Fractional Summit 2009 Convention Review
July 28, 2009 by Perspective Magazine | Timeshare & Fractional ReviewsFractional real estate professionals were brought together on Thursday 23rd and Friday 24th April in London to attend the second annual Fractional Summit.
The Summit was held at the prestigious Hilton Metropole and organised by Fractional Life with headline sponsorship from Registry Collection and sponsors: FOC – Fractional Ownership Consultancy, Citadel Trustees Ltd, DCP International, Castello di Casole – Timbers Resorts, Preferred Residences, First American Title and yooPhuket. The event attracted over 210 fractional property developers, brands and service operators together with leading property journalists.
The theme of this year’s conference ‘Fractional ownership: the rewards and opportunities’ ensured a good turnout with delegates from all around the world including Denmark, Italy, Spain, France, Portugal, Republic of Ireland, USA, Cyprus, Turkey, Mexico, Thailand, South Africa, Dubai, Russia, Australia, Cape Verde, Lebanon, India, Croatia and the United Kingdom.
The event gave fractional professionals from around the world an overview of the current state of the industry in Europe with a two-day programme of presentations and panel discussions.
One of the recent causes for concern, which is linked to making consumers more aware of fractional ownership is the lack of a clear definition of the product, with different developers using different terminology in their marketing materials. On this subject, Preben Vestdam, Principal and CEO of Valhalla Associates discussed industry definitions of luxury fractional ownership, Destination and Private Residence Clubs and the requirements of each. He spoke about and highlighted the main differences between Destination Club, PRC, fractional ownership and timeshare and ran through everything the potential fractional developer who may be considering adding one of these to his mix of products needs to know, from business models in usage plans, preferred locations, pricing methodology, and success and failure factors.
Despite managing to achieve increased positive press coverage over recent months, there’s no denying that the fractional property market in Europe is very much in its infancy, so it was very inspiring to hear from Sarah Rezak who is a senior consultant from Ragatz Associates. Sarah presented figures to show the size of the US fractional industry and how the marketplace has grown to be worth $1.6 billion dollars in 2008 (down from $2.3 billion dollars in 2007). What is interesting is that many UK and European consumers buying trends tend to follow shortly behind the US. Currently in the US there are 138 Private Residence Clubs and 12 Destination Clubs. Sarah shared with us some interesting statistics about the satisfaction levels of fractional owners – 87% of Fractional Owners and 95% of Private Residence Owners said that knowing what they know now about their purchase, they would do it again.
Following on from an interactive panel session talking about the fractional hotspots around the world we were introduced to Marc Koerts, Managing Director, Avenio Prieuré and Marina Palmerio of Timbers Resorts. At a time when many real estate developers are considering whether to change the mix of their property and may be considering a shared ownership offering we heard from two very different fractional developers, Marc Koerts shared with us his journey from being a self-confessed ‘fractional novice’ last year to, 12 months on successfully launching his mixed use “Avenio Prieuré” fractional ownership development in Provence, France – his resorts were featured in Perspective Magazine in June 2009 (available online at www.theperspectivemagazine.com). Marina Palmerio presented Timbers Resorts’ and Castello di Casole’s vision. She explained that for many, their dream is to own their own home in Tuscany, Italy and that Castello di Casole offers one of Tuscany’s most remarkable villas and surrounding estates, but also the option of whole or fractional ownership.
Nick Turner, Vice President & Head of New Developments – Europe for Registry Collection discussed the growing trend of converting traditional real estate into Fractional Ownership and gave an overview of where the fractional industry is today. His session highlighted that there are 4 main typical destinations ski, golf, beach and urban. The cost of a fractional ranges from $99,200 to $247,000 and the units are fairly large – 1670 sq ft – 2500 sq ft. The largest potential growth areas would likely be Spain, Italy, Portugal, UK, France, Cyprus and Croatia. He went on to explain how the exchange programme with Registry Collection which is the largest in the world can add huge benefits to the Fractional offering by giving the fractional owner access to 160 of some of the world’s most exclusive resorts.
As a break from concentrating on the property arena, Richard Thomas, Director of Marketing for Jet Republic gave us an amazing insight into the world of Fractional Jet Ownership. He told us about the Jet Republic mission: to revolutionise private jet travel with dramatically improved service in the air and on the ground.
Despite the current economic climate he said that they have put their money where their mouths are and have just placed the largest order in European history – 110 Learjet 60 XRs valued at $1.5 billion. The Learjet60XR is the best in its class flying higher, faster and further.
Chris Allen of Citadel Trustees spoke about the importance of getting the right structure to support the right product, right from the start. He explained the importance of getting it right from the start with a structure which supports the product from a legal, operational, sales and marketing perspective. A structure that combines flexibility for future product development with complete security for added product credibility. Doing this is both cost effective and financially logical for buyer and seller and offers each an exit route. Linked to this was a presentation from Andrew Warren, Partner, Anne Taylor, Partner from Irwin Mitchell law firm which is based in London. They spoke about the important and controversial issue that the fractional industry is currently governed by the Timeshare Directive which is part of the Consumer legislation under review at the moment in the ECC. The timeshare (Fractional) contract is a contract of accommodation use for the duration of more than one year by which a consumer acquires the right to use one or more overnight accommodation for more than one period of occupation.
The current directive states that Fractional Ownership cannot be sold as an investment. Further stipulations are that pre-contractual information should be provided in good time before the consumer is bound by any contract or offer and specific information to be contained in timeshare, long term holiday product, resale & exchange contracts. The contract should be in writing in the language of the Member State in which the client is a national. Cooling off period is extended to 14 days from the day of conclusion of the contract. If the withdrawal form is not provided, the period of withdrawal expires after one year and fourteen days. There is a total ban on advance payments, provision of guarantee, reservation of money on account and acknowledgment of debt during withdrawal period for all contracts.
Greig Holbrook from Oban Multilingual gave us a fascinating insight into the multilingual Search engine optimisation. He explained how SEO works and gave us examples of what we needed to do to increase our rankings on Google but given that not everyone searches in English or even uses Google there were other things you could do to increase your rankings. Things such as Keyphrases: Cultural variants, Search Engines, content, Domain names/localisation, Global Social Media, Growth in penetration per country.
Claude Attala – Global Managing Director of Northcourse released the findings of the first ever research paper dedicated to the fractional property market in Europe. The study, titled “Europe: Trends In Fractional Real Estate 2009” identified the following: there are 90 fractional products in Europe in the form of private residence clubs and fractional properties. Over 70% of fractional properties are located within a mixed use environment. More than 60% of these are located near the beach or a golf course, although there has been a recent growth in urban properties. Italy was chosen by those interviewed as the most desirable location followed closely by France. Portugal is also popular, followed closely by the UK, Turkey and Spain.
Of those interviewed, 33% said they were likely and 13% very likely to purchase a fractional property in the future. The remaining 54% said they were not likely to purchase a fractional at present, which highlights the need for increasing awareness of the fractional product.
We then heard some very interactive panel discussions, ‘Live’ Fractional Practical Exercises, Capturing the high net worth fractional Consumer and connecting with different cultures.
Speakers and panellists were upbeat about the future of the fractional industry despite the economic downturn, pointing at a sustained growth curve in the European fractional property market over the next few years.
The newly-launched Fractional Life Summit Awards were also presented, amongst them was Avenio Prieuré, a luxury resort development company in Provence and member of The Registry Collection, scooping the Fractional Life Award for Innovation and Excellence, the top accolade in the fractional industry.
Delegate Quotes:
“In sharp contrast to the general economic news, there was an excited buzz as new projects and current fractional successes were discussed and planned” – Eric Gummers, Howard Kennedy
“You’ll have over 300 delegates at the next one – I hope you have the space” – Peter Matthews, Cave Creative
“I really enjoyed the fractional ownership conference, expected less, very impressed, will do a lot of business from it” – Vincent Barbera, Destination Sicily.
“Great fractional property conference – it served its purpose and I enjoyed all the speakers. I’ll definitely attend next year” – Chris Bannister, GRM Solicitors.
“I think it’s been one of the best conferences and feel very positive. I would have liked to have more representatives there, will bring more next year” – Richard Thomas, Jet Republic.
“I enjoyed the conference very much, very positive feedback, panel discussions were great. I got to meet everyone I wanted to” – Maurizio Bisicky, Marriott Vacation Club International.
“It’s the first event I’ve been to in a while that has exceeded my expectations. I noticed many new faces, both developers and suppliers coming into the industry. In a time when most markets are looking inwards, it was great to see people actually making plans to enter or expand their operations in the fractional market” -
Ioannis Verdelis, Select Ownership.
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