Monday, January 30, 2006
The Providence Group Poised for Timeshare Growth in 2006
Because of its intense focus on improving timeshare operations, sales and marketing and overall profitability for client properties, The Providence Group, a management consulting firm for hotel and timeshare resorts, surpassed forecasted revenue expectations in 2005 by 22 percent.
Last year, the privately held corporation launched a new division, Villa Consultants International, to serve the luxury villa timeshare rental market. “Villa Consultants International fulfilled a previously unsatisfied need in the hospitality business by helping owners add value through our expertise in turning around operations, guaranteeing a quality experience for the guest and ensuring a profitable operation for the owner,” says Jed C. Heller, president of The Providence Group.
“Timeshare board of directors and hotel and villa owners now have a resource they can depend on to provide interim management, while finding GM candidates for ownership approval, then providing an operational overview—all as one service.”
In addition, business continued to grow for The Providence Group as an operational consultant. “We’re able to offer time share management company controls to properties without the management company bills,” Heller explains. “We’re looking forward to doing this same quality work for these companies in 2006.”
Last year, the privately held corporation launched a new division, Villa Consultants International, to serve the luxury villa timeshare rental market. “Villa Consultants International fulfilled a previously unsatisfied need in the hospitality business by helping owners add value through our expertise in turning around operations, guaranteeing a quality experience for the guest and ensuring a profitable operation for the owner,” says Jed C. Heller, president of The Providence Group.
“Timeshare board of directors and hotel and villa owners now have a resource they can depend on to provide interim management, while finding GM candidates for ownership approval, then providing an operational overview—all as one service.”
In addition, business continued to grow for The Providence Group as an operational consultant. “We’re able to offer time share management company controls to properties without the management company bills,” Heller explains. “We’re looking forward to doing this same quality work for these companies in 2006.”
Thursday, January 26, 2006
FAIRFIELD RESORTS GOES VERTICAL ON NEW TIMESHARE RESORT IN OCEANSIDE
Fairfield Resorts, Inc., the largest timeshare vacation ownership company in the world with more than 70 resort properties and 500,000 owners, obtained their building permit today for their 168-unit timeshare and hotel project in Oceanside. The developer has completed grading on the two-level subterranean parking lots and will be erecting a 195-foot crane for construction purposes by the end of next week.
The project will be located on Pacific Street at the head of the pier in downtown Oceanside, and is expected to be completed in the spring of 2008. The two-tower, 168-unit timeshare resort – to be called Fairfield Oceanside at the Pier will also feature a public promenade and plaza with retail shops, a restaurant, outdoor café and more.
Fairfield Oceanside at the Pier will feature a combination of one-, two-, three- and four-bedroom condominium-style timeshares, as well as eight luxuriously appointed Presidential Suites. All units are fully furnished with living and dining areas, full kitchens, washer/dryer and more. Resort amenities will include an outdoor pool, spa, children’s play area, and exercise facility. Great piece of timeshare real estate.
The project will be located on Pacific Street at the head of the pier in downtown Oceanside, and is expected to be completed in the spring of 2008. The two-tower, 168-unit timeshare resort – to be called Fairfield Oceanside at the Pier will also feature a public promenade and plaza with retail shops, a restaurant, outdoor café and more.
Fairfield Oceanside at the Pier will feature a combination of one-, two-, three- and four-bedroom condominium-style timeshares, as well as eight luxuriously appointed Presidential Suites. All units are fully furnished with living and dining areas, full kitchens, washer/dryer and more. Resort amenities will include an outdoor pool, spa, children’s play area, and exercise facility. Great piece of timeshare real estate.
Friday, January 20, 2006
Surge in Timeshare Activity Highlights Need For Change
New York's timeshare sector has seen a significant uptick in activity during the past few years. Three timeshare projects are currently operating in Manhattan with a number of others on the drawing board. Existing regulations, however, are outdated or cumbersome, creating unnecessary obstacles for developers interested in converting residential real estate or hotel properties for use as timeshares or in selling timeshares to New York residents.
Current regulations affecting the timeshare industry were drafted by the New York State Attorney General's office in 1985 and were modeled after regulations governing condo and co-op developments. At the time, there were only a few timeshare projects nationwide. Many of these regulations add unneeded and costly delays, and must be addressed to remove the roadblocks.
One unnecessary delay is added to the sale of timeshare units. A full 15 percent of the total units in the timeshare property must be sold before a timeshare developer can legally close on the first sale. No other state imposes a pre-sale requirement on timeshare units. While this requirement makes sense when dealing with whole ownership condominium or cooperative properties, as long as the timeshare unit is built and taking into account the magnitude of the purchase--$15,000 to $25,000--this rule deprives the customer of getting what he or she paid for on a timely basis.
The regulations also deal with timeshare structures that are now outdated, such as fixed week products. For example, they do not address timeshare point systems. Most of the major hospitality companies have some form of custom-tailored, point-based system that provides the customer with significant flexibility in vacation planning. Owners may utilize their points to reserve stays at other resorts in the vacation ownership system and in some cases, use the points to pay for traditional hotel rooms and even plane tickets.
While it was originally believed that the traditional weekly purchase product offered more product integrity, provided a company does not sell more points than they have in inventory, the flexibility of the points product outweighs any added difficulties in tracking inventory. More and more, customers have gravitated to a point-based system, which attests to the fact that the system really works. Existing regulations also do not make it easy for out-of-state properties being marketed to customers in New York. A company seeking to sell a timeshare property in Orlando, Fla., to a New York resident would have to file an offering plan in New York with the Attorney General's office. While that in itself is not a problem, the level of disclosure required by New York is far greater than that required by most other states, including the state where the project exists. New York also requires a restatement and reformatting of much of the same information that is contained in the situs state offering. In contrast, a company wishing to sell a Florida timeshare to a New Jersey resident only needs to file two or three pages worth of information with the state of New Jersey. New Jersey, as is the case most other states, relies on the registration information filed in the state where the timeshare is located.
Another instance of form over substance is in the area of timeshare budgets. For example, the company with the Florida timeshare would have filed a budget with the state of Florida for the first year of the annual period of timeshare registration. Unfortunately, the information filed in Florida does not meet the requirements and the level of detail required by the New York registration process. The Attorney General requires the developer to recast its budget as if the project were in New York, literally impressing New York regulations on a Florida project and adding significant cost and delays.
Another area of difficulty is New York's property reports requirements, which indicate the timeshare's physical status such as number of units, method of construction and structural integrity. Most states do not require the amount of detail in property reports that New York demands. Companies registering an out-of-state timeshare in New York must hire structural engineers, mechanical engineers and experts in nearly all the building trades to thoroughly examine the timeshare, adding another level of expense and delay to the process.
New York attempted to modify the timeshare regulations in 1997 to allow an architect to certify that the project was constructed according to the initial plans and specifications. However, the process remains unnecessarily complicated and expensive. Timeshares in cities such as New York have become increasingly popular. These projects are attractive to vacation users and to corporations or individual business people who find that they return to the city on a consistent basis. Because of the expanding interest of purchasers in the timeshare product, New York regulators must begin to break down the barriers so developers can bring more of their product to New Yorkers.
Current regulations affecting the timeshare industry were drafted by the New York State Attorney General's office in 1985 and were modeled after regulations governing condo and co-op developments. At the time, there were only a few timeshare projects nationwide. Many of these regulations add unneeded and costly delays, and must be addressed to remove the roadblocks.
One unnecessary delay is added to the sale of timeshare units. A full 15 percent of the total units in the timeshare property must be sold before a timeshare developer can legally close on the first sale. No other state imposes a pre-sale requirement on timeshare units. While this requirement makes sense when dealing with whole ownership condominium or cooperative properties, as long as the timeshare unit is built and taking into account the magnitude of the purchase--$15,000 to $25,000--this rule deprives the customer of getting what he or she paid for on a timely basis.
The regulations also deal with timeshare structures that are now outdated, such as fixed week products. For example, they do not address timeshare point systems. Most of the major hospitality companies have some form of custom-tailored, point-based system that provides the customer with significant flexibility in vacation planning. Owners may utilize their points to reserve stays at other resorts in the vacation ownership system and in some cases, use the points to pay for traditional hotel rooms and even plane tickets.
While it was originally believed that the traditional weekly purchase product offered more product integrity, provided a company does not sell more points than they have in inventory, the flexibility of the points product outweighs any added difficulties in tracking inventory. More and more, customers have gravitated to a point-based system, which attests to the fact that the system really works. Existing regulations also do not make it easy for out-of-state properties being marketed to customers in New York. A company seeking to sell a timeshare property in Orlando, Fla., to a New York resident would have to file an offering plan in New York with the Attorney General's office. While that in itself is not a problem, the level of disclosure required by New York is far greater than that required by most other states, including the state where the project exists. New York also requires a restatement and reformatting of much of the same information that is contained in the situs state offering. In contrast, a company wishing to sell a Florida timeshare to a New Jersey resident only needs to file two or three pages worth of information with the state of New Jersey. New Jersey, as is the case most other states, relies on the registration information filed in the state where the timeshare is located.
Another instance of form over substance is in the area of timeshare budgets. For example, the company with the Florida timeshare would have filed a budget with the state of Florida for the first year of the annual period of timeshare registration. Unfortunately, the information filed in Florida does not meet the requirements and the level of detail required by the New York registration process. The Attorney General requires the developer to recast its budget as if the project were in New York, literally impressing New York regulations on a Florida project and adding significant cost and delays.
Another area of difficulty is New York's property reports requirements, which indicate the timeshare's physical status such as number of units, method of construction and structural integrity. Most states do not require the amount of detail in property reports that New York demands. Companies registering an out-of-state timeshare in New York must hire structural engineers, mechanical engineers and experts in nearly all the building trades to thoroughly examine the timeshare, adding another level of expense and delay to the process.
New York attempted to modify the timeshare regulations in 1997 to allow an architect to certify that the project was constructed according to the initial plans and specifications. However, the process remains unnecessarily complicated and expensive. Timeshares in cities such as New York have become increasingly popular. These projects are attractive to vacation users and to corporations or individual business people who find that they return to the city on a consistent basis. Because of the expanding interest of purchasers in the timeshare product, New York regulators must begin to break down the barriers so developers can bring more of their product to New Yorkers.
Wednesday, January 18, 2006
The Sales Presentation At The Timeshare Club
In the majority of cases the qualified couple arrives at the resort after having made a pact which consists of “we are not going to buy anything today” no matter what we see or what we hear. After listening to the sales presentation “without any obligation to buy” they will be given the certificates for a discount on the price of that activity which they chose to carry out, as well as the additional gifts and other promised promotions for assisting the presentation.
In those resorts with a successful marketing, the invited couple or family can perceive that the intensity starts increasing from the moment they arrive. In the resort everything is prepared and programmed to generate in the atmosphere the sensation of “urgency” ….. the sensation that “there is no better opportunity than the one turning up today!” and as a matter of fact in many cases that’s the way it is. Everybody who is collaborating in a time-share resort understands with absolute clarity that the key to its success lies in generating “urgency”, and with this as the basic ingredient for achieving their goals they have been trained to carry out their corresponding activities in their part of the process.
The sales presentation process is divided into the following basic steps:
Reception and welcome:
After having been invited by an OPC promoter, whether it has been on the street or at any other prospecting center, it is specified to the invited guests that they have to fulfill certain requirements that certifies them as a “qualified couple” in order to obtain the fabulous discounts or gifts in exchange for an approximately ninety minute long visit of the time-share resort. By being qualified the couple is in a position to receive everything that was promised to them, in addition to being paid the corresponding amount for the transportation to the resort.
The reception basically consists of receiving the invited couple or the family making sure that their transportation is covered by the resort as well as to confirm that they fulfill all the requirements in order to be considered a qualified couple, to show them the resort and to have them attend the sales presentation without any obligation to buy.
Once this step is covered the couple is assigned a representative [the liner] that will accompany them during their visit and will show them the resort.
The line:
The assigned representative is responsible for completing this part of the process which definitely is the key on one hand; for the couple to receive all the information with clarity while on the other hand; the developer makes sure through the representative that the information which is about to be transmitted will be received with an open and receptive mind. To make sure that this is the reality is essential for the developer, and as a matter of fact there is a moment when the assigned representative addresses the couple in order to ask them, independently from the pact that they may have made between them before arriving at the resort to “not buy anything today”, to ask them to sincerely open their mind in order to receive information that they do not know and with this decide that same say whether they would like to become vacation timeshare owners or not.
Filling out a survey –where the answer to different questions determines the vacation and the social economic profile of the couple– is amongst the other steps that should be completed during this part of the process. This information is vital so that in the next step a package or vacation investment program can be designed according to the specific needs and wishes. This is generally done during the breakfast which is also offered by the developer.
After breakfast the representative or liner obtains from the qualified couple the commitment to continue with the presentation and to go on to the next step through a clear comparison between what being an owner of a vacation spot represents and what paying rent for a place to stay represents. At this point if the representative has done his job with dedication and professionalism and if the couple has maintained an open and receptive mind, they will have some questions that they would like to have answered and which are an indication for a sincere interest to know more about what the resort could do for them during their future vacations in case they do decide to become timeshare owners.
Closing:
Having obtained the commitment to wanting to continue through questions to be answered, the representative or liner will ask for the help of someone who is qualified to answer all their questions and show them the different plans on how to become an owner of a vacation property during the holiday period most suitable for them, by making an investment that would be much lower than what they would continue to pay for accommodation rentals during their next ten, twenty or thirty vacations around the world.
The person responsible for completing this last basic phase of the presentation is called a closer. In some resorts the same person does the job of the liner and closer.
The closer is responsible for responding to the questions with absolute clarity, for showing the resort, for presenting different plans to become a vacation owner and above all for asking the qualified couple –in case it makes sense to them to be vacation owners and if they qualify for it– to sign the application to become new members of the club. Occasions are reached where real opportunities are offered for purchasing time-share weeks at very reasonable prices and with attractive financing programs. It is precisely here where the sensation of urgency reaches its highest level.
Possibly you agree with me –especially if you have already assisted one or more sales presentations– that it seems –as described in this article– that a sales presentation does not have to be considered an experience which turns out to be of an overwhelming pressure for some people, especially when the ninety minutes of their vacation time that the couple committed to spend are already over. As a matter of fact if both parts were maintaining an open and receptive mind it would never be considered like that.
It is very important to recognize that in order to make it possible to have a time-share presentation on one hand there must be a qualified couple, and on the other hand there must be a developer represented by his collaborators. They are the main characters during the presentation and it must not be forgotten that above all they are human beings accustomed to interpreting and to reacting and to responding to the different events that present themselves (even when the collaborators have received a rigorous training). And it lies here where most of the times things during the sales presentation get complicated. Another part of the presentation which plays a big role in generating urgency interpreted by most as “pressure” exerted in order to make people buy is what happens around the presentation. In the next editions I will address the topic of the most familiar complications presenting themselves during a time-share sales presentation and especially during the part of the process called “closing”.
See you next time….in the meantime do not forget it is you who has the last word on accepting or not assisting a time-share presentation.
Hapy New Year!
In those resorts with a successful marketing, the invited couple or family can perceive that the intensity starts increasing from the moment they arrive. In the resort everything is prepared and programmed to generate in the atmosphere the sensation of “urgency” ….. the sensation that “there is no better opportunity than the one turning up today!” and as a matter of fact in many cases that’s the way it is. Everybody who is collaborating in a time-share resort understands with absolute clarity that the key to its success lies in generating “urgency”, and with this as the basic ingredient for achieving their goals they have been trained to carry out their corresponding activities in their part of the process.
The sales presentation process is divided into the following basic steps:
Reception and welcome:
After having been invited by an OPC promoter, whether it has been on the street or at any other prospecting center, it is specified to the invited guests that they have to fulfill certain requirements that certifies them as a “qualified couple” in order to obtain the fabulous discounts or gifts in exchange for an approximately ninety minute long visit of the time-share resort. By being qualified the couple is in a position to receive everything that was promised to them, in addition to being paid the corresponding amount for the transportation to the resort.
The reception basically consists of receiving the invited couple or the family making sure that their transportation is covered by the resort as well as to confirm that they fulfill all the requirements in order to be considered a qualified couple, to show them the resort and to have them attend the sales presentation without any obligation to buy.
Once this step is covered the couple is assigned a representative [the liner] that will accompany them during their visit and will show them the resort.
The line:
The assigned representative is responsible for completing this part of the process which definitely is the key on one hand; for the couple to receive all the information with clarity while on the other hand; the developer makes sure through the representative that the information which is about to be transmitted will be received with an open and receptive mind. To make sure that this is the reality is essential for the developer, and as a matter of fact there is a moment when the assigned representative addresses the couple in order to ask them, independently from the pact that they may have made between them before arriving at the resort to “not buy anything today”, to ask them to sincerely open their mind in order to receive information that they do not know and with this decide that same say whether they would like to become vacation timeshare owners or not.
Filling out a survey –where the answer to different questions determines the vacation and the social economic profile of the couple– is amongst the other steps that should be completed during this part of the process. This information is vital so that in the next step a package or vacation investment program can be designed according to the specific needs and wishes. This is generally done during the breakfast which is also offered by the developer.
After breakfast the representative or liner obtains from the qualified couple the commitment to continue with the presentation and to go on to the next step through a clear comparison between what being an owner of a vacation spot represents and what paying rent for a place to stay represents. At this point if the representative has done his job with dedication and professionalism and if the couple has maintained an open and receptive mind, they will have some questions that they would like to have answered and which are an indication for a sincere interest to know more about what the resort could do for them during their future vacations in case they do decide to become timeshare owners.
Closing:
Having obtained the commitment to wanting to continue through questions to be answered, the representative or liner will ask for the help of someone who is qualified to answer all their questions and show them the different plans on how to become an owner of a vacation property during the holiday period most suitable for them, by making an investment that would be much lower than what they would continue to pay for accommodation rentals during their next ten, twenty or thirty vacations around the world.
The person responsible for completing this last basic phase of the presentation is called a closer. In some resorts the same person does the job of the liner and closer.
The closer is responsible for responding to the questions with absolute clarity, for showing the resort, for presenting different plans to become a vacation owner and above all for asking the qualified couple –in case it makes sense to them to be vacation owners and if they qualify for it– to sign the application to become new members of the club. Occasions are reached where real opportunities are offered for purchasing time-share weeks at very reasonable prices and with attractive financing programs. It is precisely here where the sensation of urgency reaches its highest level.
Possibly you agree with me –especially if you have already assisted one or more sales presentations– that it seems –as described in this article– that a sales presentation does not have to be considered an experience which turns out to be of an overwhelming pressure for some people, especially when the ninety minutes of their vacation time that the couple committed to spend are already over. As a matter of fact if both parts were maintaining an open and receptive mind it would never be considered like that.
It is very important to recognize that in order to make it possible to have a time-share presentation on one hand there must be a qualified couple, and on the other hand there must be a developer represented by his collaborators. They are the main characters during the presentation and it must not be forgotten that above all they are human beings accustomed to interpreting and to reacting and to responding to the different events that present themselves (even when the collaborators have received a rigorous training). And it lies here where most of the times things during the sales presentation get complicated. Another part of the presentation which plays a big role in generating urgency interpreted by most as “pressure” exerted in order to make people buy is what happens around the presentation. In the next editions I will address the topic of the most familiar complications presenting themselves during a time-share sales presentation and especially during the part of the process called “closing”.
See you next time….in the meantime do not forget it is you who has the last word on accepting or not assisting a time-share presentation.
Hapy New Year!
Sunday, January 15, 2006
Fairfield Picks Up 1,000-Acre Pocono Timeshare Resort From Shawnee
Orlando-based Fairfield Resorts Inc. acquires Shawnee Development Inc., a timeshare resort in the Pocono Mountains. Fairfield acquired approximately 28,000 existing timeshare-owners, 600 timeshare condo units under active management contracts, 14 units of available timeshare inventory, fully entitled land for 41 timeshare units, and approximately 200 acres adjacent to the Shawnee Mountain ski area that are tentatively entitled for future timeshare development. In all, the resort encompasses approximately 1,000 acres, according to the Fairfield spokesman.
Both a member of the former ownership and a Fairfield spokesman declined to disclose the price tag, and the terms are not provided in current SEC filings by Fairfield’s parent, Cendant Corp. Commenting on the acquisition in a statement, Franz S. Hanning, Fairfield’s president and CEO, says the deal gives Fairfield an “immediate presence in a highly desirable and growing resort destination in the Poconos. We’ve been eager to add a timeshare resort in this region for some time.”
Bob Shebelsky, former chairman, CEO and one of the six sellers of Shawnee, tells GlobeSt.com, “We’ve been selling fixed-unit, fixed-week timeshare ownership for over 30 years. That’s how it evolved. But Fairfield was getting away from that with its FairShare Plus, point-based system, which gives owners much more flexibility, and Fairfield also has a large network of resorts to offer owners.” Fairfield initiated the FairShare Plus system in 1991, which gives timeshare owners the opportunity to stay at resorts throughout its nationwide network. The network now contains more than 70 timeshare resorts.
“We thought about starting a point system of our own,” Shebelsky says, “and we have a couple of other small timeshare properties in Florida and South Carolina, but it just wasn’t feasible for us.” He said under the agreement with Fairfield, “we will stay on, not as employees, but in some capacity.” The Fairfield spokesman tells GlobeSt.com that Fairfield took over management of the property at the close of the sale on Aug. 12.
Both a member of the former ownership and a Fairfield spokesman declined to disclose the price tag, and the terms are not provided in current SEC filings by Fairfield’s parent, Cendant Corp. Commenting on the acquisition in a statement, Franz S. Hanning, Fairfield’s president and CEO, says the deal gives Fairfield an “immediate presence in a highly desirable and growing resort destination in the Poconos. We’ve been eager to add a timeshare resort in this region for some time.”
Bob Shebelsky, former chairman, CEO and one of the six sellers of Shawnee, tells GlobeSt.com, “We’ve been selling fixed-unit, fixed-week timeshare ownership for over 30 years. That’s how it evolved. But Fairfield was getting away from that with its FairShare Plus, point-based system, which gives owners much more flexibility, and Fairfield also has a large network of resorts to offer owners.” Fairfield initiated the FairShare Plus system in 1991, which gives timeshare owners the opportunity to stay at resorts throughout its nationwide network. The network now contains more than 70 timeshare resorts.
“We thought about starting a point system of our own,” Shebelsky says, “and we have a couple of other small timeshare properties in Florida and South Carolina, but it just wasn’t feasible for us.” He said under the agreement with Fairfield, “we will stay on, not as employees, but in some capacity.” The Fairfield spokesman tells GlobeSt.com that Fairfield took over management of the property at the close of the sale on Aug. 12.
Thursday, January 12, 2006
Bluegreen Completes $204M Securitization Of Timeshare Real Estate Receivables
Bluegreen Corp. has completed a $203.8-million private offering of vacation ownershiptimeshare real estate receivable-backed securities, the largest private offering of such securities in its history. The offering encompasses six classes of notes, each rated at between AAA and BBB by Standard & Poor’s and at between Aaa and Ba2 by Moody’s.
The interest rates vary by class from 5.409% to 9.852% for a blended overall rate of approximately 5.98%. BXG Receivables Note Trust 2005 issued the securities. A Bluegreen spokesman tells GlobeSt.com that BXG is an independent statutory trust formed specifically by Wilmington, DE-based Wilmington Trust to administer this securitization.
Bluegreen typically finances sales of timeshare real estate at its timeshare resorts. “Generally they are financed for a 10-year period,” the spokesman explains. “Securitization,” which aggregates these loans into a negotiable security containing coupon bonds that can be acquired by outside investors, “provides an acceleration of our cash flow,” he says.
The timeshare real estate receivables in this transaction have a weighted average interest rate of approximately 14.97%. Bluegreen will continue to service the loans that collateralize the securities, and it has also received a retained interest in the future cash flows from this securitization. “We believe that the successful completion of this offering reflects the liquidity of Bluegreen’s vacation ownership receivables,” said George Donovan, president and CEO, in a statement.
The company will use the proceeds of the offering to pay down all outstanding debt due under its vacation ownership receivables purchase facilities with Winston-Salem, NC-based Branch Banking & Trust Co. and Bennington, VT-based Resort Finance LLC, which expired at the end of December. Meanwhile, Bluegreen is also currently involved in the documentation process for a new, $175-million vacation ownership purchase facility with BB&T, which is expected to close this quarter.
Bluegreen Resorts, the timeshare real estate component of the company, gives its approximately 150,000 owners access to more than 40 resorts and an exchange network of more than 3,700 resorts, including cruises. Its sister component, Bluegreen Communities, develops master-planned residential and golf communities.
The interest rates vary by class from 5.409% to 9.852% for a blended overall rate of approximately 5.98%. BXG Receivables Note Trust 2005 issued the securities. A Bluegreen spokesman tells GlobeSt.com that BXG is an independent statutory trust formed specifically by Wilmington, DE-based Wilmington Trust to administer this securitization.
Bluegreen typically finances sales of timeshare real estate at its timeshare resorts. “Generally they are financed for a 10-year period,” the spokesman explains. “Securitization,” which aggregates these loans into a negotiable security containing coupon bonds that can be acquired by outside investors, “provides an acceleration of our cash flow,” he says.
The timeshare real estate receivables in this transaction have a weighted average interest rate of approximately 14.97%. Bluegreen will continue to service the loans that collateralize the securities, and it has also received a retained interest in the future cash flows from this securitization. “We believe that the successful completion of this offering reflects the liquidity of Bluegreen’s vacation ownership receivables,” said George Donovan, president and CEO, in a statement.
The company will use the proceeds of the offering to pay down all outstanding debt due under its vacation ownership receivables purchase facilities with Winston-Salem, NC-based Branch Banking & Trust Co. and Bennington, VT-based Resort Finance LLC, which expired at the end of December. Meanwhile, Bluegreen is also currently involved in the documentation process for a new, $175-million vacation ownership purchase facility with BB&T, which is expected to close this quarter.
Bluegreen Resorts, the timeshare real estate component of the company, gives its approximately 150,000 owners access to more than 40 resorts and an exchange network of more than 3,700 resorts, including cruises. Its sister component, Bluegreen Communities, develops master-planned residential and golf communities.
Monday, January 09, 2006
CNL Hotels & Resorts to acquire Grande Lakes Orlando Timeshare
CNL Hotels & Resorts, Inc., the nation's second largest hotel real estate investment trust, announced it has entered into an agreement to acquire the 500-acre Grande Lakes Orlando Timeshare Resort, comprising a 584-room Ritz-Carlton, a 998-room JW Marriott, a 40,000-square-foot spa and an 18-hole Greg Norman-designed championship golf course. Under the terms of the agreement, CNL Hotels & Resorts will acquire 100 percent of the Grande Lakes Orlando resort from an affiliate of Annapolis-based Thayer Lodging Group for a purchase price of approximately $753 million, subject to customary closing adjustments and prorations.
"The addition of these two high-end destination properties to our portfolio, including our first Ritz-Carlton, exemplifies our focus on acquiring distinctive timeshare real estate assets while furthering our strategy to create long-term value for investors," said Thomas J. Hutchison III, CEO of CNL Hotels & Resorts. "Consistent with our stated goals, we look forward to employing our strong portfolio management skills to capitalize on Orlando's solid convention bookings. We are particularly enthusiastic about the growth opportunities at this spectacular two-and-a-half-year-old resort, which positions two of the industry's leading luxury brands within easy reach to the airport, convention center and major area attractions.
"We expect that the Grande Lakes Orlando Timeshare Resort will become one of the signature assets in our portfolio, and we look forward to working with the exceptional management teams of The Ritz-Carlton Hotel Company, L.L.C. and Marriott Hotels & Resorts."
The properties at the resort include:
- The Ritz-Carlton Orlando, Grande Lakes -- The AAA Four-Diamond property is designed to feel like an Italian palazzo with a richly appointed lobby and stylish residential ambience, featuring 584 timeshare rooms including 64 timeshare suites and 56 club level rooms. With the addition of a planned 14,100-square-foot ballroom, The Ritz-Carlton will feature 48,500 square feet of flexible meeting space. The property offers the popular Ritz Kids children's program, specialty concierge services and signature dining options including the award-winning Norman's restaurant, as well as an 18-hole Greg Norman-designed championship golf course and an award-winning 40,000-square-foot spa with 40 treatment rooms, offering a private lap pool and state-of-the-art Wellness Center.
- JW Marriott Orlando, Grande Lakes - Representing the highest level of Marriott luxury, the AAA Four-Diamond property greets guests with an expansive grand lobby atrium with Spanish and Moorish influences accented by the bold palette of the Mediterranean. The property features 998 timeshare rooms, including 64 timeshare suites, 108,000 square feet of flexible meeting space, a winding lazy river outdoor heated pool, hydrotherapy pools, three tennis courts and signature dining choices including Primo.
Among its many 2005 awards and accolades, the Grande Lakes Orlando Timeshare Resort has received: Gold Key Award by Meetings and Conventions Magazine; One of the Top 10 Golf and Spa Resorts by Corporate Meetings & Incentives Magazine; Top 100 Golf Resorts in North America by Conde Nast Traveler Magazine; America?s Best Hotel and Resort Spas by Mobil Travel Guide; and America?s Top 10 Best New Golf Courses by Golf Digest Magazine.
John A. Griswold, president and chief operating officer of CNL Hotels & Resorts, has served as 2004-2005 chairman of the Orlando/Orange County Convention & Visitors Bureau and brings 20 years of Orlando hotelier experience to the Grande Lakes Orlando resort venture. "We are extremely pleased to be investing in our hometown of Orlando, the nation's second largest timeshare lodging market, and are confident that its strong demand generators will continue to drive growth in both group and individual leisure travel," stated Mr. Griswold. "Further, we expect that both properties at the resort will benefit from Marriott's global marketing reach of group bookings through its network of large destination resorts, including our own JW Marriott Desert Ridge Resort & Spa in Phoenix, which will provide synergistic strength in group venues in the Eastern and Western U.S."
To enhance existing meeting space at The Ritz-Carlton and meet growing group demand, a 14,100-square-foot ballroom is currently being developed in a new 27,000-square-foot building. A separate 3,000-square-foot private exterior patio will also be available for outdoor functions. Construction is scheduled to be completed in the third quarter 2006. As part of the transaction, CNL Hotels & Resorts has allocated approximately $10 million for capital improvements at the resort, including the completion of The Ritz-Carlton ballroom and other capital projects such as a high-tech wireless connectivity system.
CNL Hotels & Resorts' plans to use proceeds in part from the sale of its interest in the Waikiki Beach Marriott Timeshare Resort and the pending sale of its interest in the Hotel del Coronado to acquire the Grande Lakes Orlando Timeshare Resort. The transaction, which is expected to close during the first quarter 2006, remains subject to customary closing conditions. There can be no assurance that it will be completed.
Once the transaction is consummated, the addition of the Grande Lakes Orlando Timeshare Resort will bring CNL Hotels & Resorts' portfolio to 95 properties with more than 27,000 rooms with 20 nationally recognized hotel brands. Other destination resorts in its portfolio include: the 780-room Grand Wailea Resort Hotel & Spa in Maui, Hawaii; the 617-room La Quinta Resort & Club in La Quinta, California; the 950-room JW Marriott Desert Ridge Resort & Spa in Phoenix, Arizona; and the 692-room Doral Golf Resort & Spa, A Marriott Resort, in Miami, Fla.
"The addition of these two high-end destination properties to our portfolio, including our first Ritz-Carlton, exemplifies our focus on acquiring distinctive timeshare real estate assets while furthering our strategy to create long-term value for investors," said Thomas J. Hutchison III, CEO of CNL Hotels & Resorts. "Consistent with our stated goals, we look forward to employing our strong portfolio management skills to capitalize on Orlando's solid convention bookings. We are particularly enthusiastic about the growth opportunities at this spectacular two-and-a-half-year-old resort, which positions two of the industry's leading luxury brands within easy reach to the airport, convention center and major area attractions.
"We expect that the Grande Lakes Orlando Timeshare Resort will become one of the signature assets in our portfolio, and we look forward to working with the exceptional management teams of The Ritz-Carlton Hotel Company, L.L.C. and Marriott Hotels & Resorts."
The properties at the resort include:
- The Ritz-Carlton Orlando, Grande Lakes -- The AAA Four-Diamond property is designed to feel like an Italian palazzo with a richly appointed lobby and stylish residential ambience, featuring 584 timeshare rooms including 64 timeshare suites and 56 club level rooms. With the addition of a planned 14,100-square-foot ballroom, The Ritz-Carlton will feature 48,500 square feet of flexible meeting space. The property offers the popular Ritz Kids children's program, specialty concierge services and signature dining options including the award-winning Norman's restaurant, as well as an 18-hole Greg Norman-designed championship golf course and an award-winning 40,000-square-foot spa with 40 treatment rooms, offering a private lap pool and state-of-the-art Wellness Center.
- JW Marriott Orlando, Grande Lakes - Representing the highest level of Marriott luxury, the AAA Four-Diamond property greets guests with an expansive grand lobby atrium with Spanish and Moorish influences accented by the bold palette of the Mediterranean. The property features 998 timeshare rooms, including 64 timeshare suites, 108,000 square feet of flexible meeting space, a winding lazy river outdoor heated pool, hydrotherapy pools, three tennis courts and signature dining choices including Primo.
Among its many 2005 awards and accolades, the Grande Lakes Orlando Timeshare Resort has received: Gold Key Award by Meetings and Conventions Magazine; One of the Top 10 Golf and Spa Resorts by Corporate Meetings & Incentives Magazine; Top 100 Golf Resorts in North America by Conde Nast Traveler Magazine; America?s Best Hotel and Resort Spas by Mobil Travel Guide; and America?s Top 10 Best New Golf Courses by Golf Digest Magazine.
John A. Griswold, president and chief operating officer of CNL Hotels & Resorts, has served as 2004-2005 chairman of the Orlando/Orange County Convention & Visitors Bureau and brings 20 years of Orlando hotelier experience to the Grande Lakes Orlando resort venture. "We are extremely pleased to be investing in our hometown of Orlando, the nation's second largest timeshare lodging market, and are confident that its strong demand generators will continue to drive growth in both group and individual leisure travel," stated Mr. Griswold. "Further, we expect that both properties at the resort will benefit from Marriott's global marketing reach of group bookings through its network of large destination resorts, including our own JW Marriott Desert Ridge Resort & Spa in Phoenix, which will provide synergistic strength in group venues in the Eastern and Western U.S."
To enhance existing meeting space at The Ritz-Carlton and meet growing group demand, a 14,100-square-foot ballroom is currently being developed in a new 27,000-square-foot building. A separate 3,000-square-foot private exterior patio will also be available for outdoor functions. Construction is scheduled to be completed in the third quarter 2006. As part of the transaction, CNL Hotels & Resorts has allocated approximately $10 million for capital improvements at the resort, including the completion of The Ritz-Carlton ballroom and other capital projects such as a high-tech wireless connectivity system.
CNL Hotels & Resorts' plans to use proceeds in part from the sale of its interest in the Waikiki Beach Marriott Timeshare Resort and the pending sale of its interest in the Hotel del Coronado to acquire the Grande Lakes Orlando Timeshare Resort. The transaction, which is expected to close during the first quarter 2006, remains subject to customary closing conditions. There can be no assurance that it will be completed.
Once the transaction is consummated, the addition of the Grande Lakes Orlando Timeshare Resort will bring CNL Hotels & Resorts' portfolio to 95 properties with more than 27,000 rooms with 20 nationally recognized hotel brands. Other destination resorts in its portfolio include: the 780-room Grand Wailea Resort Hotel & Spa in Maui, Hawaii; the 617-room La Quinta Resort & Club in La Quinta, California; the 950-room JW Marriott Desert Ridge Resort & Spa in Phoenix, Arizona; and the 692-room Doral Golf Resort & Spa, A Marriott Resort, in Miami, Fla.
Thursday, January 05, 2006
Alpha1Estates Launch Pioneering Timeshare Real Estate Opportunities In Islamic Holy Cities
International overseas property company Alpha1Estates on Sunday launched unique opportunities to purchase timeshare real estate projects in the Islamic holy cities of Makkah and Madinah, unique for their sacredness, exclusivity and worth.
The British-based timeshare property company launched ZamZam Tower in Makkah and Taiba Eastern Tower in Madinah, the two most holy cities to 1.5 billion Muslims, who alone are permitted to enter the cities in Saudi Arabia and where land is the most expensive in the world.
"These are genuinely the most exclusive timeshare real estate developments in the world, in the most sacred cities and on the most expensive land on Earth,"
said CEO Mr. Malik.
As a result of recent changes in Saudi real estate law, non-Saudi Muslim residents are permitted to own real estate Saudi Arabia for their private residence.
The two developments are in the centre of the two Holy Cities, near to the sites of The Holy Mosque in Makkah, where Muslims direct their five daily prayers to, and the Noble Prophet's Mosque, where the Prophet Muhammad is buried.
Land in Makkah has recently sold for £50,000/ sq. metre and in Madinah for £28,500/ sq. metre making it the most expensive real estate in the world, compared to averages prices of £20,452/ sq. metre in Mayfair, London and £10,700/ sq. metre in Manhattan, New York.
In ZamZam Tower, Makkah, Muslims can buy a Sukouk (Islamic timeshare lease bond) for 24 years, allowing them to spend a periodical part of the year at the tower every year.
ZamZam Tower is to be completed by September 2006, and is the first of the seven towers which will form the Abraj al-Bait Towers Complex, Makkah. Funded by the Saudi government's King Abdul Aziz Endowment, and built by the kingdom's largest construction company, the Saudi Bin Laden Group, Abraj al-Bait will be the largest building complex in the world at 1.4 million square metres.
In Taiba Eastern Tower, Muslims can for the first time buy their permanent home in Madinah overlooking the Prophet's Mosque. Clients can purchase an automatically renewable 99-year lease to an apartment at the 20-floor tower, which contractually becomes a freehold property when Saudi law changes to allow non-Saudi Muslims to own property in the city.
Major Saudi real estate developers of the projects have approached the Saudi government to arrange and legalise residence permits and extended visas for Muslims purchasing these leases.
CEO Mr. Malik and Business Development Manager Mr. Jasrai launched the first international television presentations of ZamZam Tower, Taiba Eastern Tower and the King Abdul-Aziz Endowment, on Tuesday 26 December on UK-based television station, Islam Channel.
The launch coincides with the Islamic Hajj month when the annual pilgrimage to Makkah is performed and also with the new year 2006.
The British-based timeshare property company launched ZamZam Tower in Makkah and Taiba Eastern Tower in Madinah, the two most holy cities to 1.5 billion Muslims, who alone are permitted to enter the cities in Saudi Arabia and where land is the most expensive in the world.
"These are genuinely the most exclusive timeshare real estate developments in the world, in the most sacred cities and on the most expensive land on Earth,"
said CEO Mr. Malik.
As a result of recent changes in Saudi real estate law, non-Saudi Muslim residents are permitted to own real estate Saudi Arabia for their private residence.
The two developments are in the centre of the two Holy Cities, near to the sites of The Holy Mosque in Makkah, where Muslims direct their five daily prayers to, and the Noble Prophet's Mosque, where the Prophet Muhammad is buried.
Land in Makkah has recently sold for £50,000/ sq. metre and in Madinah for £28,500/ sq. metre making it the most expensive real estate in the world, compared to averages prices of £20,452/ sq. metre in Mayfair, London and £10,700/ sq. metre in Manhattan, New York.
In ZamZam Tower, Makkah, Muslims can buy a Sukouk (Islamic timeshare lease bond) for 24 years, allowing them to spend a periodical part of the year at the tower every year.
ZamZam Tower is to be completed by September 2006, and is the first of the seven towers which will form the Abraj al-Bait Towers Complex, Makkah. Funded by the Saudi government's King Abdul Aziz Endowment, and built by the kingdom's largest construction company, the Saudi Bin Laden Group, Abraj al-Bait will be the largest building complex in the world at 1.4 million square metres.
In Taiba Eastern Tower, Muslims can for the first time buy their permanent home in Madinah overlooking the Prophet's Mosque. Clients can purchase an automatically renewable 99-year lease to an apartment at the 20-floor tower, which contractually becomes a freehold property when Saudi law changes to allow non-Saudi Muslims to own property in the city.
Major Saudi real estate developers of the projects have approached the Saudi government to arrange and legalise residence permits and extended visas for Muslims purchasing these leases.
CEO Mr. Malik and Business Development Manager Mr. Jasrai launched the first international television presentations of ZamZam Tower, Taiba Eastern Tower and the King Abdul-Aziz Endowment, on Tuesday 26 December on UK-based television station, Islam Channel.
The launch coincides with the Islamic Hajj month when the annual pilgrimage to Makkah is performed and also with the new year 2006.
Wednesday, January 04, 2006
Timeshares Move Into A Higher Bracket Of Real Estate
Jeff Spears said he "looked into everything" when he and his family were thinking of buying a vacation home, even sharing ownership with a bunch of strangers.
An investment banker based in San Francisco, Spears had the kind of budget that would permit him to purchase his own house and share it with no one.
So the fact that he was even considering fractional ownership of a timeshare represents something of a paradigm shift for the worldwide timeshare industry, where a hard sell and slightly shopworn properties have been the norm.
"To a lot of people, the word timeshare has become synonymous with scam, and people are very frightened of it,"
said Sandy Gray, founder of the Timeshare Consumers Association, which is based in England.
But things are changing. Gray said that while sales growth in midmarket timeshares in Europe was effectively flat, that had done little to tarnish the reputation, and rise, of the luxury timeshare resort clubs.
"Really, they are the only bright spot in the European market," Gray said. "It's that top 2 percent where all the growth is."
George Goeggel never imagined that he would find himself selling vacation home timeshares. Yet with resort development economics being what they are, Goeggel, a veteran hospitality executive, has found that engaging in such real estate transactions are becoming a necessity to finance the development of new resorts.
Goeggel is managing director of Auberge Resorts, an operator of luxury hotels based in the Napa Valley, the Northern California wine region. Auberge has been steadily expanding its network of luxury properties in the United States and Mexico.
Seeking to grow, the company has increasingly met with resistance from its real estate development partners who want more "immediate upfront returns" than a hotel can offer, Goeggel said.
As a compromise, resort operators like Auberge are teaming up with real estate developers to create an elite tier of timeshare properties, offered via the auspices of "private residence clubs" in or around a luxury hotel setting.
Depending on the program guidelines, they can purchase a specific unit or simply the rights to one.
The cost of ownership can range from $100,000 to $800,000, depending on the size of the share. There are also annual fees, which will increase with inflation.
Relatively new to the 40-year-old timeshare concept begun in Sweden, these residence clubs are starting to open across the globe.
Among those luxury resort operators at the forefront, along with Auberge, are DeVere Group of Britain, Ritz-Carlton Hotel, Four Seasons and Marriott Hotels & Resorts.
Auberge Resorts, for instance, is selling a one-fifth fractional share for $710,000 and one-tenth share for $425,000 in a new Napa Valley establishment, Calistoga Ranch.
Unlike more traditional timeshares, which generally parcel out shares in weeklong periods, the fractional offerings being sold by Auberge and others allow for 73 days' lodging in the case of a one-fifth share and 36 days for the one-tenth.
Owners are required to pay yearly dues of $10,000 to $20,000 depending on the type of share purchased. For Calistoga Ranch, owners of fractional shares have a lease-hold arrangement, in which they hold title to the building but not the land.
Auberge Resorts is also selling fractional ownership in a new resort, the Esperanza, on Mexico's western Riviera, that gives owners title to the land and the property.
There are private resort clubs like De Vere Resort Ownership that offer smaller blocks of time, more in line with the traditional timeshare model. De Vere is in the process of building a new luxury residence club, Carrick, on Loch Lomond in Scotland, near its flagship residence club, Cameron House.
A more upscale version of that property, Carrick is selling single fixed-week shares at the residence club for £8,000 to £39,000, or about $15,000 to $73,000. The resort operator has reported total sales of £4.5 million, with single customers purchasing multiple weeks at as much as £100,000.
Not a single lodge has been built, and the property is not scheduled to open until the spring of 2006.
While it is not hard to understand the economic motivation for the people creating these properties, what about the people who are buying into them?
The key benefit, said Joel Greene, a real estate broker in Miami, is that they offer investors the opportunity to own big blocks of time in a luxury vacation home in a highly desirable location for a small fraction of the cost of buying a single-family home. Likewise, they have none of the headaches associated with maintaining the home, since those things are covered by the annual dues. And then there are the perks - hotel-style services including housekeeping, room service and a concierge.
"We didn't look at this as an investment in anything other than our vacation," said Robin Morgan, speaking of the one-twelfth share, or 21 days, that she and her husband, Ken, purchased at a preconstruction rate at the Ritz-Carlton Club in St. Thomas, the U.S. Virgin Islands, in 2001 for $85,000.
The couple have since picked up a second one-week timeshare at the Marriott Waiohai Beach Club on the Hawaiian island of Kauai for $70,000.
Robin Morgan is a self-employed real estate owner and manager based in Laguna Nigel, California. While she and her husband did not expect the timeshare to be a cash cow, they did want the property to pay for itself in time.
To determine that, they established how much time they might actually spend on vacation every year at the property or one of the other three Ritz-Carlton clubs offering reciprocal membership trades.
Next they looked at what it would cost them to be repeat visitors at a comparable resort hotel in St. Thomas for 21 days versus actually owning a unit. They factored in a 6 percent financing on a 20-year loan they would receive from Ritz Carlton's in-house financing arm, along with anticipated annual dues of between $7,000 to $9,000.
"A unit like this rents for $2,000 per night," Robin Morgan said. "When we amortized what we were paying for the share, it ran around $523 per night, or $11,000 per 21 days."
This meant that the couple were getting an apartment of 1,640 square feet, or about 150 square meters, for less than the price of a 450-square-foot room at the hotel.
"We couldn't afford to do this any other way," she added.
In addition to the amortized benefits they foresee, the Morgans like the fact that they can trade their shares for stays at the Ritz Carlton's three other private residence clubs for a fee of $100. Likewise, they are eligible for a 30 percent discount when staying at a Ritz Carlton hotel anywhere in the world. As U.S. residents, the Morgans are also eligible for a 40 percent tax-rate deduction, which works out, she said, to $1,836 per year.
The only thing that the Morgans are not expecting is any return on their investment if they resell the property.
"That's not where the value is," she said.
That is because real estate timeshares, like fractional jet ownerships, generally depreciate in the secondary marketplace. While luxury residence clubs do have prestigious locales to bolster their value, brokers like Joel Greene remain skeptical as to whether they will be able to do any better in the resale market than their more modest predecessors.
"There is so much supply and not as much demand that invariably, no matter what price you pay, a timeshare generally won't appreciate," said Greene, who along with his father owns Condo Hotel Center, a 30-year old real estate brokerage business based in Miami.
There is a lot of inventory all over the world. As of Jan. 1, 2003, the American Resort Development Association estimated that there were 1,590 timeshare resorts in the United States alone, with a total of 132,000 units. New markets are opening up daily, with operators moving into uncharted territories like India, China and Thailand.
To see any meaningful appreciation, experts say, the property has to sell out. That is not always easy despite the highly desirable locations and rave reviews of many of these fractional luxury clubs.
The Phillips Club, a private residence club in New York City founded in 2001, continues to receive highly positive reviews for its services and accommodations. The development's management company, Millennium Partners, said prices for its fractional share offerings were up only slightly from their opening levels of five years ago: $125,000 to $300,000, or $1,500 per square foot.
The club, which has 350 members, was still well short of its stated goal to sell out its 704 memberships by the end of 2004. Pamela Malkani, a partner in Millennium and director of hotel operations, said resale prices through local real estate brokers were 5 percent to 15 percent higher than the original sale price.
It is because of the tough secondary market, coupled with all the fine print that generally comes along with timeshare ownership that some prospective buyers choose not to bite in the end. It was this aspect of timeshare investment that turned off Spears, the investment banker.
"The secondary market is ugly," he said.
While he looked into buying a fractional share in a private residence club, Spears said he "couldn't make the math work" in terms of his family's vacation needs and patterns and what was being offered. The other thing that bothered Spears was the "exit strategy" from residence clubs.
Developers of such clubs can preclude owners from reselling their shares until all units in their phase have been sold out. Even when they can, certain resorts require first right of purchase or ask that sales be handled through their own resale arms.
In the end, Spears bought into a Denver company, Exclusive Resorts, a new breed of luxury residence club backed by Steve Case, a founder of America Online, who became chairman in November. Similar to a nonequity country club membership, Exclusive Resorts members pay an upfront membership deposit of $375,000, of which 80 percent is refundable if a member chooses to resign. Members also pay annual dues of $10,000 to $20,000 depending on the number of days they exercise their membership during a year.
In exchange, Spears and his fellow 999 members have 30 to 60 days access to 200 fully staffed private residences at 30 sites. Company literature places the collective value of those properties at more than $500 million.
Timeshares move into a higher bracket
By Holly Hubbard Preston International Herald Tribune
SATURDAY, JANUARY 8, 2005
Jeff Spears said he "looked into everything" when he and his family were thinking of buying a vacation home, even sharing ownership with a bunch of strangers.
An investment banker based in San Francisco, Spears had the kind of budget that would permit him to purchase his own house and share it with no one.
So the fact that he was even considering fractional ownership of a timeshare represents something of a paradigm shift for the worldwide timeshare industry, where a hard sell and slightly shopworn properties have been the norm.
"To a lot of people, the word timeshare has become synonymous with scam, and people are very frightened of it," said Sandy Gray, founder of the Timeshare Consumers Association, which is based in England.
But things are changing. Gray said that while sales growth in midmarket timeshares in Europe was effectively flat, that had done little to tarnish the reputation, and rise, of the luxury timeshare resort clubs.
"Really, they are the only bright spot in the European market," Gray said. "It's that top 2 percent where all the growth is."
George Goeggel never imagined that he would find himself selling vacation home timeshares. Yet with resort development economics being what they are, Goeggel, a veteran hospitality executive, has found that engaging in such real estate transactions are becoming a necessity to finance the development of new resorts.
Goeggel is managing director of Auberge Resorts, an operator of luxury hotels based in the Napa Valley, the Northern California wine region. Auberge has been steadily expanding its network of luxury properties in the United States and Mexico.
Seeking to grow, the company has increasingly met with resistance from its real estate development partners who want more "immediate upfront returns" than a hotel can offer, Goeggel said.
As a compromise, resort operators like Auberge are teaming up with real estate developers to create an elite tier of timeshare properties, offered via the auspices of "private residence clubs" in or around a luxury hotel setting.
Depending on the program guidelines, they can purchase a specific unit or simply the rights to one.
The cost of ownership can range from $100,000 to $800,000, depending on the size of the share. There are also annual fees, which will increase with inflation.
Relatively new to the 40-year-old timeshare concept begun in Sweden, these residence clubs are starting to open across the globe.
Among those luxury resort operators at the forefront, along with Auberge, are DeVere Group of Britain, Ritz-Carlton Hotel, Four Seasons and Marriott Hotels & Resorts.
Auberge Resorts, for instance, is selling a one-fifth fractional share for $710,000 and one-tenth share for $425,000 in a new Napa Valley establishment, Calistoga Ranch.
Unlike more traditional timeshares, which generally parcel out shares in weeklong periods, the fractional offerings being sold by Auberge and others allow for 73 days' lodging in the case of a one-fifth share and 36 days for the one-tenth.
Owners are required to pay yearly dues of $10,000 to $20,000 depending on the type of share purchased. For Calistoga Ranch, owners of fractional shares have a lease-hold arrangement, in which they hold title to the building but not the land.
Auberge Resorts is also selling fractional ownership in a new resort, the Esperanza, on Mexico's western Riviera, that gives owners title to the land and the property.
There are private resort clubs like De Vere Resort Ownership that offer smaller blocks of time, more in line with the traditional timeshare model. De Vere is in the process of building a new luxury residence club, Carrick, on Loch Lomond in Scotland, near its flagship residence club, Cameron House.
A more upscale version of that property, Carrick is selling single fixed-week shares at the residence club for £8,000 to £39,000, or about $15,000 to $73,000. The resort operator has reported total sales of £4.5 million, with single customers purchasing multiple weeks at as much as £100,000.
Not a single lodge has been built, and the property is not scheduled to open until the spring of 2006.
While it is not hard to understand the economic motivation for the people creating these properties, what about the people who are buying into them?
The key benefit, said Joel Greene, a real estate broker in Miami, is that they offer investors the opportunity to own big blocks of time in a luxury vacation home in a highly desirable location for a small fraction of the cost of buying a single-family home. Likewise, they have none of the headaches associated with maintaining the home, since those things are covered by the annual dues. And then there are the perks - hotel-style services including housekeeping, room service and a concierge.
"We didn't look at this as an investment in anything other than our vacation," said Robin Morgan, speaking of the one-twelfth share, or 21 days, that she and her husband, Ken, purchased at a preconstruction rate at the Ritz-Carlton Club in St. Thomas, the U.S. Virgin Islands, in 2001 for $85,000.
The couple have since picked up a second one-week timeshare at the Marriott Waiohai Beach Club on the Hawaiian island of Kauai for $70,000.
Robin Morgan is a self-employed real estate owner and manager based in Laguna Nigel, California. While she and her husband did not expect the timeshare to be a cash cow, they did want the property to pay for itself in time.
To determine that, they established how much time they might actually spend on vacation every year at the property or one of the other three Ritz-Carlton clubs offering reciprocal membership trades.
Next they looked at what it would cost them to be repeat visitors at a comparable resort hotel in St. Thomas for 21 days versus actually owning a unit. They factored in a 6 percent financing on a 20-year loan they would receive from Ritz Carlton's in-house financing arm, along with anticipated annual dues of between $7,000 to $9,000.
"A unit like this rents for $2,000 per night," Robin Morgan said. "When we amortized what we were paying for the share, it ran around $523 per night, or $11,000 per 21 days."
This meant that the couple were getting an apartment of 1,640 square feet, or about 150 square meters, for less than the price of a 450-square-foot room at the hotel.
"We couldn't afford to do this any other way," she added.
In addition to the amortized benefits they foresee, the Morgans like the fact that they can trade their shares for stays at the Ritz Carlton's three other private residence clubs for a fee of $100. Likewise, they are eligible for a 30 percent discount when staying at a Ritz Carlton hotel anywhere in the world. As U.S. residents, the Morgans are also eligible for a 40 percent tax-rate deduction, which works out, she said, to $1,836 per year.
The only thing that the Morgans are not expecting is any return on their investment if they resell the property.
"That's not where the value is," she said.
That is because real estate timeshares, like fractional jet ownerships, generally depreciate in the secondary marketplace. While luxury residence clubs do have prestigious locales to bolster their value, brokers like Joel Greene remain skeptical as to whether they will be able to do any better in the resale market than their more modest predecessors.
"There is so much supply and not as much demand that invariably, no matter what price you pay, a timeshare generally won't appreciate," said Greene, who along with his father owns Condo Hotel Center, a 30-year old real estate brokerage business based in Miami.
There is a lot of inventory all over the world. As of Jan. 1, 2003, the American Resort Development Association estimated that there were 1,590 timeshare resorts in the United States alone, with a total of 132,000 units. New markets are opening up daily, with operators moving into uncharted territories like India, China and Thailand.
To see any meaningful appreciation, experts say, the property has to sell out. That is not always easy despite the highly desirable locations and rave reviews of many of these fractional luxury clubs.
The Phillips Club, a private residence club in New York City founded in 2001, continues to receive highly positive reviews for its services and accommodations. The development's management company, Millennium Partners, said prices for its fractional share offerings were up only slightly from their opening levels of five years ago: $125,000 to $300,000, or $1,500 per square foot.
The club, which has 350 members, was still well short of its stated goal to sell out its 704 memberships by the end of 2004. Pamela Malkani, a partner in Millennium and director of hotel operations, said resale prices through local real estate brokers were 5 percent to 15 percent higher than the original sale price.
It is because of the tough secondary market, coupled with all the fine print that generally comes along with timeshare ownership that some prospective buyers choose not to bite in the end. It was this aspect of timeshare investment that turned off Spears, the investment banker.
"The secondary market is ugly," he said.
While he looked into buying a fractional share in a private residence club, Spears said he "couldn't make the math work" in terms of his family's vacation needs and patterns and what was being offered. The other thing that bothered Spears was the "exit strategy" from residence clubs.
Developers of such clubs can preclude owners from reselling their shares until all units in their phase have been sold out. Even when they can, certain resorts require first right of purchase or ask that sales be handled through their own resale arms.
In the end, Spears bought into a Denver company, Exclusive Resorts, a new breed of luxury residence club backed by Steve Case, a founder of America Online, who became chairman in November. Similar to a nonequity country club membership, Exclusive Resorts members pay an upfront membership deposit of $375,000, of which 80 percent is refundable if a member chooses to resign. Members also pay annual dues of $10,000 to $20,000 depending on the number of days they exercise their membership during a year.
In exchange, Spears and his fellow 999 members have 30 to 60 days access to 200 fully staffed private residences at 30 sites. Company literature places the collective value of those properties at more than $500 million.
Jeff Spears said he "looked into everything" when he and his family were thinking of buying a vacation home, even sharing ownership with a bunch of strangers.
An investment banker based in San Francisco, Spears had the kind of budget that would permit him to purchase his own house and share it with no one.
So the fact that he was even considering fractional ownership of a timeshare represents something of a paradigm shift for the worldwide timeshare industry, where a hard sell and slightly shopworn properties have been the norm.
"To a lot of people, the word timeshare has become synonymous with scam, and people are very frightened of it," said Sandy Gray, founder of the Timeshare Consumers Association, which is based in England.
But things are changing. Gray said that while sales growth in midmarket timeshares in Europe was effectively flat, that had done little to tarnish the reputation, and rise, of the luxury timeshare resort clubs.
"Really, they are the only bright spot in the European market," Gray said. "It's that top 2 percent where all the growth is."
George Goeggel never imagined that he would find himself selling vacation home timeshares. Yet with resort development economics being what they are, Goeggel, a veteran hospitality executive, has found that engaging in such real estate transactions are becoming a necessity to finance the development of new resorts.
Goeggel is managing director of Auberge Resorts, an operator of luxury hotels based in the Napa Valley, the Northern California wine region. Auberge has been steadily expanding its network of luxury properties in the United States and Mexico.
Seeking to grow, the company has increasingly met with resistance from its real estate development partners who want more "immediate upfront returns" than a hotel can offer, Goeggel said.
As a compromise, resort operators like Auberge are teaming up with real estate developers to create an elite tier of timeshare properties, offered via the auspices of "private residence clubs" in or around a luxury hotel setting.
Depending on the program guidelines, they can purchase a specific unit or simply the rights to one.
The cost of ownership can range from $100,000 to $800,000, depending on the size of the share. There are also annual fees, which will increase with inflation.
Relatively new to the 40-year-old timeshare concept begun in Sweden, these residence clubs are starting to open across the globe.
Among those luxury resort operators at the forefront, along with Auberge, are DeVere Group of Britain, Ritz-Carlton Hotel, Four Seasons and Marriott Hotels & Resorts.
Auberge Resorts, for instance, is selling a one-fifth fractional share for $710,000 and one-tenth share for $425,000 in a new Napa Valley establishment, Calistoga Ranch.
Unlike more traditional timeshares, which generally parcel out shares in weeklong periods, the fractional offerings being sold by Auberge and others allow for 73 days' lodging in the case of a one-fifth share and 36 days for the one-tenth.
Owners are required to pay yearly dues of $10,000 to $20,000 depending on the type of share purchased. For Calistoga Ranch, owners of fractional shares have a lease-hold arrangement, in which they hold title to the building but not the land.
Auberge Resorts is also selling fractional ownership in a new resort, the Esperanza, on Mexico's western Riviera, that gives owners title to the land and the property.
There are private resort clubs like De Vere Resort Ownership that offer smaller blocks of time, more in line with the traditional timeshare model. De Vere is in the process of building a new luxury residence club, Carrick, on Loch Lomond in Scotland, near its flagship residence club, Cameron House.
A more upscale version of that property, Carrick is selling single fixed-week shares at the residence club for £8,000 to £39,000, or about $15,000 to $73,000. The resort operator has reported total sales of £4.5 million, with single customers purchasing multiple weeks at as much as £100,000.
Not a single lodge has been built, and the property is not scheduled to open until the spring of 2006.
While it is not hard to understand the economic motivation for the people creating these properties, what about the people who are buying into them?
The key benefit, said Joel Greene, a real estate broker in Miami, is that they offer investors the opportunity to own big blocks of time in a luxury vacation home in a highly desirable location for a small fraction of the cost of buying a single-family home. Likewise, they have none of the headaches associated with maintaining the home, since those things are covered by the annual dues. And then there are the perks - hotel-style services including housekeeping, room service and a concierge.
"We didn't look at this as an investment in anything other than our vacation," said Robin Morgan, speaking of the one-twelfth share, or 21 days, that she and her husband, Ken, purchased at a preconstruction rate at the Ritz-Carlton Club in St. Thomas, the U.S. Virgin Islands, in 2001 for $85,000.
The couple have since picked up a second one-week timeshare at the Marriott Waiohai Beach Club on the Hawaiian island of Kauai for $70,000.
Robin Morgan is a self-employed real estate owner and manager based in Laguna Nigel, California. While she and her husband did not expect the timeshare to be a cash cow, they did want the property to pay for itself in time.
To determine that, they established how much time they might actually spend on vacation every year at the property or one of the other three Ritz-Carlton clubs offering reciprocal membership trades.
Next they looked at what it would cost them to be repeat visitors at a comparable resort hotel in St. Thomas for 21 days versus actually owning a unit. They factored in a 6 percent financing on a 20-year loan they would receive from Ritz Carlton's in-house financing arm, along with anticipated annual dues of between $7,000 to $9,000.
"A unit like this rents for $2,000 per night," Robin Morgan said. "When we amortized what we were paying for the share, it ran around $523 per night, or $11,000 per 21 days."
This meant that the couple were getting an apartment of 1,640 square feet, or about 150 square meters, for less than the price of a 450-square-foot room at the hotel.
"We couldn't afford to do this any other way," she added.
In addition to the amortized benefits they foresee, the Morgans like the fact that they can trade their shares for stays at the Ritz Carlton's three other private residence clubs for a fee of $100. Likewise, they are eligible for a 30 percent discount when staying at a Ritz Carlton hotel anywhere in the world. As U.S. residents, the Morgans are also eligible for a 40 percent tax-rate deduction, which works out, she said, to $1,836 per year.
The only thing that the Morgans are not expecting is any return on their investment if they resell the property.
"That's not where the value is," she said.
That is because real estate timeshares, like fractional jet ownerships, generally depreciate in the secondary marketplace. While luxury residence clubs do have prestigious locales to bolster their value, brokers like Joel Greene remain skeptical as to whether they will be able to do any better in the resale market than their more modest predecessors.
"There is so much supply and not as much demand that invariably, no matter what price you pay, a timeshare generally won't appreciate," said Greene, who along with his father owns Condo Hotel Center, a 30-year old real estate brokerage business based in Miami.
There is a lot of inventory all over the world. As of Jan. 1, 2003, the American Resort Development Association estimated that there were 1,590 timeshare resorts in the United States alone, with a total of 132,000 units. New markets are opening up daily, with operators moving into uncharted territories like India, China and Thailand.
To see any meaningful appreciation, experts say, the property has to sell out. That is not always easy despite the highly desirable locations and rave reviews of many of these fractional luxury clubs.
The Phillips Club, a private residence club in New York City founded in 2001, continues to receive highly positive reviews for its services and accommodations. The development's management company, Millennium Partners, said
An investment banker based in San Francisco, Spears had the kind of budget that would permit him to purchase his own house and share it with no one.
So the fact that he was even considering fractional ownership of a timeshare represents something of a paradigm shift for the worldwide timeshare industry, where a hard sell and slightly shopworn properties have been the norm.
"To a lot of people, the word timeshare has become synonymous with scam, and people are very frightened of it,"
said Sandy Gray, founder of the Timeshare Consumers Association, which is based in England.
But things are changing. Gray said that while sales growth in midmarket timeshares in Europe was effectively flat, that had done little to tarnish the reputation, and rise, of the luxury timeshare resort clubs.
"Really, they are the only bright spot in the European market," Gray said. "It's that top 2 percent where all the growth is."
George Goeggel never imagined that he would find himself selling vacation home timeshares. Yet with resort development economics being what they are, Goeggel, a veteran hospitality executive, has found that engaging in such real estate transactions are becoming a necessity to finance the development of new resorts.
Goeggel is managing director of Auberge Resorts, an operator of luxury hotels based in the Napa Valley, the Northern California wine region. Auberge has been steadily expanding its network of luxury properties in the United States and Mexico.
Seeking to grow, the company has increasingly met with resistance from its real estate development partners who want more "immediate upfront returns" than a hotel can offer, Goeggel said.
As a compromise, resort operators like Auberge are teaming up with real estate developers to create an elite tier of timeshare properties, offered via the auspices of "private residence clubs" in or around a luxury hotel setting.
Depending on the program guidelines, they can purchase a specific unit or simply the rights to one.
The cost of ownership can range from $100,000 to $800,000, depending on the size of the share. There are also annual fees, which will increase with inflation.
Relatively new to the 40-year-old timeshare concept begun in Sweden, these residence clubs are starting to open across the globe.
Among those luxury resort operators at the forefront, along with Auberge, are DeVere Group of Britain, Ritz-Carlton Hotel, Four Seasons and Marriott Hotels & Resorts.
Auberge Resorts, for instance, is selling a one-fifth fractional share for $710,000 and one-tenth share for $425,000 in a new Napa Valley establishment, Calistoga Ranch.
Unlike more traditional timeshares, which generally parcel out shares in weeklong periods, the fractional offerings being sold by Auberge and others allow for 73 days' lodging in the case of a one-fifth share and 36 days for the one-tenth.
Owners are required to pay yearly dues of $10,000 to $20,000 depending on the type of share purchased. For Calistoga Ranch, owners of fractional shares have a lease-hold arrangement, in which they hold title to the building but not the land.
Auberge Resorts is also selling fractional ownership in a new resort, the Esperanza, on Mexico's western Riviera, that gives owners title to the land and the property.
There are private resort clubs like De Vere Resort Ownership that offer smaller blocks of time, more in line with the traditional timeshare model. De Vere is in the process of building a new luxury residence club, Carrick, on Loch Lomond in Scotland, near its flagship residence club, Cameron House.
A more upscale version of that property, Carrick is selling single fixed-week shares at the residence club for £8,000 to £39,000, or about $15,000 to $73,000. The resort operator has reported total sales of £4.5 million, with single customers purchasing multiple weeks at as much as £100,000.
Not a single lodge has been built, and the property is not scheduled to open until the spring of 2006.
While it is not hard to understand the economic motivation for the people creating these properties, what about the people who are buying into them?
The key benefit, said Joel Greene, a real estate broker in Miami, is that they offer investors the opportunity to own big blocks of time in a luxury vacation home in a highly desirable location for a small fraction of the cost of buying a single-family home. Likewise, they have none of the headaches associated with maintaining the home, since those things are covered by the annual dues. And then there are the perks - hotel-style services including housekeeping, room service and a concierge.
"We didn't look at this as an investment in anything other than our vacation," said Robin Morgan, speaking of the one-twelfth share, or 21 days, that she and her husband, Ken, purchased at a preconstruction rate at the Ritz-Carlton Club in St. Thomas, the U.S. Virgin Islands, in 2001 for $85,000.
The couple have since picked up a second one-week timeshare at the Marriott Waiohai Beach Club on the Hawaiian island of Kauai for $70,000.
Robin Morgan is a self-employed real estate owner and manager based in Laguna Nigel, California. While she and her husband did not expect the timeshare to be a cash cow, they did want the property to pay for itself in time.
To determine that, they established how much time they might actually spend on vacation every year at the property or one of the other three Ritz-Carlton clubs offering reciprocal membership trades.
Next they looked at what it would cost them to be repeat visitors at a comparable resort hotel in St. Thomas for 21 days versus actually owning a unit. They factored in a 6 percent financing on a 20-year loan they would receive from Ritz Carlton's in-house financing arm, along with anticipated annual dues of between $7,000 to $9,000.
"A unit like this rents for $2,000 per night," Robin Morgan said. "When we amortized what we were paying for the share, it ran around $523 per night, or $11,000 per 21 days."
This meant that the couple were getting an apartment of 1,640 square feet, or about 150 square meters, for less than the price of a 450-square-foot room at the hotel.
"We couldn't afford to do this any other way," she added.
In addition to the amortized benefits they foresee, the Morgans like the fact that they can trade their shares for stays at the Ritz Carlton's three other private residence clubs for a fee of $100. Likewise, they are eligible for a 30 percent discount when staying at a Ritz Carlton hotel anywhere in the world. As U.S. residents, the Morgans are also eligible for a 40 percent tax-rate deduction, which works out, she said, to $1,836 per year.
The only thing that the Morgans are not expecting is any return on their investment if they resell the property.
"That's not where the value is," she said.
That is because real estate timeshares, like fractional jet ownerships, generally depreciate in the secondary marketplace. While luxury residence clubs do have prestigious locales to bolster their value, brokers like Joel Greene remain skeptical as to whether they will be able to do any better in the resale market than their more modest predecessors.
"There is so much supply and not as much demand that invariably, no matter what price you pay, a timeshare generally won't appreciate," said Greene, who along with his father owns Condo Hotel Center, a 30-year old real estate brokerage business based in Miami.
There is a lot of inventory all over the world. As of Jan. 1, 2003, the American Resort Development Association estimated that there were 1,590 timeshare resorts in the United States alone, with a total of 132,000 units. New markets are opening up daily, with operators moving into uncharted territories like India, China and Thailand.
To see any meaningful appreciation, experts say, the property has to sell out. That is not always easy despite the highly desirable locations and rave reviews of many of these fractional luxury clubs.
The Phillips Club, a private residence club in New York City founded in 2001, continues to receive highly positive reviews for its services and accommodations. The development's management company, Millennium Partners, said prices for its fractional share offerings were up only slightly from their opening levels of five years ago: $125,000 to $300,000, or $1,500 per square foot.
The club, which has 350 members, was still well short of its stated goal to sell out its 704 memberships by the end of 2004. Pamela Malkani, a partner in Millennium and director of hotel operations, said resale prices through local real estate brokers were 5 percent to 15 percent higher than the original sale price.
It is because of the tough secondary market, coupled with all the fine print that generally comes along with timeshare ownership that some prospective buyers choose not to bite in the end. It was this aspect of timeshare investment that turned off Spears, the investment banker.
"The secondary market is ugly," he said.
While he looked into buying a fractional share in a private residence club, Spears said he "couldn't make the math work" in terms of his family's vacation needs and patterns and what was being offered. The other thing that bothered Spears was the "exit strategy" from residence clubs.
Developers of such clubs can preclude owners from reselling their shares until all units in their phase have been sold out. Even when they can, certain resorts require first right of purchase or ask that sales be handled through their own resale arms.
In the end, Spears bought into a Denver company, Exclusive Resorts, a new breed of luxury residence club backed by Steve Case, a founder of America Online, who became chairman in November. Similar to a nonequity country club membership, Exclusive Resorts members pay an upfront membership deposit of $375,000, of which 80 percent is refundable if a member chooses to resign. Members also pay annual dues of $10,000 to $20,000 depending on the number of days they exercise their membership during a year.
In exchange, Spears and his fellow 999 members have 30 to 60 days access to 200 fully staffed private residences at 30 sites. Company literature places the collective value of those properties at more than $500 million.
Timeshares move into a higher bracket
By Holly Hubbard Preston International Herald Tribune
SATURDAY, JANUARY 8, 2005
Jeff Spears said he "looked into everything" when he and his family were thinking of buying a vacation home, even sharing ownership with a bunch of strangers.
An investment banker based in San Francisco, Spears had the kind of budget that would permit him to purchase his own house and share it with no one.
So the fact that he was even considering fractional ownership of a timeshare represents something of a paradigm shift for the worldwide timeshare industry, where a hard sell and slightly shopworn properties have been the norm.
"To a lot of people, the word timeshare has become synonymous with scam, and people are very frightened of it," said Sandy Gray, founder of the Timeshare Consumers Association, which is based in England.
But things are changing. Gray said that while sales growth in midmarket timeshares in Europe was effectively flat, that had done little to tarnish the reputation, and rise, of the luxury timeshare resort clubs.
"Really, they are the only bright spot in the European market," Gray said. "It's that top 2 percent where all the growth is."
George Goeggel never imagined that he would find himself selling vacation home timeshares. Yet with resort development economics being what they are, Goeggel, a veteran hospitality executive, has found that engaging in such real estate transactions are becoming a necessity to finance the development of new resorts.
Goeggel is managing director of Auberge Resorts, an operator of luxury hotels based in the Napa Valley, the Northern California wine region. Auberge has been steadily expanding its network of luxury properties in the United States and Mexico.
Seeking to grow, the company has increasingly met with resistance from its real estate development partners who want more "immediate upfront returns" than a hotel can offer, Goeggel said.
As a compromise, resort operators like Auberge are teaming up with real estate developers to create an elite tier of timeshare properties, offered via the auspices of "private residence clubs" in or around a luxury hotel setting.
Depending on the program guidelines, they can purchase a specific unit or simply the rights to one.
The cost of ownership can range from $100,000 to $800,000, depending on the size of the share. There are also annual fees, which will increase with inflation.
Relatively new to the 40-year-old timeshare concept begun in Sweden, these residence clubs are starting to open across the globe.
Among those luxury resort operators at the forefront, along with Auberge, are DeVere Group of Britain, Ritz-Carlton Hotel, Four Seasons and Marriott Hotels & Resorts.
Auberge Resorts, for instance, is selling a one-fifth fractional share for $710,000 and one-tenth share for $425,000 in a new Napa Valley establishment, Calistoga Ranch.
Unlike more traditional timeshares, which generally parcel out shares in weeklong periods, the fractional offerings being sold by Auberge and others allow for 73 days' lodging in the case of a one-fifth share and 36 days for the one-tenth.
Owners are required to pay yearly dues of $10,000 to $20,000 depending on the type of share purchased. For Calistoga Ranch, owners of fractional shares have a lease-hold arrangement, in which they hold title to the building but not the land.
Auberge Resorts is also selling fractional ownership in a new resort, the Esperanza, on Mexico's western Riviera, that gives owners title to the land and the property.
There are private resort clubs like De Vere Resort Ownership that offer smaller blocks of time, more in line with the traditional timeshare model. De Vere is in the process of building a new luxury residence club, Carrick, on Loch Lomond in Scotland, near its flagship residence club, Cameron House.
A more upscale version of that property, Carrick is selling single fixed-week shares at the residence club for £8,000 to £39,000, or about $15,000 to $73,000. The resort operator has reported total sales of £4.5 million, with single customers purchasing multiple weeks at as much as £100,000.
Not a single lodge has been built, and the property is not scheduled to open until the spring of 2006.
While it is not hard to understand the economic motivation for the people creating these properties, what about the people who are buying into them?
The key benefit, said Joel Greene, a real estate broker in Miami, is that they offer investors the opportunity to own big blocks of time in a luxury vacation home in a highly desirable location for a small fraction of the cost of buying a single-family home. Likewise, they have none of the headaches associated with maintaining the home, since those things are covered by the annual dues. And then there are the perks - hotel-style services including housekeeping, room service and a concierge.
"We didn't look at this as an investment in anything other than our vacation," said Robin Morgan, speaking of the one-twelfth share, or 21 days, that she and her husband, Ken, purchased at a preconstruction rate at the Ritz-Carlton Club in St. Thomas, the U.S. Virgin Islands, in 2001 for $85,000.
The couple have since picked up a second one-week timeshare at the Marriott Waiohai Beach Club on the Hawaiian island of Kauai for $70,000.
Robin Morgan is a self-employed real estate owner and manager based in Laguna Nigel, California. While she and her husband did not expect the timeshare to be a cash cow, they did want the property to pay for itself in time.
To determine that, they established how much time they might actually spend on vacation every year at the property or one of the other three Ritz-Carlton clubs offering reciprocal membership trades.
Next they looked at what it would cost them to be repeat visitors at a comparable resort hotel in St. Thomas for 21 days versus actually owning a unit. They factored in a 6 percent financing on a 20-year loan they would receive from Ritz Carlton's in-house financing arm, along with anticipated annual dues of between $7,000 to $9,000.
"A unit like this rents for $2,000 per night," Robin Morgan said. "When we amortized what we were paying for the share, it ran around $523 per night, or $11,000 per 21 days."
This meant that the couple were getting an apartment of 1,640 square feet, or about 150 square meters, for less than the price of a 450-square-foot room at the hotel.
"We couldn't afford to do this any other way," she added.
In addition to the amortized benefits they foresee, the Morgans like the fact that they can trade their shares for stays at the Ritz Carlton's three other private residence clubs for a fee of $100. Likewise, they are eligible for a 30 percent discount when staying at a Ritz Carlton hotel anywhere in the world. As U.S. residents, the Morgans are also eligible for a 40 percent tax-rate deduction, which works out, she said, to $1,836 per year.
The only thing that the Morgans are not expecting is any return on their investment if they resell the property.
"That's not where the value is," she said.
That is because real estate timeshares, like fractional jet ownerships, generally depreciate in the secondary marketplace. While luxury residence clubs do have prestigious locales to bolster their value, brokers like Joel Greene remain skeptical as to whether they will be able to do any better in the resale market than their more modest predecessors.
"There is so much supply and not as much demand that invariably, no matter what price you pay, a timeshare generally won't appreciate," said Greene, who along with his father owns Condo Hotel Center, a 30-year old real estate brokerage business based in Miami.
There is a lot of inventory all over the world. As of Jan. 1, 2003, the American Resort Development Association estimated that there were 1,590 timeshare resorts in the United States alone, with a total of 132,000 units. New markets are opening up daily, with operators moving into uncharted territories like India, China and Thailand.
To see any meaningful appreciation, experts say, the property has to sell out. That is not always easy despite the highly desirable locations and rave reviews of many of these fractional luxury clubs.
The Phillips Club, a private residence club in New York City founded in 2001, continues to receive highly positive reviews for its services and accommodations. The development's management company, Millennium Partners, said prices for its fractional share offerings were up only slightly from their opening levels of five years ago: $125,000 to $300,000, or $1,500 per square foot.
The club, which has 350 members, was still well short of its stated goal to sell out its 704 memberships by the end of 2004. Pamela Malkani, a partner in Millennium and director of hotel operations, said resale prices through local real estate brokers were 5 percent to 15 percent higher than the original sale price.
It is because of the tough secondary market, coupled with all the fine print that generally comes along with timeshare ownership that some prospective buyers choose not to bite in the end. It was this aspect of timeshare investment that turned off Spears, the investment banker.
"The secondary market is ugly," he said.
While he looked into buying a fractional share in a private residence club, Spears said he "couldn't make the math work" in terms of his family's vacation needs and patterns and what was being offered. The other thing that bothered Spears was the "exit strategy" from residence clubs.
Developers of such clubs can preclude owners from reselling their shares until all units in their phase have been sold out. Even when they can, certain resorts require first right of purchase or ask that sales be handled through their own resale arms.
In the end, Spears bought into a Denver company, Exclusive Resorts, a new breed of luxury residence club backed by Steve Case, a founder of America Online, who became chairman in November. Similar to a nonequity country club membership, Exclusive Resorts members pay an upfront membership deposit of $375,000, of which 80 percent is refundable if a member chooses to resign. Members also pay annual dues of $10,000 to $20,000 depending on the number of days they exercise their membership during a year.
In exchange, Spears and his fellow 999 members have 30 to 60 days access to 200 fully staffed private residences at 30 sites. Company literature places the collective value of those properties at more than $500 million.
Jeff Spears said he "looked into everything" when he and his family were thinking of buying a vacation home, even sharing ownership with a bunch of strangers.
An investment banker based in San Francisco, Spears had the kind of budget that would permit him to purchase his own house and share it with no one.
So the fact that he was even considering fractional ownership of a timeshare represents something of a paradigm shift for the worldwide timeshare industry, where a hard sell and slightly shopworn properties have been the norm.
"To a lot of people, the word timeshare has become synonymous with scam, and people are very frightened of it," said Sandy Gray, founder of the Timeshare Consumers Association, which is based in England.
But things are changing. Gray said that while sales growth in midmarket timeshares in Europe was effectively flat, that had done little to tarnish the reputation, and rise, of the luxury timeshare resort clubs.
"Really, they are the only bright spot in the European market," Gray said. "It's that top 2 percent where all the growth is."
George Goeggel never imagined that he would find himself selling vacation home timeshares. Yet with resort development economics being what they are, Goeggel, a veteran hospitality executive, has found that engaging in such real estate transactions are becoming a necessity to finance the development of new resorts.
Goeggel is managing director of Auberge Resorts, an operator of luxury hotels based in the Napa Valley, the Northern California wine region. Auberge has been steadily expanding its network of luxury properties in the United States and Mexico.
Seeking to grow, the company has increasingly met with resistance from its real estate development partners who want more "immediate upfront returns" than a hotel can offer, Goeggel said.
As a compromise, resort operators like Auberge are teaming up with real estate developers to create an elite tier of timeshare properties, offered via the auspices of "private residence clubs" in or around a luxury hotel setting.
Depending on the program guidelines, they can purchase a specific unit or simply the rights to one.
The cost of ownership can range from $100,000 to $800,000, depending on the size of the share. There are also annual fees, which will increase with inflation.
Relatively new to the 40-year-old timeshare concept begun in Sweden, these residence clubs are starting to open across the globe.
Among those luxury resort operators at the forefront, along with Auberge, are DeVere Group of Britain, Ritz-Carlton Hotel, Four Seasons and Marriott Hotels & Resorts.
Auberge Resorts, for instance, is selling a one-fifth fractional share for $710,000 and one-tenth share for $425,000 in a new Napa Valley establishment, Calistoga Ranch.
Unlike more traditional timeshares, which generally parcel out shares in weeklong periods, the fractional offerings being sold by Auberge and others allow for 73 days' lodging in the case of a one-fifth share and 36 days for the one-tenth.
Owners are required to pay yearly dues of $10,000 to $20,000 depending on the type of share purchased. For Calistoga Ranch, owners of fractional shares have a lease-hold arrangement, in which they hold title to the building but not the land.
Auberge Resorts is also selling fractional ownership in a new resort, the Esperanza, on Mexico's western Riviera, that gives owners title to the land and the property.
There are private resort clubs like De Vere Resort Ownership that offer smaller blocks of time, more in line with the traditional timeshare model. De Vere is in the process of building a new luxury residence club, Carrick, on Loch Lomond in Scotland, near its flagship residence club, Cameron House.
A more upscale version of that property, Carrick is selling single fixed-week shares at the residence club for £8,000 to £39,000, or about $15,000 to $73,000. The resort operator has reported total sales of £4.5 million, with single customers purchasing multiple weeks at as much as £100,000.
Not a single lodge has been built, and the property is not scheduled to open until the spring of 2006.
While it is not hard to understand the economic motivation for the people creating these properties, what about the people who are buying into them?
The key benefit, said Joel Greene, a real estate broker in Miami, is that they offer investors the opportunity to own big blocks of time in a luxury vacation home in a highly desirable location for a small fraction of the cost of buying a single-family home. Likewise, they have none of the headaches associated with maintaining the home, since those things are covered by the annual dues. And then there are the perks - hotel-style services including housekeeping, room service and a concierge.
"We didn't look at this as an investment in anything other than our vacation," said Robin Morgan, speaking of the one-twelfth share, or 21 days, that she and her husband, Ken, purchased at a preconstruction rate at the Ritz-Carlton Club in St. Thomas, the U.S. Virgin Islands, in 2001 for $85,000.
The couple have since picked up a second one-week timeshare at the Marriott Waiohai Beach Club on the Hawaiian island of Kauai for $70,000.
Robin Morgan is a self-employed real estate owner and manager based in Laguna Nigel, California. While she and her husband did not expect the timeshare to be a cash cow, they did want the property to pay for itself in time.
To determine that, they established how much time they might actually spend on vacation every year at the property or one of the other three Ritz-Carlton clubs offering reciprocal membership trades.
Next they looked at what it would cost them to be repeat visitors at a comparable resort hotel in St. Thomas for 21 days versus actually owning a unit. They factored in a 6 percent financing on a 20-year loan they would receive from Ritz Carlton's in-house financing arm, along with anticipated annual dues of between $7,000 to $9,000.
"A unit like this rents for $2,000 per night," Robin Morgan said. "When we amortized what we were paying for the share, it ran around $523 per night, or $11,000 per 21 days."
This meant that the couple were getting an apartment of 1,640 square feet, or about 150 square meters, for less than the price of a 450-square-foot room at the hotel.
"We couldn't afford to do this any other way," she added.
In addition to the amortized benefits they foresee, the Morgans like the fact that they can trade their shares for stays at the Ritz Carlton's three other private residence clubs for a fee of $100. Likewise, they are eligible for a 30 percent discount when staying at a Ritz Carlton hotel anywhere in the world. As U.S. residents, the Morgans are also eligible for a 40 percent tax-rate deduction, which works out, she said, to $1,836 per year.
The only thing that the Morgans are not expecting is any return on their investment if they resell the property.
"That's not where the value is," she said.
That is because real estate timeshares, like fractional jet ownerships, generally depreciate in the secondary marketplace. While luxury residence clubs do have prestigious locales to bolster their value, brokers like Joel Greene remain skeptical as to whether they will be able to do any better in the resale market than their more modest predecessors.
"There is so much supply and not as much demand that invariably, no matter what price you pay, a timeshare generally won't appreciate," said Greene, who along with his father owns Condo Hotel Center, a 30-year old real estate brokerage business based in Miami.
There is a lot of inventory all over the world. As of Jan. 1, 2003, the American Resort Development Association estimated that there were 1,590 timeshare resorts in the United States alone, with a total of 132,000 units. New markets are opening up daily, with operators moving into uncharted territories like India, China and Thailand.
To see any meaningful appreciation, experts say, the property has to sell out. That is not always easy despite the highly desirable locations and rave reviews of many of these fractional luxury clubs.
The Phillips Club, a private residence club in New York City founded in 2001, continues to receive highly positive reviews for its services and accommodations. The development's management company, Millennium Partners, said
Tuesday, January 03, 2006
Americans Are Buying Second Timeshare Homes By The Slice
Just like leisure-starved Americans who sneak away for a weekend when a long holiday isn't practical, people who want a second home can opt for a smaller slice of that dream.
While the "timeshare" idea has been around a long time, other options are proliferating, going "fractional ownership," "private residence clubs," "non-equity clubs," and "condo-hotel" or "condotel."
Not all of these options share the characteristics of owning real estate, like the deductibility of mortgage interest and profit on resale.
It's a mistake to consider a timeshare a real estate investment; it's really an investment in a vacation, says notes Richard Ragatz, president of Ragatz Associates, a resort research firm based in Eugene, Ore.
The term "timeshare," according to the American Resort Development Association, a Washington, D.C., trade group, refers to "multiple owners sharing the same vacation property, such as a condominium, and utilizing it for a specified time period. Ownership could be in the form of a deed, right to use, points program, or other purchase structure."
Timeshare owners probably can't expect to sell their share at a profit, as they might a vacation home, Ragatz says.
Moreover, buyers of second homes who get a mortgage to pay for the property can deduct the interest charges on the loan. Many buyers of new timeshares can get a loan from the developer, but the interest is deductible only when the loan is secured by a deed for the timeshare property, says Robert J. Webb, an Orlando-based senior partner in the hospitality practice of law firm Baker & Hostetler LLP.
Rules for deductibility on a loan to buy a timeshare or other property are outlined in IRS Publication 936, Webb says. If someone elects to use a home equity loan to buy a time share or other type of vacation property, that interest is deductible, as long as the loan doesn't exceed $100,000, he says. Because interest deductibility issues can get complicated, Webb recommends first consulting a tax adviser.
A related, but distinctly different model from the time share, are "fractional ownership" or "fractional interest" resorts.
As of last spring, about 150 resorts offered fractional interests, according to a recent Ragatz Associates report. That doesn't count many smaller clusters of condos or houses sold on a fractional basis, Ragatz says.
"The idea of fractionals has been around as long as vacation homes have," Ragatz says. "For a long time, friends have come together to buy a vacation home. It's about the last five years that a whole industry has sprung up oriented to fractionals."
While timeshares are typically sold in weekly increments, fractionals are sold in bundles of weeks, Ragatz explains.
Fractionals are a real estate investment, and a pricey one at that, Ragatz says, with the average sale price at $650 a square foot. These properties are often located at posh resorts, and include amenities like concierge services.
Fractional owners get a deed for their share of the property, Webb notes. Many developers don't provide financing for fractionals, however, and buyers often finance a fractional purchase with an equity loan on their principal residence.
So far, fractional resales have fetched about a 10 percent return, according to Ragatz.
However, there is a sub-type of fractional known as a "non-equity club" that is "not a pure real estate investment," Ragatz says. With these, owners buy membership in a club that entitles them to use a variety of resort homes. They don't receive a property deed.
Finally, a "condo hotel" is a condo in a complex managed by a resort. Vacationers book nights in a privately owned condo, Ragatz explains. Condotel owners must also use it themselves a certain number of days if they intend to deduct interest on their purchase loan, Webb says.
It's a confusing landscape, and will become even more so as developers meld elements from one option into another. Buyers should first examine what they want -- such as property they can resell at a profit or property that they can collect rent on -- and then vigorously research whether that aim is feasible, Webb says.
While the "timeshare" idea has been around a long time, other options are proliferating, going "fractional ownership," "private residence clubs," "non-equity clubs," and "condo-hotel" or "condotel."
Not all of these options share the characteristics of owning real estate, like the deductibility of mortgage interest and profit on resale.
It's a mistake to consider a timeshare a real estate investment; it's really an investment in a vacation, says notes Richard Ragatz, president of Ragatz Associates, a resort research firm based in Eugene, Ore.
The term "timeshare," according to the American Resort Development Association, a Washington, D.C., trade group, refers to "multiple owners sharing the same vacation property, such as a condominium, and utilizing it for a specified time period. Ownership could be in the form of a deed, right to use, points program, or other purchase structure."
Timeshare owners probably can't expect to sell their share at a profit, as they might a vacation home, Ragatz says.
Moreover, buyers of second homes who get a mortgage to pay for the property can deduct the interest charges on the loan. Many buyers of new timeshares can get a loan from the developer, but the interest is deductible only when the loan is secured by a deed for the timeshare property, says Robert J. Webb, an Orlando-based senior partner in the hospitality practice of law firm Baker & Hostetler LLP.
Rules for deductibility on a loan to buy a timeshare or other property are outlined in IRS Publication 936, Webb says. If someone elects to use a home equity loan to buy a time share or other type of vacation property, that interest is deductible, as long as the loan doesn't exceed $100,000, he says. Because interest deductibility issues can get complicated, Webb recommends first consulting a tax adviser.
A related, but distinctly different model from the time share, are "fractional ownership" or "fractional interest" resorts.
As of last spring, about 150 resorts offered fractional interests, according to a recent Ragatz Associates report. That doesn't count many smaller clusters of condos or houses sold on a fractional basis, Ragatz says.
"The idea of fractionals has been around as long as vacation homes have," Ragatz says. "For a long time, friends have come together to buy a vacation home. It's about the last five years that a whole industry has sprung up oriented to fractionals."
While timeshares are typically sold in weekly increments, fractionals are sold in bundles of weeks, Ragatz explains.
Fractionals are a real estate investment, and a pricey one at that, Ragatz says, with the average sale price at $650 a square foot. These properties are often located at posh resorts, and include amenities like concierge services.
Fractional owners get a deed for their share of the property, Webb notes. Many developers don't provide financing for fractionals, however, and buyers often finance a fractional purchase with an equity loan on their principal residence.
So far, fractional resales have fetched about a 10 percent return, according to Ragatz.
However, there is a sub-type of fractional known as a "non-equity club" that is "not a pure real estate investment," Ragatz says. With these, owners buy membership in a club that entitles them to use a variety of resort homes. They don't receive a property deed.
Finally, a "condo hotel" is a condo in a complex managed by a resort. Vacationers book nights in a privately owned condo, Ragatz explains. Condotel owners must also use it themselves a certain number of days if they intend to deduct interest on their purchase loan, Webb says.
It's a confusing landscape, and will become even more so as developers meld elements from one option into another. Buyers should first examine what they want -- such as property they can resell at a profit or property that they can collect rent on -- and then vigorously research whether that aim is feasible, Webb says.
Sunday, January 01, 2006
Acquisition of Walton Hall & Timeshare for £15m
The Hotel Corporation - the AIM quoted investment company established as a vehicle for public company investors to invest in Dawnay ShoreHotelsplc (DSH)- is pleased to announce a further acquisition of a major hotel and conference venue. DSH is the hotel group established by Dawnay, Day and Shore Capital in 2004 to build a chain of four-star hotels in the UK. DSH has a stated intention of making complementary acquisitions in the sector. The initial hotel portfolio of DSH consistsof 13 hotels, acquired as the Paramount chain in July 2004, together with 3 additional hotels acquired from subsidiary companies of Hanover International plc in January 2005. Paramount Group of Hotels is the hotels' brandname.
Highlights
DSH has acquired a large existing timeshare and leisure complex, Walton Hall at Wellesbourne, near Stratford Upon Avon. Walton Hall houses 132 time-share units, whose interests have been bought out. DSH has obtained planning consent to convert the property into a high qualityfour-star country hotel and spa with around 200 rooms,substantial conference facilities, leisure and fitness. DSH will operate it as a hotel from acquisition.
The purchase consideration is£15.2 mandis to be financed from internal resources and an additional facilityfrom DSH's bank. The property has a 104 year lease with amodest ground rent.
Built in the 1860s (designed by SirGilbertScott) and situated within grounds of 65 acres, this listed property is highly complementary with DSH's existing portfolio of hotels,many of which have architectural and historical significance.
The facilities of the existing property include two restaurants, two bars,an indoorand outdoor swimming pool, 2 tennis courts a fitness and leisure club,a main event room and meeting rooms. The property currently has athriving business hosting weddings, conferences andother events.
While the existing character of the main house will be maintained, DSH proposes to upgrade the property. The works will convert the timeshare units into hotel bedrooms and, in some cases, to meeting rooms(increasing the number from 3 to 10). Subject to planning,it is also proposed to build a new 10,000 sq ft conference facility.The total cost of these works is likely to be around £10m.
Initial refurbishment is expected to start in January 2006 and the internal works should be completed by the summer of 2006, when the hotel will bere-launched with the Paramount brand of distinction. The new conference facility is expected to be completed by the summer of 2007.
DSH hasimmediate ownership of the property and will provide continuity on all existing and ongoing bookings (some existing timeshare bookings, plus events). Walton Hall is expected to contribute to DSH's operating profit from inception, although at a lower rate until the refurbishment is completed.
Charles Prew, chief executive of Paramount Hotels, said:
"This is a stunning property which I am sure is destined to become one of our flagship hotels. We remain convinced that four-star regional hotels which can offer full conference and leisure facilities will continue tobe attractive to both the corporate and leisure markets. This represents an important niche for us to occupy and build a major group of hotels."
Barclay Douglas, chairman of The Hotel Corporation, said:
"We are delighted to see that DSH has made another acquisition which looks to have the potential for a significant uplift in value."
Highlights
DSH has acquired a large existing timeshare and leisure complex, Walton Hall at Wellesbourne, near Stratford Upon Avon. Walton Hall houses 132 time-share units, whose interests have been bought out. DSH has obtained planning consent to convert the property into a high qualityfour-star country hotel and spa with around 200 rooms,substantial conference facilities, leisure and fitness. DSH will operate it as a hotel from acquisition.
The purchase consideration is£15.2 mandis to be financed from internal resources and an additional facilityfrom DSH's bank. The property has a 104 year lease with amodest ground rent.
Built in the 1860s (designed by SirGilbertScott) and situated within grounds of 65 acres, this listed property is highly complementary with DSH's existing portfolio of hotels,many of which have architectural and historical significance.
The facilities of the existing property include two restaurants, two bars,an indoorand outdoor swimming pool, 2 tennis courts a fitness and leisure club,a main event room and meeting rooms. The property currently has athriving business hosting weddings, conferences andother events.
While the existing character of the main house will be maintained, DSH proposes to upgrade the property. The works will convert the timeshare units into hotel bedrooms and, in some cases, to meeting rooms(increasing the number from 3 to 10). Subject to planning,it is also proposed to build a new 10,000 sq ft conference facility.The total cost of these works is likely to be around £10m.
Initial refurbishment is expected to start in January 2006 and the internal works should be completed by the summer of 2006, when the hotel will bere-launched with the Paramount brand of distinction. The new conference facility is expected to be completed by the summer of 2007.
DSH hasimmediate ownership of the property and will provide continuity on all existing and ongoing bookings (some existing timeshare bookings, plus events). Walton Hall is expected to contribute to DSH's operating profit from inception, although at a lower rate until the refurbishment is completed.
Charles Prew, chief executive of Paramount Hotels, said:
"This is a stunning property which I am sure is destined to become one of our flagship hotels. We remain convinced that four-star regional hotels which can offer full conference and leisure facilities will continue tobe attractive to both the corporate and leisure markets. This represents an important niche for us to occupy and build a major group of hotels."
Barclay Douglas, chairman of The Hotel Corporation, said:
"We are delighted to see that DSH has made another acquisition which looks to have the potential for a significant uplift in value."
