be Fed policy and regulation that could severely impact our ability to do- have a business. The initial fix is on primary owner occupied housing - it appears.
>The depth of market that can pay cash - and not use the equity in another property is very limited ,,. and again that may want to use their cash for this purpose...
>I would think that the fractional product would be more appealing since buyers may be more reluctant to make a large investment in the whole unit purchase. On the other hand getting financing for fractions will be critical.
>We are probably going to emerge from this economic crisis slowly and in fits and starts. As the economy improves, people's confidence will gradually grow. They are more apt to re-enter markets in a cautious and piecemeal fashion given what they/we all have been through. (Use-)Value and utility are likely to be more important considerations in leisure real estate purchases than profit.
>All of the folks that have lost value in their second homes as well as those contemplating a second home purchase will think twice before stepping up to the plate for a whole ownership vacation home, they will all look at alternatives and will find the fractional industry attractive as their risk is minimized and they can continue their quality vacations with their families.
>I am clinging to the belief and hope that this malaise and bloodletting won't snuff out the dream of owning secondary real estate among boomers and Gen-Ys. People have short memories. . I want to believe that when the mushroom cloud dissipates, the roaches will emerge again from the cracks.
>Flight to value & downsizing are coming into vogue. No longer does conspicuous consumption sell. Products priced for status are likely to suffer. The planet can no longer afford the waste that 2nd home whole ownership connotes. Economy is no longer a demeaning word.
>The high-end market will be more challenging as job losses and downsizing has allowed companies to make cuts at the high end of market (in terms of compensation). My opinion is that some or many of these high-end positions will not be refilled in the short-run and thereby reduce the pool of eligible high-end buyers. Their return to the market will be more gradual than the middle market for whom timesharing will be affordable
>Further impacting this former high-end of the market will be that many will have suffered irreversible losses in their investment portfolios and real estate assets. This will further reduce the interest in second homes.
>As a result, value will become even more important to all buyers.
>In the next few years, to counter the inroads of fractional developers, I see timeshare developers offering point-based programs that have the attributes of fractional programs and products. Further, I see a move by fractional developers to offer points-based programs to become more competitive with the timeshare developers and increase the flexibility of the programs offered, thereby eliminating the need to sell fractions of a home (i.e. 1/12th, 1/10th, 1/8th, 1/4th, or other)
>…my assessment is that timesharing will be the first to experience growth and recovery. Next, will be the fractional market, driven by the desire of consumers for value and a reduced financial commitment as compared to whole ownership. Finally, whole ownership second homes will begin their recovery. Overall, the year ahead will be focused on rightsizing, stability, and reestablishing the financial conditions to support the industry. In 2010, I predict the recovery of the timeshare business as they begin to rebuild their marketing and sales organizations to align with an increased buyer base. In late 2010 and 2011, we’ll begin to see the recovery of the fractional market.
>First of all, through more education and public awareness! Secondly, as fear is replaced by more confidence and pent-up demand continues to build, I predict a surge in sales across the land. Thirdly, I see a burst in single family stand alone homes as brokers, buyers and sellers get more educated and exposed to this second home alternative.
So, what do you think? Good stuff in my opinion. Thanks for reading. Carl
>If you read this blog two weeks ago - skip it. If not...
If not, there are some really excellent comments and predictions from experts in our business on when and how fractions will come back.
So, I'm sending again with the hopes that you may take a moment [it will take you a minute or two] to click through and read what they say.
If you're tired of me - this is not about me. It's about what others think of the business today.
Many thanks, Carl
January 23, 2009
So, here's the staying-in-business question: Once the market begins to come back will it be led by fractions? And, of course, WHEN?
This is a long blog, but I think the comments, below, are worthwhile reading. I hope you agree. Let me know?
Boy, that's the multi-million dollar question isn't it? To help clear up my crystal ball I ask a number of leading resort professionals what they thought. This is real time - in the past week. Where's Dick Ragatz? Good catch! He came out with a broadcast release last month stating that fractions would lead the comeback.
Now, I'm not the one to question Dick, but I thought I'd get a wider number of views than his ‘release-sponsor’ who was obviously generating business from the release.
So, among the respondents:
Greg Traxler of East West
John Veering fmr. Villa la Estancia and now Contact Development Corp.
Scott Burlingame of Vacation Ownership World
Greg Cory and Bob Chickering both of ERA
Mary Borgia of her own powerhouse consulting company
Dave Howe of Greenangels
Jeff Prostor of Brookfield Hawaii
Tom Goetchius - guru
Sherman Potvin of Luxury Fractional Guide
Dean Kneider of Resort to Resort
Tom and Bill Ward of Ward Financial
Jim Marmorstone of Tenstar and the inventor of points-based programs
Hart Rist of Bald Head Island at The Hammocks
Here are excerpts taken from their replies to the question: Once the market begins to come back will it be led by fractions?
>I believe more buyers will indeed consider fractional options as caution fades and market returns. One major factor in this opinion is the amount of consideration / interest we have seen with our fractional projects here through recent trends. As our prospects have discovered what previously was not an ideal purchase option, they have gained insight into the level of quality and benefits fractional projects offer
>The fractions really need to sold as a product that is thought out and is specially designed before the shovel hits the ground. It has to have particular elements that reflect product owned and used through the world but also the real estate investment and use to that particular local
>They need to be marked differently not cheaper but an alternative purchase in mix use and the only way to go in single use. Generous trade in policies are important.
>As affluent and semi-affluent consumers very slowly emerge from the fear and lack of confidence resulting from the steady drumbeat of dire news about the state of the economy, and get on with their lives and, in particular, their leisure lifestyle, they, I believe, will be more cautious and conservative about what they buy and how they buy it
>My gut check says yes…. We collectively thought there will be a whole segment of the baby boom market that will pass on the purchase decision altogether because they will be working longer and saving more to replace their paper and real losses in the market (me included). There will be another segment that will be risk adverse, and be looking for a lower priced alternative to whole ownership. There may be a moral suasion reaction too, where in an austerity environment owning the 'whole thing' may become viewed as wasteful and tacky.
>After all, Fractional Ownership was making a lot of sense before the economic collapse. Isn't it reasonable to predict that it makes even more sense in a post economic meltdown era.
>… that are no longer driven buy the Developer reaping the reward of a multiplier greater then 1.5 as the Greed factor in fractional was always the #1 reason for failure in my mind (along with poor use plans and high HOA fees, as close 2nd & 3rd)
>Fractional may lead as a value statement. Buyers may embrace the "buy only the time that you need" aspect of fractional ownership ( more of a statement and above Time Share still ) as they try to limit their financial obligations.
>The recession has made the barrier to entry come down in virtually every market, which was one of the key factors for fractionals in the first place.
>The fractional alternative will give the buyer all of the benefits of the vacation property but without the capital commitment of whole ownership. So when the US consumer finally does start to return they will behave differently and will be more financially conservative for quite some time to come. The fractional product will be a very good match for this new consumer behavior.
>As the market rebounds, a percentage of buyers will certainly find fractional products the product of choice...if it suits their family's needs... usage, size, location, price, etc... early buyers will be users and cautious as opposed to scavengers.
>… also believe there is be Fed policy and regulation that could severely impact our ability to do- have a business. The initial fix is on primary owner occupied housing - it appears.
>The depth of market that can pay cash - and not use the equity in another property is very limited ,,. and again that may want to use their cash for this purpose...
>I would think that the fractional product would be more appealing since buyers may be more reluctant to make a large investment in the whole unit purchase. On the other hand getting financing for fractions will be critical.
>We are probably going to emerge from this economic crisis slowly and in fits and starts. As the economy improves, people's confidence will gradually grow. They are more apt to re-enter markets in a cautious and piecemeal fashion given what they/we all have been through. (Use-)Value and utility are likely to be more important considerations in leisure real estate purchases than profit.
>All of the folks that have lost value in their second homes as well as those contemplating a second home purchase will think twice before stepping up to the plate for a whole ownership vacation home, they will all look at alternatives and will find the fractional industry attractive as their risk is minimized and they can continue their quality vacations with their families.
>I am clinging to the belief and hope that this malaise and bloodletting won't snuff out the dream of owning secondary real estate among boomers and Gen-Ys. People have short memories. . I want to believe that when the mushroom cloud dissipates, the roaches will emerge again from the cracks.
>Flight to value & downsizing are coming into vogue. No longer does conspicuous consumption sell. Products priced for status are likely to suffer. The planet can no longer afford the waste that 2nd home whole ownership connotes. Economy is no longer a demeaning word.
>The high-end market will be more challenging as job losses and downsizing has allowed companies to make cuts at the high end of market (in terms of compensation). My opinion is that some or many of these high-end positions will not be refilled in the short-run and thereby reduce the pool of eligible high-end buyers. Their return to the market will be more gradual than the middle market for whom timesharing will be affordable
>Further impacting this former high-end of the market will be that many will have suffered irreversible losses in their investment portfolios and real estate assets. This will further reduce the interest in second homes.
>As a result, value will become even more important to all buyers.
>In the next few years, to counter the inroads of fractional developers, I see timeshare developers offering point-based programs that have the attributes of fractional programs and products. Further, I see a move by fractional developers to offer points-based programs to become more competitive with the timeshare developers and increase the flexibility of the programs offered, thereby eliminating the need to sell fractions of a home (i.e. 1/12th, 1/10th, 1/8th, 1/4th, or other)
>…my assessment is that timesharing will be the first to experience growth and recovery. Next, will be the fractional market, driven by the desire of consumers for value and a reduced financial commitment as compared to whole ownership. Finally, whole ownership second homes will begin their recovery. Overall, the year ahead will be focused on rightsizing, stability, and reestablishing the financial conditions to support the industry. In 2010, I predict the recovery of the timeshare business as they begin to rebuild their marketing and sales organizations to align with an increased buyer base. In late 2010 and 2011, we’ll begin to see the recovery of the fractional market.
>First of all, through more education and public awareness! Secondly, as fear is replaced by more confidence and pent-up demand continues to build, I predict a surge in sales across the land. Thirdly, I see a burst in single family stand alone homes as brokers, buyers and sellers get more educated and exposed to this second home alternative.
So, what do you think? Good stuff in my opinion. Thanks for reading. Carl
Friday, January 23, 2009
January 23, 2009
So, here's the staying-in-business question: Once the market begins to come back will it be led by fractions? And, of course, WHEN?
This is a long blog, but I think the comments, below, are worthwhile reading. I hope you agree. Let me know?
Boy, that's the multi-million dollar question isn't it? To help clear up my crystal ball I ask a number of leading resort professionals what they thought. This is real time - in the past week. Where's Dick Ragatz? Good catch! He came out with a broadcast release last month stating that fractions would lead the comeback.
Now, I'm not the one to question Dick, but I thought I'd get a wider number of views than his ‘release-sponsor’ who was obviously generating business from the release.
So, among the respondents:
Greg Traxler of East West
John Veering fmr. Villa la Estancia and now Contact Development Corp.
Scott Burlingame of Vacation Ownership World
Greg Cory and Bob Chickering both of ERA
Mary Borgia of her own powerhouse consulting company
Dave Howe of Greenangels
Jeff Prostor of Brookfield Hawaii
Tom Goetchius - guru
Sherman Potvin of Luxury Fractional Guide
Dean Kneider of Resort to Resort
Tom and Bill Ward of Ward Financial
Jim Marmorstone of Tenstar and the inventor of points-based programs
Hart Rist of Bald Head Island at The Hammocks
Here are excerpts taken from their replies to the question: Once the market begins to come back will it be led by fractions?
>I believe more buyers will indeed consider fractional options as caution fades and market returns. One major factor in this opinion is the amount of consideration / interest we have seen with our fractional projects here through recent trends. As our prospects have discovered what previously was not an ideal purchase option, they have gained insight into the level of quality and benefits fractional projects offer
>The fractions really need to sold as a product that is thought out and is specially designed before the shovel hits the ground. It has to have particular elements that reflect product owned and used through the world but also the real estate investment and use to that particular local
>They need to be marked differently not cheaper but an alternative purchase in mix use and the only way to go in single use. Generous trade in policies are important.
>As affluent and semi-affluent consumers very slowly emerge from the fear and lack of confidence resulting from the steady drumbeat of dire news about the state of the economy, and get on with their lives and, in particular, their leisure lifestyle, they, I believe, will be more cautious and conservative about what they buy and how they buy it
>My gut check says yes…. We collectively thought there will be a whole segment of the baby boom market that will pass on the purchase decision altogether because they will be working longer and saving more to replace their paper and real losses in the market (me included). There will be another segment that will be risk adverse, and be looking for a lower priced alternative to whole ownership. There may be a moral suasion reaction too, where in an austerity environment owning the 'whole thing' may become viewed as wasteful and tacky.
>After all, Fractional Ownership was making a lot of sense before the economic collapse. Isn't it reasonable to predict that it makes even more sense in a post economic meltdown era.
>… that are no longer driven buy the Developer reaping the reward of a multiplier greater then 1.5 as the Greed factor in fractional was always the #1 reason for failure in my mind (along with poor use plans and high HOA fees, as close 2nd & 3rd)
>Fractional may lead as a value statement. Buyers may embrace the "buy only the time that you need" aspect of fractional ownership ( more of a statement and above Time Share still ) as they try to limit their financial obligations.
>The recession has made the barrier to entry come down in virtually every market, which was one of the key factors for fractionals in the first place.
>The fractional alternative will give the buyer all of the benefits of the vacation property but without the capital commitment of whole ownership. So when the US consumer finally does start to return they will behave differently and will be more financially conservative for quite some time to come. The fractional product will be a very good match for this new consumer behavior.
>As the market rebounds, a percentage of buyers will certainly find fractional products the product of choice...if it suits their family's needs... usage, size, location, price, etc... early buyers will be users and cautious as opposed to scavengers.
>… also believe there is be Fed policy and regulation that could severely impact our ability to do- have a business. The initial fix is on primary owner occupied housing - it appears.
>The depth of market that can pay cash - and not use the equity in another property is very limited ,,. and again that may want to use their cash for this purpose...
>I would think that the fractional product would be more appealing since buyers may be more reluctant to make a large investment in the whole unit purchase. On the other hand getting financing for fractions will be critical.
>We are probably going to emerge from this economic crisis slowly and in fits and starts. As the economy improves, people's confidence will gradually grow. They are more apt to re-enter markets in a cautious and piecemeal fashion given what they/we all have been through. (Use-)Value and utility are likely to be more important considerations in leisure real estate purchases than profit.
>All of the folks that have lost value in their second homes as well as those contemplating a second home purchase will think twice before stepping up to the plate for a whole ownership vacation home, they will all look at alternatives and will find the fractional industry attractive as their risk is minimized and they can continue their quality vacations with their families.
>I am clinging to the belief and hope that this malaise and bloodletting won't snuff out the dream of owning secondary real estate among boomers and Gen-Ys. People have short memories. . I want to believe that when the mushroom cloud dissipates, the roaches will emerge again from the cracks.
>Flight to value & downsizing are coming into vogue. No longer does conspicuous consumption sell. Products priced for status are likely to suffer. The planet can no longer afford the waste that 2nd home whole ownership connotes. Economy is no longer a demeaning word.
>The high-end market will be more challenging as job losses and downsizing has allowed companies to make cuts at the high end of market (in terms of compensation). My opinion is that some or many of these high-end positions will not be refilled in the short-run and thereby reduce the pool of eligible high-end buyers. Their return to the market will be more gradual than the middle market for whom timesharing will be affordable
>Further impacting this former high-end of the market will be that many will have suffered irreversible losses in their investment portfolios and real estate assets. This will further reduce the interest in second homes.
>As a result, value will become even more important to all buyers.
>In the next few years, to counter the inroads of fractional developers, I see timeshare developers offering point-based programs that have the attributes of fractional programs and products. Further, I see a move by fractional developers to offer points-based programs to become more competitive with the timeshare developers and increase the flexibility of the programs offered, thereby eliminating the need to sell fractions of a home (i.e. 1/12th, 1/10th, 1/8th, 1/4th, or other)
>…my assessment is that timesharing will be the first to experience growth and recovery. Next, will be the fractional market, driven by the desire of consumers for value and a reduced financial commitment as compared to whole ownership. Finally, whole ownership second homes will begin their recovery. Overall, the year ahead will be focused on rightsizing, stability, and reestablishing the financial conditions to support the industry. In 2010, I predict the recovery of the timeshare business as they begin to rebuild their marketing and sales organizations to align with an increased buyer base. In late 2010 and 2011, we’ll begin to see the recovery of the fractional market.
>First of all, through more education and public awareness! Secondly, as fear is replaced by more confidence and pent-up demand continues to build, I predict a surge in sales across the land. Thirdly, I see a burst in single family stand alone homes as brokers, buyers and sellers get more educated and exposed to this second home alternative.
So, what do you think? Good stuff in my opinion. Thanks for reading. Carl
So, here's the staying-in-business question: Once the market begins to come back will it be led by fractions? And, of course, WHEN?
This is a long blog, but I think the comments, below, are worthwhile reading. I hope you agree. Let me know?
Boy, that's the multi-million dollar question isn't it? To help clear up my crystal ball I ask a number of leading resort professionals what they thought. This is real time - in the past week. Where's Dick Ragatz? Good catch! He came out with a broadcast release last month stating that fractions would lead the comeback.
Now, I'm not the one to question Dick, but I thought I'd get a wider number of views than his ‘release-sponsor’ who was obviously generating business from the release.
So, among the respondents:
Greg Traxler of East West
John Veering fmr. Villa la Estancia and now Contact Development Corp.
Scott Burlingame of Vacation Ownership World
Greg Cory and Bob Chickering both of ERA
Mary Borgia of her own powerhouse consulting company
Dave Howe of Greenangels
Jeff Prostor of Brookfield Hawaii
Tom Goetchius - guru
Sherman Potvin of Luxury Fractional Guide
Dean Kneider of Resort to Resort
Tom and Bill Ward of Ward Financial
Jim Marmorstone of Tenstar and the inventor of points-based programs
Hart Rist of Bald Head Island at The Hammocks
Here are excerpts taken from their replies to the question: Once the market begins to come back will it be led by fractions?
>I believe more buyers will indeed consider fractional options as caution fades and market returns. One major factor in this opinion is the amount of consideration / interest we have seen with our fractional projects here through recent trends. As our prospects have discovered what previously was not an ideal purchase option, they have gained insight into the level of quality and benefits fractional projects offer
>The fractions really need to sold as a product that is thought out and is specially designed before the shovel hits the ground. It has to have particular elements that reflect product owned and used through the world but also the real estate investment and use to that particular local
>They need to be marked differently not cheaper but an alternative purchase in mix use and the only way to go in single use. Generous trade in policies are important.
>As affluent and semi-affluent consumers very slowly emerge from the fear and lack of confidence resulting from the steady drumbeat of dire news about the state of the economy, and get on with their lives and, in particular, their leisure lifestyle, they, I believe, will be more cautious and conservative about what they buy and how they buy it
>My gut check says yes…. We collectively thought there will be a whole segment of the baby boom market that will pass on the purchase decision altogether because they will be working longer and saving more to replace their paper and real losses in the market (me included). There will be another segment that will be risk adverse, and be looking for a lower priced alternative to whole ownership. There may be a moral suasion reaction too, where in an austerity environment owning the 'whole thing' may become viewed as wasteful and tacky.
>After all, Fractional Ownership was making a lot of sense before the economic collapse. Isn't it reasonable to predict that it makes even more sense in a post economic meltdown era.
>… that are no longer driven buy the Developer reaping the reward of a multiplier greater then 1.5 as the Greed factor in fractional was always the #1 reason for failure in my mind (along with poor use plans and high HOA fees, as close 2nd & 3rd)
>Fractional may lead as a value statement. Buyers may embrace the "buy only the time that you need" aspect of fractional ownership ( more of a statement and above Time Share still ) as they try to limit their financial obligations.
>The recession has made the barrier to entry come down in virtually every market, which was one of the key factors for fractionals in the first place.
>The fractional alternative will give the buyer all of the benefits of the vacation property but without the capital commitment of whole ownership. So when the US consumer finally does start to return they will behave differently and will be more financially conservative for quite some time to come. The fractional product will be a very good match for this new consumer behavior.
>As the market rebounds, a percentage of buyers will certainly find fractional products the product of choice...if it suits their family's needs... usage, size, location, price, etc... early buyers will be users and cautious as opposed to scavengers.
>… also believe there is be Fed policy and regulation that could severely impact our ability to do- have a business. The initial fix is on primary owner occupied housing - it appears.
>The depth of market that can pay cash - and not use the equity in another property is very limited ,,. and again that may want to use their cash for this purpose...
>I would think that the fractional product would be more appealing since buyers may be more reluctant to make a large investment in the whole unit purchase. On the other hand getting financing for fractions will be critical.
>We are probably going to emerge from this economic crisis slowly and in fits and starts. As the economy improves, people's confidence will gradually grow. They are more apt to re-enter markets in a cautious and piecemeal fashion given what they/we all have been through. (Use-)Value and utility are likely to be more important considerations in leisure real estate purchases than profit.
>All of the folks that have lost value in their second homes as well as those contemplating a second home purchase will think twice before stepping up to the plate for a whole ownership vacation home, they will all look at alternatives and will find the fractional industry attractive as their risk is minimized and they can continue their quality vacations with their families.
>I am clinging to the belief and hope that this malaise and bloodletting won't snuff out the dream of owning secondary real estate among boomers and Gen-Ys. People have short memories. . I want to believe that when the mushroom cloud dissipates, the roaches will emerge again from the cracks.
>Flight to value & downsizing are coming into vogue. No longer does conspicuous consumption sell. Products priced for status are likely to suffer. The planet can no longer afford the waste that 2nd home whole ownership connotes. Economy is no longer a demeaning word.
>The high-end market will be more challenging as job losses and downsizing has allowed companies to make cuts at the high end of market (in terms of compensation). My opinion is that some or many of these high-end positions will not be refilled in the short-run and thereby reduce the pool of eligible high-end buyers. Their return to the market will be more gradual than the middle market for whom timesharing will be affordable
>Further impacting this former high-end of the market will be that many will have suffered irreversible losses in their investment portfolios and real estate assets. This will further reduce the interest in second homes.
>As a result, value will become even more important to all buyers.
>In the next few years, to counter the inroads of fractional developers, I see timeshare developers offering point-based programs that have the attributes of fractional programs and products. Further, I see a move by fractional developers to offer points-based programs to become more competitive with the timeshare developers and increase the flexibility of the programs offered, thereby eliminating the need to sell fractions of a home (i.e. 1/12th, 1/10th, 1/8th, 1/4th, or other)
>…my assessment is that timesharing will be the first to experience growth and recovery. Next, will be the fractional market, driven by the desire of consumers for value and a reduced financial commitment as compared to whole ownership. Finally, whole ownership second homes will begin their recovery. Overall, the year ahead will be focused on rightsizing, stability, and reestablishing the financial conditions to support the industry. In 2010, I predict the recovery of the timeshare business as they begin to rebuild their marketing and sales organizations to align with an increased buyer base. In late 2010 and 2011, we’ll begin to see the recovery of the fractional market.
>First of all, through more education and public awareness! Secondly, as fear is replaced by more confidence and pent-up demand continues to build, I predict a surge in sales across the land. Thirdly, I see a burst in single family stand alone homes as brokers, buyers and sellers get more educated and exposed to this second home alternative.
So, what do you think? Good stuff in my opinion. Thanks for reading. Carl
Tuesday, December 02, 2008
Bring on the Chateaus & Van Goghs!
We're giving two parties, sent the invitations, got the table set, but will anyone come? Isn't that the pervasive question?
To use the same metaphor we're also planning a couple of parties with high hopes that, when the guest lists go out, that we'll have a great response. Today, most developers would rather be in this group vs. the former one.
The wealth effect, or more accurately the negative wealth effect, is controlling sales these days. A lot of our customers have the money to spend to buy a fractional interest, but they 'feel' as though they don't, so they aren't. It's as straight forward as that.
We may even be living the negative wealth effect ourselves. Gave up our storage locker the other day…why spend $2400 per year for it? Just toss all that stuff away, or more appropriately give it away.
I saw on Fox News the other day that $300,000 invested in the S&P500 a year ago would now be worth $160,000. Take any variation on that number and our customers know that. So, go from a portfolio of $7 million to $3.8 million - that's still a cut worth thinking twice about.
The fraction is a personal use purchase. Each of the 'buying unit' needs to sign off on that use. In these times one of the buying couple is sure to be more 'tucked in' than the other, and there goes the sale!
So, on the Spectrum Clusters I say bring on the 'CEO with a Lexus to Go' and the 'Chateaus & Van Goghs'. These are the folks to whom we have the best chance to sell this winter.
You remember the Xerox sales training program….the selling for benefits and not features? Now's the time for that for one buys what benefits them most. The adjustment in the sales pitch today will be vital to snag those sales than can be snagged!
I hope Santa's coming to your project!
We're giving two parties, sent the invitations, got the table set, but will anyone come? Isn't that the pervasive question?
To use the same metaphor we're also planning a couple of parties with high hopes that, when the guest lists go out, that we'll have a great response. Today, most developers would rather be in this group vs. the former one.
The wealth effect, or more accurately the negative wealth effect, is controlling sales these days. A lot of our customers have the money to spend to buy a fractional interest, but they 'feel' as though they don't, so they aren't. It's as straight forward as that.
We may even be living the negative wealth effect ourselves. Gave up our storage locker the other day…why spend $2400 per year for it? Just toss all that stuff away, or more appropriately give it away.
I saw on Fox News the other day that $300,000 invested in the S&P500 a year ago would now be worth $160,000. Take any variation on that number and our customers know that. So, go from a portfolio of $7 million to $3.8 million - that's still a cut worth thinking twice about.
The fraction is a personal use purchase. Each of the 'buying unit' needs to sign off on that use. In these times one of the buying couple is sure to be more 'tucked in' than the other, and there goes the sale!
So, on the Spectrum Clusters I say bring on the 'CEO with a Lexus to Go' and the 'Chateaus & Van Goghs'. These are the folks to whom we have the best chance to sell this winter.
You remember the Xerox sales training program….the selling for benefits and not features? Now's the time for that for one buys what benefits them most. The adjustment in the sales pitch today will be vital to snag those sales than can be snagged!
I hope Santa's coming to your project!
Sunday, November 02, 2008
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.
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.
Wednesday, September 24, 2008
I hoped 09 might be better for sales than 08. I get the feeling of, "not so fast" thanks to the last month on Wall Street. Was September a good sales month for anyone out there?
I'm holding my breath 'till after the election. One of the great parts of the Harrison Group's presentation to the ULI Recreation Development Councils a year ago was the focus on discretionary income of a family as the driver for the purchase of resort real estate vs. household income.
So, I assume that if Obama is elected that two of the key drivers for discretionary income, dividends and capital gains, will have their tax rates increased from the current 15%. Not good for our sales.
However, I used to assume that if McCain were elected that these rates would be kept at present levels. I'm not so sure now. He may be forced to increase them due to all the current economic dynamics he'll have to live with. Not good for our sales.
This does not take into account the marginal rates being increased for all those 'rich' people, via Obama, making over $200k, which is a gross number. Forget the discretionary part that's left. Not good for our sales
2010 here we come - I hope. Does all this put a spotlight on fractional sales? I think so.
Did you know that on Vegas' South Strip there's a hotel with 1200 horse stalls underneath? Don't volunteer for the maintenance crew!
I'm holding my breath 'till after the election. One of the great parts of the Harrison Group's presentation to the ULI Recreation Development Councils a year ago was the focus on discretionary income of a family as the driver for the purchase of resort real estate vs. household income.
So, I assume that if Obama is elected that two of the key drivers for discretionary income, dividends and capital gains, will have their tax rates increased from the current 15%. Not good for our sales.
However, I used to assume that if McCain were elected that these rates would be kept at present levels. I'm not so sure now. He may be forced to increase them due to all the current economic dynamics he'll have to live with. Not good for our sales.
This does not take into account the marginal rates being increased for all those 'rich' people, via Obama, making over $200k, which is a gross number. Forget the discretionary part that's left. Not good for our sales
2010 here we come - I hope. Does all this put a spotlight on fractional sales? I think so.
Did you know that on Vegas' South Strip there's a hotel with 1200 horse stalls underneath? Don't volunteer for the maintenance crew!
Tuesday, August 26, 2008
Aug Blog
Dog days of summer…what's going on around the business?
We wanted to schedule a sales manager round-table, for a day, to get ten or twelve pros together and see what's working or not. We all have a program or two that works regardless of outside conditions. Couldn't put it together as there were too many personal conflicts.
On one hand one might say, "What's more important than selling or keeping your job?" On the other hand, these were pros and they know what they know and as we all know personal time is to be kept away from business.
Hart Rist of North Carolina was venturing with us, and I want to thank him for his energy and efforts to make the Eastern half of the round-table go.
Those developers who have breathing room have gone on 'hold' and are planning to come out strong, when the buyers return. Other developers, who don't have much space left, are doing their best. We do know that in fractions lowering the price does not make much of a difference. The 'bail out' guys seem to have come and gone.
At Meriwether the summer sales are beginning to drop. It's been very taxing to get buying decisions made. All the buying signals are there. And, as reported earlier most all the buyers want financing to leverage their purchase, and there's very, very little of it out there. We gone to the old favorite of local bank financing for a handful of deals.
View-up here…Rick Abelson, one of our Meriwether sales pros, did his own video to show clients. Now, this is really using technology in a smart way.
www.video.google.com and then type in Meriwether Ranch. The video, parts 1 and 2 were shot in one day, and, no, the wildlife were not paid to show…they were just there as they always are.
NextStar is in the market, but their underwriting procedure has us baffled. Textron is in the market, they are pros, but do not lend direct, which in this environment may have to be okay. Tom Ward is doing a good job in moving them into more of the main stream for fractions vs. timeshare where they have resided for decades.
Vallarta Gardens is coming together for a strong winter opening. We expect there to be a market, but we'll need to wait and see. The same for Tierra del Sol in Aruba. Pam Temples is applying her talents to the project's interiors.
Sales are going down at the Cape Codder Residence Club in Hyannis, though a bit slower than planned, but at least sales are being made.
We continue to have good experiences transitioning selected timeshare sales pros into fractions. They need mentoring at the outset to change the mind-set, but once they get it they really go to town especially in this environment as they do know how to close in a more direct line. That's a delicate balance, but the good ones we have use their past experiences to their benefit.
June and July were just dead for us in terms of new deals coming our way. August has been very busy so far, and maybe that's an indication - or not.
ULI is two months off and I'm looking forward even now to hear how the
Recreational Development crowd did over the summer.
Dog days of summer…what's going on around the business?
We wanted to schedule a sales manager round-table, for a day, to get ten or twelve pros together and see what's working or not. We all have a program or two that works regardless of outside conditions. Couldn't put it together as there were too many personal conflicts.
On one hand one might say, "What's more important than selling or keeping your job?" On the other hand, these were pros and they know what they know and as we all know personal time is to be kept away from business.
Hart Rist of North Carolina was venturing with us, and I want to thank him for his energy and efforts to make the Eastern half of the round-table go.
Those developers who have breathing room have gone on 'hold' and are planning to come out strong, when the buyers return. Other developers, who don't have much space left, are doing their best. We do know that in fractions lowering the price does not make much of a difference. The 'bail out' guys seem to have come and gone.
At Meriwether the summer sales are beginning to drop. It's been very taxing to get buying decisions made. All the buying signals are there. And, as reported earlier most all the buyers want financing to leverage their purchase, and there's very, very little of it out there. We gone to the old favorite of local bank financing for a handful of deals.
View-up here…Rick Abelson, one of our Meriwether sales pros, did his own video to show clients. Now, this is really using technology in a smart way.
www.video.google.com and then type in Meriwether Ranch. The video, parts 1 and 2 were shot in one day, and, no, the wildlife were not paid to show…they were just there as they always are.
NextStar is in the market, but their underwriting procedure has us baffled. Textron is in the market, they are pros, but do not lend direct, which in this environment may have to be okay. Tom Ward is doing a good job in moving them into more of the main stream for fractions vs. timeshare where they have resided for decades.
Vallarta Gardens is coming together for a strong winter opening. We expect there to be a market, but we'll need to wait and see. The same for Tierra del Sol in Aruba. Pam Temples is applying her talents to the project's interiors.
Sales are going down at the Cape Codder Residence Club in Hyannis, though a bit slower than planned, but at least sales are being made.
We continue to have good experiences transitioning selected timeshare sales pros into fractions. They need mentoring at the outset to change the mind-set, but once they get it they really go to town especially in this environment as they do know how to close in a more direct line. That's a delicate balance, but the good ones we have use their past experiences to their benefit.
June and July were just dead for us in terms of new deals coming our way. August has been very busy so far, and maybe that's an indication - or not.
ULI is two months off and I'm looking forward even now to hear how the
Recreational Development crowd did over the summer.
Wednesday, July 09, 2008
Professionals and practitioners of resort development….what’s selling?
I’ve been through the gas lines of 1973-4, the Carter recession with 21% interest on my San Francisco Suites loan [youth never sees a down side] the Clinton generated ‘we’re in the biggest recession since the 30s' minor dip of early 90s, the dot-bomb and now today. One thing for sure - the media has it down pat – doom and gloom.
Hiking in England last week, looking at BBC news for a 9-day period I never heard one positive economic statement. It was a lot of, “Current inflation is 3.2% but it could go to 12%! That kind of junk.
Back to the first statement. Are we selling? Yes, but slowly. This rundown will not be news to any readers. At Laguna Beach we are very close to the major market [SoCal] but getting them to put up a buck is tough. At Meriwether [see more below] if we can get ‘em there we can sell them, but being a national market getting them off the dime and getting them there has been very difficult.
In Vallarta, off-season, those who come to see us; we have a good closing percentage. Maybe that’s key indicator…if you’re in a resort counter-season you’re a good prospect.
At Cape Cod they are just coming into high, high time and have high hopes with Boston so close. First sale is down! More next month on their sales. In Aruba we plan to target the high-end buyer, who has already made a decision for the Island as Aruba has the highest repeat visitor percentage in the Caribbean.
Meriwether? Okay, if you know the outdoors you know Chris Dorsey of Orion Multimedia. He stars in 30 Beretta Outdoors episodes yearly and he produces another 150 half-hour segments of hunting and fishing adventure TV shows. Special episodes for the Ultimate Lodge will include: the Ultimate Gun Library & Trophy Room," a "Liar's Bar (aka: Fisherman's Watering Hole," "Master Mud Room & Labrador Lounge," "Eat-Like-a-Wild-Man Kitchen;" and many other custom house elements designed for the series.
Each segment will include features staring Jeff Foxworthy, America's favorite and funniest outdoorsman and will showcase amazing design elements from several outdoor lodges from around the nation. The network's 65 million viewers across America will be treated to DIY's newest phenomenon, "The Ultimate Sportsman's Lodge" series!
Great PR, huh?
We are really having to scrabble for buyer-fractional end loans….in the past with 90% of the buyers paying cash we paid only nominal attention to the sourcing of these loans. Now it seem almost all buyers inquire about financing and many are serious about it. The market has shrunken a lot, so it's tough sledding.
More next month…
I’ve been through the gas lines of 1973-4, the Carter recession with 21% interest on my San Francisco Suites loan [youth never sees a down side] the Clinton generated ‘we’re in the biggest recession since the 30s' minor dip of early 90s, the dot-bomb and now today. One thing for sure - the media has it down pat – doom and gloom.
Hiking in England last week, looking at BBC news for a 9-day period I never heard one positive economic statement. It was a lot of, “Current inflation is 3.2% but it could go to 12%! That kind of junk.
Back to the first statement. Are we selling? Yes, but slowly. This rundown will not be news to any readers. At Laguna Beach we are very close to the major market [SoCal] but getting them to put up a buck is tough. At Meriwether [see more below] if we can get ‘em there we can sell them, but being a national market getting them off the dime and getting them there has been very difficult.
In Vallarta, off-season, those who come to see us; we have a good closing percentage. Maybe that’s key indicator…if you’re in a resort counter-season you’re a good prospect.
At Cape Cod they are just coming into high, high time and have high hopes with Boston so close. First sale is down! More next month on their sales. In Aruba we plan to target the high-end buyer, who has already made a decision for the Island as Aruba has the highest repeat visitor percentage in the Caribbean.
Meriwether? Okay, if you know the outdoors you know Chris Dorsey of Orion Multimedia. He stars in 30 Beretta Outdoors episodes yearly and he produces another 150 half-hour segments of hunting and fishing adventure TV shows. Special episodes for the Ultimate Lodge will include: the Ultimate Gun Library & Trophy Room," a "Liar's Bar (aka: Fisherman's Watering Hole," "Master Mud Room & Labrador Lounge," "Eat-Like-a-Wild-Man Kitchen;" and many other custom house elements designed for the series.
Each segment will include features staring Jeff Foxworthy, America's favorite and funniest outdoorsman and will showcase amazing design elements from several outdoor lodges from around the nation. The network's 65 million viewers across America will be treated to DIY's newest phenomenon, "The Ultimate Sportsman's Lodge" series!
Great PR, huh?
We are really having to scrabble for buyer-fractional end loans….in the past with 90% of the buyers paying cash we paid only nominal attention to the sourcing of these loans. Now it seem almost all buyers inquire about financing and many are serious about it. The market has shrunken a lot, so it's tough sledding.
More next month…
Wednesday, June 04, 2008
June 2008
This month it’s Aruba, Laguna Beach, and Puerto Vallarta – Star having all the fun it can stand.
We are working with the wonderful Tierra del Sol project on Aruba - the Caribbean Island with the largest percentage of repeat visitors. http://www.Tierra delSol.com Aruba’s only planned development and only 18 hole golf course – Robert Trent Jones II – is launching a fractional project to go along with their extensive development comprised of homes, villas and condominiums plus spa, fine dining, etc.
Mac MacEwan, Ash Offermann and I were there over the past week to launch Star’s marketing and sales program with the Dutch owned luxury resort project. Tough assignment with the sapphire Caribbean calling….
Marriott Vacation Ownership ‘owns’ the timeshare action on the Island. If there ever was a juggernaut of VO development this is it. Three huge buildings; two sold out and the third within a year of sell out. Walking through the lobbies, pools and beaches they are all awash with blissfully pleased Marriott owners. Divi’s OPC are on the street, annoying, but nowhere as bad as in Mexico or Spain.
Is Aruba a long way from SRG’s headquarters in Scottsdale? You bet, but worth the trip!
Our project in Laguna Beach, Sunset Cove, began SoCal Wall Street Journal adverts this week after working with the extensive past renter guest list. Dede Bacon, down from her Tahoe base, has been heading up sales. http://www.sunsetcovelaguna.com Due to local ordinances we have what might appear as a kind of convoluted ownership structure, but just another innovation for us. Sixths and twelfths are being sold right on the beach, I mean right on the beach…sand between the toes!
Down Mexico way our Puerto Vallarta project, Vallarta Gardens, is selling away all the while trying to keep out of the way of the seemingly ever changing registration requirements of the state in which we’re located. Another groundbreaking set of use plans for the two unit types; the Corals and the Sea Stars.
Both tenths but with a combination of fixed, float and rotating to meet US and Mexican National demands. Nothing like it before, but then that’s us. By the way…dealing with the Registry Collection/Mexico is like being in another galaxy far away!
We count our blessings – 75% of our Kirkwood sales team is still with us, but at different deals: Dede Bacon at Laguna Beach, Linnea Stanhope at Meriwether and Melissa Maxey still living in the Carson Valley but heading up telemarketing for Meriwether. First class performers all!
This month it’s Aruba, Laguna Beach, and Puerto Vallarta – Star having all the fun it can stand.
We are working with the wonderful Tierra del Sol project on Aruba - the Caribbean Island with the largest percentage of repeat visitors. http://www.Tierra delSol.com Aruba’s only planned development and only 18 hole golf course – Robert Trent Jones II – is launching a fractional project to go along with their extensive development comprised of homes, villas and condominiums plus spa, fine dining, etc.
Mac MacEwan, Ash Offermann and I were there over the past week to launch Star’s marketing and sales program with the Dutch owned luxury resort project. Tough assignment with the sapphire Caribbean calling….
Marriott Vacation Ownership ‘owns’ the timeshare action on the Island. If there ever was a juggernaut of VO development this is it. Three huge buildings; two sold out and the third within a year of sell out. Walking through the lobbies, pools and beaches they are all awash with blissfully pleased Marriott owners. Divi’s OPC are on the street, annoying, but nowhere as bad as in Mexico or Spain.
Is Aruba a long way from SRG’s headquarters in Scottsdale? You bet, but worth the trip!
Our project in Laguna Beach, Sunset Cove, began SoCal Wall Street Journal adverts this week after working with the extensive past renter guest list. Dede Bacon, down from her Tahoe base, has been heading up sales. http://www.sunsetcovelaguna.com Due to local ordinances we have what might appear as a kind of convoluted ownership structure, but just another innovation for us. Sixths and twelfths are being sold right on the beach, I mean right on the beach…sand between the toes!
Down Mexico way our Puerto Vallarta project, Vallarta Gardens, is selling away all the while trying to keep out of the way of the seemingly ever changing registration requirements of the state in which we’re located. Another groundbreaking set of use plans for the two unit types; the Corals and the Sea Stars.
Both tenths but with a combination of fixed, float and rotating to meet US and Mexican National demands. Nothing like it before, but then that’s us. By the way…dealing with the Registry Collection/Mexico is like being in another galaxy far away!
We count our blessings – 75% of our Kirkwood sales team is still with us, but at different deals: Dede Bacon at Laguna Beach, Linnea Stanhope at Meriwether and Melissa Maxey still living in the Carson Valley but heading up telemarketing for Meriwether. First class performers all!
Sunday, May 11, 2008
May 11, 2008
Just back from the Urban Land Institute’s spring meeting in Charleston SC. Our group, a sub part of the over 30,000 ULI members, is the Recreational Development Council comprised of about 220 members. Rarefied Atmosphere. I was there with Rich Feldheim and Ash Offermann.
Not a lot working for most developers, so the creative juices were flowing on how to get around the ‘emotional recession’ so named by Jim Taylor of the Harrison Group. As the country is not in a recession by the Government’s standards, not withstanding the incessant media harping that we are in one…the income demographic for vacation home properties is solidly on the sidelines.
This was an observation: this so-called recession is the first in memory not to have high interest rates. A way to create urgency for sales had been to buy-down the interest rate, but that’s a non-starter this time around. So, where is the urgency now with the buyers on the sidelines?
Here are some thoughts that came out of our meetings during this period and to focus on the strong sales that will occur in the coming years.
•Focus on ‘intellectual’ amenities in addition to the hard amenities. Build in programming for the mind and soul.
•Pay attention to ‘lifestyle’ brands in addition to hotel brands.
•In these times you have to ‘block and tackle’ – get back to fundamentals
•Concept of a ‘greater California’ meaning NV, AZ, OR, WA and ID.
•There may not be the appreciation in the coming years for vacation homes, so developers will need to focus more on the use aspects to make the property more valuable in that sense.
•Follow-on – service will become even more important to provide that side of value to the owner.
•Micro-economy – defined as an area with very limited supply of housing and therefore high demand.
•Bootstrapping Developer – ah, how often have we seen him?
•Tennis, after being dead in past years, grew 14% last year. Come back?
•Zip Code Brands i.e. the zip for an Aspen or Sun Valley. Remember Plumtv.com? Those areas.
•Best of all, from a selling vantage: QTR = Quality Time Remaining to have your vacation home and do all the things you want. This from Jim Hill at East-West.
Bottom line…the market is wide open for free-range fractions!
Just back from the Urban Land Institute’s spring meeting in Charleston SC. Our group, a sub part of the over 30,000 ULI members, is the Recreational Development Council comprised of about 220 members. Rarefied Atmosphere. I was there with Rich Feldheim and Ash Offermann.
Not a lot working for most developers, so the creative juices were flowing on how to get around the ‘emotional recession’ so named by Jim Taylor of the Harrison Group. As the country is not in a recession by the Government’s standards, not withstanding the incessant media harping that we are in one…the income demographic for vacation home properties is solidly on the sidelines.
This was an observation: this so-called recession is the first in memory not to have high interest rates. A way to create urgency for sales had been to buy-down the interest rate, but that’s a non-starter this time around. So, where is the urgency now with the buyers on the sidelines?
Here are some thoughts that came out of our meetings during this period and to focus on the strong sales that will occur in the coming years.
•Focus on ‘intellectual’ amenities in addition to the hard amenities. Build in programming for the mind and soul.
•Pay attention to ‘lifestyle’ brands in addition to hotel brands.
•In these times you have to ‘block and tackle’ – get back to fundamentals
•Concept of a ‘greater California’ meaning NV, AZ, OR, WA and ID.
•There may not be the appreciation in the coming years for vacation homes, so developers will need to focus more on the use aspects to make the property more valuable in that sense.
•Follow-on – service will become even more important to provide that side of value to the owner.
•Micro-economy – defined as an area with very limited supply of housing and therefore high demand.
•Bootstrapping Developer – ah, how often have we seen him?
•Tennis, after being dead in past years, grew 14% last year. Come back?
•Zip Code Brands i.e. the zip for an Aspen or Sun Valley. Remember Plumtv.com? Those areas.
•Best of all, from a selling vantage: QTR = Quality Time Remaining to have your vacation home and do all the things you want. This from Jim Hill at East-West.
Bottom line…the market is wide open for free-range fractions!
Sunday, April 27, 2008
Bob Wengel joins Star Resort Group
Beginning April 15th Bob joined SRG as a senior executive and principal of the company. Initially, Bob will manage Meriwether Ranch and then assist SRG in expanding their project base from the current four to eight in the coming 12 months. This also allows Star to handle projects in the Eastern half of the country and the Caribbean.
Bob is the former COO of Diamond Resorts the major Las Vegas timeshare development company with annual sales of $180 million and over 1600 employees. He was with Diamond and its predecessor, Jockey Club, for 22 years.
A native to Butte, Montana Bob came back to Butte for some time off, and when he decided to get ‘back in the business’ Star met his requirements, and we welcome him.
He can be reached at : bwengel@starresortgroup.com and his cel is (406) 498-5606.
It’s been a month since the Ragatz Conference and the calls keep coming in from developers wanting to enter the fractional business. The good news is that most projects are not bailouts of unsold condos or condo hotels…at least the ones we have seen.
The relationship of share size and use plan is still not well understood and ill-started projects are destined for a tough time. We’ve seen a bunch of these. Also, as Ron Frank’s talk at Ragatz pointed out, there’s really very little known about how to sell a fraction, save those of us who have learned by trial and error over the years. The number of real estate brokerage companies who feel they can jump in and sell fractions is startling.
An interesting note from a fractional session at ARDA is to cover a co-brokerage commission into the marketing budget as a cost of lead generation vs. putting it in the sales, commission line. The sales team has to handle the client from front to back, so it really is a generated lead. That is if brokers ever refer in any substantial numbers!
Off to ULI week after next where we’ll see what the ‘big guys’ have planned.
Beginning April 15th Bob joined SRG as a senior executive and principal of the company. Initially, Bob will manage Meriwether Ranch and then assist SRG in expanding their project base from the current four to eight in the coming 12 months. This also allows Star to handle projects in the Eastern half of the country and the Caribbean.
Bob is the former COO of Diamond Resorts the major Las Vegas timeshare development company with annual sales of $180 million and over 1600 employees. He was with Diamond and its predecessor, Jockey Club, for 22 years.
A native to Butte, Montana Bob came back to Butte for some time off, and when he decided to get ‘back in the business’ Star met his requirements, and we welcome him.
He can be reached at : bwengel@starresortgroup.com and his cel is (406) 498-5606.
It’s been a month since the Ragatz Conference and the calls keep coming in from developers wanting to enter the fractional business. The good news is that most projects are not bailouts of unsold condos or condo hotels…at least the ones we have seen.
The relationship of share size and use plan is still not well understood and ill-started projects are destined for a tough time. We’ve seen a bunch of these. Also, as Ron Frank’s talk at Ragatz pointed out, there’s really very little known about how to sell a fraction, save those of us who have learned by trial and error over the years. The number of real estate brokerage companies who feel they can jump in and sell fractions is startling.
An interesting note from a fractional session at ARDA is to cover a co-brokerage commission into the marketing budget as a cost of lead generation vs. putting it in the sales, commission line. The sales team has to handle the client from front to back, so it really is a generated lead. That is if brokers ever refer in any substantial numbers!
Off to ULI week after next where we’ll see what the ‘big guys’ have planned.
Saturday, March 22, 2008
March Blog
Just back from the front lines of fractional development and sales at the sold out Ragatz 08 conference. It was smashing in all areas; the most qualified attendees I’ve ever seen at any resort conference for new entrants, really good panels with as little hype as possible and some real substance.
Tooting the Star horn – Ron Frank gave the first ‘how do you sell’ a fraction presentation at any conference, Ragatz, ARDA, ULI or other…he worked on it to be specific and not BS. It was great. If you want a copy of the power point let me know.
Ash Offerman let the panel on product structure/use plans and delved into excellent examples of the varied nature of use plans and how they specifically relate to the market.
I had the 101 session and a brief 10 minutes in the sun, but I think the overview was comprehensive. That power point is available, too.
From Dick’s annual report the one statistic that stood out was that 91% of Robb Report subscribers had heard of fractions. The other one was that when asked where they would want to buy 83% said ‘give me the beach!’. Well, I guess that’s one reason we’re in Puerto Vallarta!
The tales one hears of deep Africa where there is a place that bull elephants go to die…you know that one? Well, we had our own version as it applies to former ARDA Chairmen. In chorological order George Donovan, Jerry Andres, yours truly and Ed McMullen, Sr. all present and standing.
There were lots of ‘deals’ floating around from Paris to Bermuda, to The Keys, to Costa Rica, to Toronto urban, to Idaho, the California desert back up to the Oregon coast over to Washington state and to Hawaii. That’s geography, and we did not get to the guys from India or Australia!
The consensus on the economy? Gonna wander a bit, but so far fractional sales are holding up just fine, and we expect them to continue. Going back to Dick Ragatz’s report…this mini-lull just hyper extends the pent up demand for fractional buyers.
Last notes: None other than Gordon McMahon, the originator of the luxury fractional product, was there. Originally at Tahoe in the 80s, [yes, there was a before, before the Deer Valley Club] and now the Oregon coast. A real treat to have the founder with us! Sons following fathers; Michael Kosmin, son of Alex, now with Lowe Enterprises and as competent as his dad; Malcolm McMullen presenting while dad Ed looked on; Allen Ten Broek getting lunch advice from son Bryan.
Jim Marmorstone with yet more fine ideas on how to make the product better for the buyer; Mel Grant finally launching his fractional exchange program [fractionalcollection.com]; Hart Rist of Bald Head Island, Carolinas, who named his dog after Dick ‘Ragatz’; Dick Bass of Snowbird still generating a big wake in his path; Mary Borgia, my ULI flight leader, who for reasons unknown came to 101 a second year in a row; Keith Cox the only guy to make the ‘one-offs’ work and now he has ten at Tahoe + others in SF, Hawaii and Tuscany;
Good folk all and many more.
Just back from the front lines of fractional development and sales at the sold out Ragatz 08 conference. It was smashing in all areas; the most qualified attendees I’ve ever seen at any resort conference for new entrants, really good panels with as little hype as possible and some real substance.
Tooting the Star horn – Ron Frank gave the first ‘how do you sell’ a fraction presentation at any conference, Ragatz, ARDA, ULI or other…he worked on it to be specific and not BS. It was great. If you want a copy of the power point let me know.
Ash Offerman let the panel on product structure/use plans and delved into excellent examples of the varied nature of use plans and how they specifically relate to the market.
I had the 101 session and a brief 10 minutes in the sun, but I think the overview was comprehensive. That power point is available, too.
From Dick’s annual report the one statistic that stood out was that 91% of Robb Report subscribers had heard of fractions. The other one was that when asked where they would want to buy 83% said ‘give me the beach!’. Well, I guess that’s one reason we’re in Puerto Vallarta!
The tales one hears of deep Africa where there is a place that bull elephants go to die…you know that one? Well, we had our own version as it applies to former ARDA Chairmen. In chorological order George Donovan, Jerry Andres, yours truly and Ed McMullen, Sr. all present and standing.
There were lots of ‘deals’ floating around from Paris to Bermuda, to The Keys, to Costa Rica, to Toronto urban, to Idaho, the California desert back up to the Oregon coast over to Washington state and to Hawaii. That’s geography, and we did not get to the guys from India or Australia!
The consensus on the economy? Gonna wander a bit, but so far fractional sales are holding up just fine, and we expect them to continue. Going back to Dick Ragatz’s report…this mini-lull just hyper extends the pent up demand for fractional buyers.
Last notes: None other than Gordon McMahon, the originator of the luxury fractional product, was there. Originally at Tahoe in the 80s, [yes, there was a before, before the Deer Valley Club] and now the Oregon coast. A real treat to have the founder with us! Sons following fathers; Michael Kosmin, son of Alex, now with Lowe Enterprises and as competent as his dad; Malcolm McMullen presenting while dad Ed looked on; Allen Ten Broek getting lunch advice from son Bryan.
Jim Marmorstone with yet more fine ideas on how to make the product better for the buyer; Mel Grant finally launching his fractional exchange program [fractionalcollection.com]; Hart Rist of Bald Head Island, Carolinas, who named his dog after Dick ‘Ragatz’; Dick Bass of Snowbird still generating a big wake in his path; Mary Borgia, my ULI flight leader, who for reasons unknown came to 101 a second year in a row; Keith Cox the only guy to make the ‘one-offs’ work and now he has ten at Tahoe + others in SF, Hawaii and Tuscany;
Good folk all and many more.
Wednesday, January 30, 2008
Going through the looking glass…gaining a totally different perspective? That’s what I did last week in attending the annual convention of Safari Club International. 22,500 attendees and 1100 booths at the Reno Convention Center.
I was there as part of Meriwether Ranch, which was a co-sponsor of the mega booth of our GM Teri Walsh’s brother, supreme wildlife artist John Banovich. Get this, in addition to his oils, all pre sold at north of $50-$100k he has a NASCAR deal and painted the hood of one that was auctioned off!
Safari Club is big on hunting and conservation. Booth position is based on the donations made to supported conservation programs. Good idea, no? Maybe ARDA or ULI could take note?
Thru the looking glass as I tramped the exhibit hall; no less than 182 outfitters and guides from the African Continent. Talk about jet lag in the faces of the exhibitors – a long haul from there to Reno! South Africa naturally, but lots of Mozambique, Namibia, and Rhodesia. Then, how about 13 outfitters from Asia including China, and 44 from the South Pacific [didn’t know that New Zealand was such a robust hunting venue], and 16 from Europe – lots of Spain. Of course tons from the USA and Canada.
Then there were the 10 ammo companies and how about the 14 optics companies [the better to see you with my Water Buffalo] and the 17 knife guys and then the 70+ gun and rifle manufacturers. All the famous names: Purdey, Bretta, Kreighoff, Remington, Smith & Wesson, Sturm, Ruger; Weatherly and Winchester.
I had not seen so much ‘money on the hoof’ so the $25,000 knife, or the $145,000 gun did not turn away the crowd. Lots of camo, too.
The logistics of getting the stuffed specimens to Reno much have been Herculean…no end of the aforementioned Water Buffalos, but full-size Crocs, scads of Mountain Sheep varieties from the World over…outfitters going to Iran and Kazakhstan and the other Stans, too; numerous leaping Lions, too many to count world record racks for Elk, Moose and deer, and Elephant and Giraffe heads – at every turn another display of the hunter’s success.
Did we sell any Meriwether fractions? Certainly, and Elk sausage and Roe Deer meat was grand, too, prepared by the NSACAR chef!
But, then there were the educational sessions: Designing Your Trophy Room, Sharpening Your Blades at Home and in the Field, Dark Secrets of Scope Sights Revealed, and then of course in the PM there was Dana Carvey and The Oak Ridge Boys. I was a babe in the woods!
Back to fractions next month!
I was there as part of Meriwether Ranch, which was a co-sponsor of the mega booth of our GM Teri Walsh’s brother, supreme wildlife artist John Banovich. Get this, in addition to his oils, all pre sold at north of $50-$100k he has a NASCAR deal and painted the hood of one that was auctioned off!
Safari Club is big on hunting and conservation. Booth position is based on the donations made to supported conservation programs. Good idea, no? Maybe ARDA or ULI could take note?
Thru the looking glass as I tramped the exhibit hall; no less than 182 outfitters and guides from the African Continent. Talk about jet lag in the faces of the exhibitors – a long haul from there to Reno! South Africa naturally, but lots of Mozambique, Namibia, and Rhodesia. Then, how about 13 outfitters from Asia including China, and 44 from the South Pacific [didn’t know that New Zealand was such a robust hunting venue], and 16 from Europe – lots of Spain. Of course tons from the USA and Canada.
Then there were the 10 ammo companies and how about the 14 optics companies [the better to see you with my Water Buffalo] and the 17 knife guys and then the 70+ gun and rifle manufacturers. All the famous names: Purdey, Bretta, Kreighoff, Remington, Smith & Wesson, Sturm, Ruger; Weatherly and Winchester.
I had not seen so much ‘money on the hoof’ so the $25,000 knife, or the $145,000 gun did not turn away the crowd. Lots of camo, too.
The logistics of getting the stuffed specimens to Reno much have been Herculean…no end of the aforementioned Water Buffalos, but full-size Crocs, scads of Mountain Sheep varieties from the World over…outfitters going to Iran and Kazakhstan and the other Stans, too; numerous leaping Lions, too many to count world record racks for Elk, Moose and deer, and Elephant and Giraffe heads – at every turn another display of the hunter’s success.
Did we sell any Meriwether fractions? Certainly, and Elk sausage and Roe Deer meat was grand, too, prepared by the NSACAR chef!
But, then there were the educational sessions: Designing Your Trophy Room, Sharpening Your Blades at Home and in the Field, Dark Secrets of Scope Sights Revealed, and then of course in the PM there was Dana Carvey and The Oak Ridge Boys. I was a babe in the woods!
Back to fractions next month!
Thursday, January 10, 2008
January 10, 2008
Greetings to the New Year!
I'd like to share more information from the Harrison Group's presentation to the Recreational Development Councils at the Urban Land Institute October meeting. In my November bog I mentioned some of the material, but over the past two months I've though more and more about the data.
Source: Harrison Group for American Express Publishing
The concept that I had not thought much about was 'discretionary income' vs. household income. Sorry if I'm behind the curve on this. I know we are in the discretionary product market with vacation homes - that's clear , but, I had always thought of the 'household' part, NOT the part they had to spend of the household income. I guess assuming if the income was high enough they would buy.
Here' s how Harrison delineates wealth categories:
Affluent = annual, discretionary income of $125,000 to $249,999
Super Affluent = annual discretionary income of $250,000 to $499,000
Wealthy = annual discretionary income of $500,000+
Here's how the vacation ownership break down:
Own 2nd Home
Affluent 32%
Super Affluent 34%
Wealthy 49%
Own Timeshare
Affluent 20%
Super Affluent 15%
Wealthy 14%
Own Fraction
Affluent 15%
Super Affluent 12%
Wealthy 13%
Their Intention to buy:
Buy a Second Home
Affluent 21%
Super Affluent 28%
Wealthy 37%
Buy a Timeshare
Affluent 15%
Super Affluent 19%
Wealthy 11%
Buy a Fraction
Affluent 15%
Super Affluent 23%
Wealthy 14%
Wow, wow and wow on the 23% of the Super Affluent!
As we design the physical fractional home here's how these groups look at and how they play out with brands. We kind of know to use quality stuff, but….
Quality - 97% want quality and the reputation of quality
Craftsmanship - 96% want to have their property be reflective of this
Design - 81% go for who has a reputation for this
All you marketing folk read up here: What the wealthy are collecting?
Fine art 20%
Sound systems/media 18 %
Books/Rare books 18%
Fine Watches 18%
Yachts/Boat 17%
Vintage cars 14%
Great stuff, no? Gimme those Super Affluents almost a quarter of which want to buy a fraction!
Best to all.
Greetings to the New Year!
I'd like to share more information from the Harrison Group's presentation to the Recreational Development Councils at the Urban Land Institute October meeting. In my November bog I mentioned some of the material, but over the past two months I've though more and more about the data.
Source: Harrison Group for American Express Publishing
The concept that I had not thought much about was 'discretionary income' vs. household income. Sorry if I'm behind the curve on this. I know we are in the discretionary product market with vacation homes - that's clear , but, I had always thought of the 'household' part, NOT the part they had to spend of the household income. I guess assuming if the income was high enough they would buy.
Here' s how Harrison delineates wealth categories:
Affluent = annual, discretionary income of $125,000 to $249,999
Super Affluent = annual discretionary income of $250,000 to $499,000
Wealthy = annual discretionary income of $500,000+
Here's how the vacation ownership break down:
Own 2nd Home
Affluent 32%
Super Affluent 34%
Wealthy 49%
Own Timeshare
Affluent 20%
Super Affluent 15%
Wealthy 14%
Own Fraction
Affluent 15%
Super Affluent 12%
Wealthy 13%
Their Intention to buy:
Buy a Second Home
Affluent 21%
Super Affluent 28%
Wealthy 37%
Buy a Timeshare
Affluent 15%
Super Affluent 19%
Wealthy 11%
Buy a Fraction
Affluent 15%
Super Affluent 23%
Wealthy 14%
Wow, wow and wow on the 23% of the Super Affluent!
As we design the physical fractional home here's how these groups look at and how they play out with brands. We kind of know to use quality stuff, but….
Quality - 97% want quality and the reputation of quality
Craftsmanship - 96% want to have their property be reflective of this
Design - 81% go for who has a reputation for this
All you marketing folk read up here: What the wealthy are collecting?
Fine art 20%
Sound systems/media 18 %
Books/Rare books 18%
Fine Watches 18%
Yachts/Boat 17%
Vintage cars 14%
Great stuff, no? Gimme those Super Affluents almost a quarter of which want to buy a fraction!
Best to all.
Friday, December 07, 2007
December 6th
The reach of fractions continues to surprise me. In the past week inquiries from a Manhattan area golf and residential community, a luxe hotel in Miami expanding to CO ski and Manhattan, a fancy golf course outside of Denver, the best located of all Santa Fe deals and a couple of left-fielders from Panama! Those are just the calls I got to return.
Mac MacEwan, our marketing guru, and I are advising a nifty project in Hyannis, Cape Cod. No, it's not the windmill farm that the Kennedys are so excited about, but a full service, amenity-rich resort hotel property expanding into fractions. It's great to work with, in this case, entrepreneurs, who 'get it' and are on the move.
A new destination spa, major water park, and beach house are being added to go along with the current amenities. The beach house, right on the beach, and not inexpensive to say the least brings this project to the ocean. A shuttle will take owners to Hyannis for shopping and to the private beaches [owners only] that surround Hyannis. As this is a fee product the owners are, well, owners. Only in Hyannis, where the Kenneyds preach for the little guy can there be private beaches! So says a California guy, were we are proud to share our beaches with any bum that comes by!
15 fractional condos will be built on top of hotel wings [259 room resort hotel] and on top of the destination spa building, two and three bedrooms, lock-offs, robust rental program and fully leveraged HOA budget with all hotel personnel and services right there. The one missing spot right now is the fractional experienced sales director for a February soft opening.
Mike Bosch, our advisory team leader, and I have finished a stint in Atlantic City for a luxury condo tower that chose not to sell the top floor units so it can have a fractional project. Atlantic City? Yup. Only $11 billion going into new development on top of the $11 billion already invested. As they have seen the regional [Indian] casinos take away a lot of the day business they are transforming themselves into more of a Vegas, destination location.
Morgan Stanley's gaming company has launched a 3900-room hotel and when it is 'all in' the tab will be $2.5 billion, not to mention the new MGM Grand and a deck of others. Atlantic City is a happening place. . A new, twice-a-day train from Penn Station will begin this summer.
There are some 50 fractional condos, 1/6th shares, eventually. All amenities are in and in the building, and of course Atlantic City is the big amenity. There's a need for a sales director here, too. The good news is that the developer is very experienced in PA and well-established in Atlantic City.
Star is launching its 'Star Sales Education Center' in January. It's purpose is to inculcate the Star-way of selling to our new sales directors and sales teams, and not loose our grasp on how we have grown up with the fractional selling business.
The reach of fractions continues to surprise me. In the past week inquiries from a Manhattan area golf and residential community, a luxe hotel in Miami expanding to CO ski and Manhattan, a fancy golf course outside of Denver, the best located of all Santa Fe deals and a couple of left-fielders from Panama! Those are just the calls I got to return.
Mac MacEwan, our marketing guru, and I are advising a nifty project in Hyannis, Cape Cod. No, it's not the windmill farm that the Kennedys are so excited about, but a full service, amenity-rich resort hotel property expanding into fractions. It's great to work with, in this case, entrepreneurs, who 'get it' and are on the move.
A new destination spa, major water park, and beach house are being added to go along with the current amenities. The beach house, right on the beach, and not inexpensive to say the least brings this project to the ocean. A shuttle will take owners to Hyannis for shopping and to the private beaches [owners only] that surround Hyannis. As this is a fee product the owners are, well, owners. Only in Hyannis, where the Kenneyds preach for the little guy can there be private beaches! So says a California guy, were we are proud to share our beaches with any bum that comes by!
15 fractional condos will be built on top of hotel wings [259 room resort hotel] and on top of the destination spa building, two and three bedrooms, lock-offs, robust rental program and fully leveraged HOA budget with all hotel personnel and services right there. The one missing spot right now is the fractional experienced sales director for a February soft opening.
Mike Bosch, our advisory team leader, and I have finished a stint in Atlantic City for a luxury condo tower that chose not to sell the top floor units so it can have a fractional project. Atlantic City? Yup. Only $11 billion going into new development on top of the $11 billion already invested. As they have seen the regional [Indian] casinos take away a lot of the day business they are transforming themselves into more of a Vegas, destination location.
Morgan Stanley's gaming company has launched a 3900-room hotel and when it is 'all in' the tab will be $2.5 billion, not to mention the new MGM Grand and a deck of others. Atlantic City is a happening place. . A new, twice-a-day train from Penn Station will begin this summer.
There are some 50 fractional condos, 1/6th shares, eventually. All amenities are in and in the building, and of course Atlantic City is the big amenity. There's a need for a sales director here, too. The good news is that the developer is very experienced in PA and well-established in Atlantic City.
Star is launching its 'Star Sales Education Center' in January. It's purpose is to inculcate the Star-way of selling to our new sales directors and sales teams, and not loose our grasp on how we have grown up with the fractional selling business.
Wednesday, November 14, 2007
Carl's November Blog
Notes from the Star front lines:
•At Snowbird, going into our second, selling season we are really set up. What a difference it makes - start-up one year to 'roll-out'' in year two. Great developers, great sales team and wonderful buyers!
•Vallarta Gardens in Puerta Vallarta just the opposite; the jumble of tasks for a start up getting into sales - a full time job for five, but handled expertly by Ron Frank and Ash Offermann from Star.
•Finishing the main selling season at Meriwether in Montana, owner occupancy of homes, adding operations to sales, and if initial owner users are indicators - the project's a winner.
•Success story or is it genetic? Josh, son of Sherman Potvin, sales exec extraordinary with Ritz and others, came to Meriwether as 'green 'pea' last December and this November he's the #1 salesperson and just escrowed a three-lot purchase in addition to all his fractional sales! We think it's our sales education program designed by Ron Frank. What's say, Sherman?
ULI's annual conference held last month in Vegas at the Venetian. My question: how big is too big for Vegas hotels…how many towers do there need to be and how long a trek is long to get to your room and back to the conference center? That aside - Recreational Development Council day focused on Lake Las Vegas a star-crossed development now 20 years in the making. From our discussions beyond Lake LV:
•The sub-prime crises and the availability of development money is affecting community developers not unexpectedly. The niche players with well located projects or the fractional guys continue to sell well. No 'crisis' in sight for them. As a couple of Council members said, 'We're in an emotional recession".
•Responses to developer's laments on slow moving inventory - get out there and sell the product! The order taking years are over! That's not news to those of us in the shared ownership business as we've always been advancing our shared products, and have sharply honed sales skills.
•Great presentation by Jim Taylor of Harrison Group on wealth in America and how that relates to buying vacation homes. Some of his points:
•Most of the wealth today has been accumulated in the past 15 years.
•The wealthy today have come from the middle class and retain many of
those values
•Discretionary income above $25k per year is the real, target for our
business, and families with discretionary income of over $125k and
up to $499k either own fractions at a good percentage and/or
plan to buy them at a higher rate than a wholly owned home. Over
$500k the percentages flip back to the fully owned home.
•Plumtv.com….if you have to ask…no, seriously a web site for selected,
mega wealthy resort areas that tells owners what's happening, so
they can plan before their arrival. And, in these towns when they do
arrive, in season, they take over the place. Think Nantucket, Sun
Valley, Aspen, etc.
•Auctions for failed fractional projects? I've seen two so far…in Santa Barbara and Big Bear CA. Both filed - do we call that 'failed squared'? Why, beats me, but common sense would say that the buying public is not yet aware enough to jump on these deals. Or, the stigma of a failed deal and how will owner services be provided and the HOA costs, etc?
Notes from the Star front lines:
•At Snowbird, going into our second, selling season we are really set up. What a difference it makes - start-up one year to 'roll-out'' in year two. Great developers, great sales team and wonderful buyers!
•Vallarta Gardens in Puerta Vallarta just the opposite; the jumble of tasks for a start up getting into sales - a full time job for five, but handled expertly by Ron Frank and Ash Offermann from Star.
•Finishing the main selling season at Meriwether in Montana, owner occupancy of homes, adding operations to sales, and if initial owner users are indicators - the project's a winner.
•Success story or is it genetic? Josh, son of Sherman Potvin, sales exec extraordinary with Ritz and others, came to Meriwether as 'green 'pea' last December and this November he's the #1 salesperson and just escrowed a three-lot purchase in addition to all his fractional sales! We think it's our sales education program designed by Ron Frank. What's say, Sherman?
ULI's annual conference held last month in Vegas at the Venetian. My question: how big is too big for Vegas hotels…how many towers do there need to be and how long a trek is long to get to your room and back to the conference center? That aside - Recreational Development Council day focused on Lake Las Vegas a star-crossed development now 20 years in the making. From our discussions beyond Lake LV:
•The sub-prime crises and the availability of development money is affecting community developers not unexpectedly. The niche players with well located projects or the fractional guys continue to sell well. No 'crisis' in sight for them. As a couple of Council members said, 'We're in an emotional recession".
•Responses to developer's laments on slow moving inventory - get out there and sell the product! The order taking years are over! That's not news to those of us in the shared ownership business as we've always been advancing our shared products, and have sharply honed sales skills.
•Great presentation by Jim Taylor of Harrison Group on wealth in America and how that relates to buying vacation homes. Some of his points:
•Most of the wealth today has been accumulated in the past 15 years.
•The wealthy today have come from the middle class and retain many of
those values
•Discretionary income above $25k per year is the real, target for our
business, and families with discretionary income of over $125k and
up to $499k either own fractions at a good percentage and/or
plan to buy them at a higher rate than a wholly owned home. Over
$500k the percentages flip back to the fully owned home.
•Plumtv.com….if you have to ask…no, seriously a web site for selected,
mega wealthy resort areas that tells owners what's happening, so
they can plan before their arrival. And, in these towns when they do
arrive, in season, they take over the place. Think Nantucket, Sun
Valley, Aspen, etc.
•Auctions for failed fractional projects? I've seen two so far…in Santa Barbara and Big Bear CA. Both filed - do we call that 'failed squared'? Why, beats me, but common sense would say that the buying public is not yet aware enough to jump on these deals. Or, the stigma of a failed deal and how will owner services be provided and the HOA costs, etc?
Subscribe to:
Posts (Atom)