Miami – Destination & Private Residence Club Industry Symposium

Reviewed By Aaron Weddell, Fractional Life

I’m fresh back from my trip to Miami attending the (deep breath) The Second Annual Destination Club & Private Residence Club Industry Symposium. We’ll be posting up stories on some of the nuggets of information and announcements made at the event elsewhere so check out the other news stories on our News page- a page that is groaning under the weight of news at the moment of current fractional events and developments, a positive sign reinforced by the upbeat tone of this event despite the overall downbeat economic climate we hear so much of in the mainstream media.

The event was well-attended by some of the leading lights of the Destination Club & PRC market including Ultimate Escapes, Everlands, Exclusive Resorts, the new Abercrombie & Kent club, One Key, LUSSO, Solstice, Equity Estates and Distinctive Holiday Homes as well as a number of related fractional service providers and media including our very own Senior Staff Writer Susan Kime of Kimedia.

So we popped on our pastel suits, rolled up our sleeves and slipped on our loafers (sans socks) and got involved! There were a number of key themes that ran throughout so I have broken down into the following
headed areas:

Awareness
A big ‘problem’ for the fractional market in general is a lack of consumer awareness. Problem in inverted commas as the market is booming and as Howard Nusbaum, President and CEO of ARDA, told us that fractional property achieved $13bn in sales for 2007 and with the 78m upcoming boomers that are on the increase, yet still not enough of the general populace are aware that fractional property is out there.

Jim Tousignant, President and CEO of Ultimate Resorts stated that there are 4 million people in the US alone that meet the minimum income criteria for joining a Destination Club yet so far there is only a 1% market
penetration. For those who are savvy to the opportunities there still needed to be more understanding as to the differences between a deeded real estate, right to use, equity, or non-equity club.

Jim predicted tremendous international growth of members as marketing efforts look to the large base of current timeshare owners looking to upgrade to a PRC or Destination Club. Despite timeshare being a much maligned term in the UK there are apparently still 4m+ timeshare owners out-there who have spent up to $100k and beyond so if even a small percentage of those could be ‘converted’ that would represent a massive boon.

Credibility
As a flow-through from awareness the key to achieving adopters is having a highly credible product. As the market grows it is undoubtedly attracting major players from related industries who bring their big name brands to the party and thus add credibility in the eyes of the man-in-the-street. Jarvis Slade, President of Abercrombie & Kent Residence Club – has many years of experience with wealthy customers through his work at American Express and said that once aware of the opportunities in the fractional world he feels that many would take the plunge and that Abercrombie & Kent’slong history in travel would add to the credibility of the industry.

Awareness and credibility was a rich thread that ran throughout many of the presentations.

Value
Value, although not necessarily by way of PRCs and Destination Clubs offering a cheaper alternative to more traditional forms of vacationing. Jeff Potter, CEO, Exclusive Resorts said that he felt that joining a club was
more about the improved lifestyle for families rather than a strict financial investment and that although there is often a heavy focus on equity potential that the true value was in the experience itself.

Steve Greer, President and CEO, LUSSO Collection backed up this sentiment in saying that that his average member has a $5m networth that a Destination Club is more of a “consumption product” than an
“investment product”.

Time is a precious commodity for the wealthy and the cost is potentially immaterial (within reason – people don’t become rich by paying well over the odds!) if the overall experience is a good one. Richard Keith, Chairman of the Board, Ultimate Escapes made an illuminating proclamation on the topic of net worth against fractional spend in that there is not necessarily correlation to the net worth of a member and the specific club they join. The bottom line being that the wealthiest members don’t necessarily opt for the top-tier clubs but instead select one most closely matching their time, location, facilities and space requirements. A logical but often overlooked point.

On ‘value’ from a more monetary perspective Christian Kirschner, President and CEO, High Country Club made some interesting points. The High Country Club is targeted at a more cost conscious consumer with
average member is a 40-55 year old couple with 2-3 children (compared to the older, often retired demographic of higher tier clubs) who would generally holiday at the best hotels and resorts and would often need two rooms to accommodate their families so the HCC can make emotional and economic
sense. This is particularly relevant in the current economic climate as families who would traditionally plumped for second home but now see that their down payment could instead be used to join a DC, thus sparing them the cost of continuous second-home ownership and associated hassles.

QTR
We love a decent buzz-phrase here at FL Towers and Gregg Amonette, Senior Vice President, Business Development; Ultimate Escapes introduced us to an absolute winner of a phrase. QTR stands for Quality Time Remaining- which basically means making the most of the time we have before one departs to their
fractional residence in the clouds.

Through the results of a recent Ultimate Resorts member survey Gregg explained that 70% of their members are 45-65 years old with children and stated many members are grandparents joining to allow them to spend time with their adult children and grandchildren. They are claiming back time that may have been, to some extent, ‘lost’ whilst they were building their personal empires and are now looking to enjoy the wealth they have accumulated with the people they hold most dear.

This tied in something that Howard Nusbaum mentioned earlier in the day that retirement is no longer for settling down and that retirees are becoming increasingly active in their later years so are still looking for new opportunities and excitement.

As a positive aside Gregg also indicated that the most recent month was a record one for new member sign-ups.

Conclusion
In the future, it seems the growth of the ‘super-club’ such as the likes of Ultimate Escapes will continue but with such a wide potential market there will still be a place for more niche offerings catering to specific tastes. Customer satisfaction is king. Aside from high-level advertising campaigns and the increased popularity of such sites as our very own Fractional Life growing the marketplace the key to new member sign-ups are referrals. The kind of high net-worth individuals who sign up to fractional offerings quite rightly demand the best but as long as that is delivered they will recommend the opportunity to their peers so membership satisfaction and retention is key to being successful.

Experiences are looking to become more tailored to the individual- this can be accomplished through ‘unbundling’- providing just the services that each member requires rather than providing a number of ‘value-added’ extras that do anything but in some cases. As a logical progression there will be a growth of fractional hybrids mixing different club structures.

Credibility through recognised branding is beneficial to the whole industry through increased awareness and greater consumer understanding. As a knock-on effect there will be an expansion in fractional tie-in
products, particularly finance and a change in willingness of developers to embrace fractional based business – reducing restrictions on transient use in some already established gated communities.

Previously we have looked at the topic of tempering conspicuous consumption and the desire for individuals to enjoy themselves but balance this against environmental impact and a move away from ‘flashy’ demonstrations of wealth. Kenneth May, CEO, Everlands –presented his clubs eco-friendly resorts built with a dedication to protecting the environment and this was a familiar thread throughout the symposiumperhaps
a theme best summed up as a ‘philanthropic spirit’. Another common theme emerging was the importance of sharing the luxury lifestyle experience with family and friends.

Overall the marketplace is growing at a pace at odds with the broader economic downturn – the target consumer not necessarily being affected by the rising fuel and utility prices yet still wanting to temper their
consumption of resources through buy-in to what is termed an ‘emotional recession’ whereby although one personally is not restricted in their experiences by cash-flow they still wish to be a touch more shrewd in
their personal spending habits yet still enjoy the very best products and services on offer. In short- it’s a Fractional Life!

MORE INFORMATION
Fractional Life is an exciting new web brand based on the fractional ownership and asset-sharing concept.
For more information visit www.fractionallife.com, email info@fractionallife.com or telephone +44 20 8340 7989

Perspective’s A LIST – Jonathan Back

An Interview With Jonathan Back, Managing Director of Group RCI UK & RCI Europe, on his new position and future plans for further development of the company’s products and services and his views on the future of the industry including a resurgence in all shared ownership markets

1. What does your position as Managing Director entail and what regions are you in charge of?

As managing director of Group RCI UK and RCI Europe, I am responsible for Group RCI’s European exchange business and its European cottage and villa rental portfolio for the UK consumer.

2. Coming from a financial background, what attracted you to the position of Managing Director at Group RCI?

The two factors that attracted me to Group RCI were its market presence and its people. Group RCI is the European market leader in both exchange and rental business lines, with the best pedigree and the greatest brand equity. It is a diverse and complex organisation with a variety of affiliates across the regions and I am looking forward to meeting with as many of them as possible to investigate ways of maximising our joint resources to offer the best possible holiday options and customer service to our owner/members. Working with the people at Group RCI is also a bonus for me. They have great integrity and consistently put the customer first. They are innovative, hard working and are resourceful and enthusiastic in delivering great and memorable holiday experiences.

3. What skills learnt from your previous careers are proving the most useful in your new role?

The keys to Group RCI’s success will always be in its ability to develop relationships, serve its customers and produce great business results for itself and its partners. I have always worked for sales and marketing lead organisations with both B2B and B2C channels. Those organisations have always been partnership businesses where consistently adding value and service quality were essentials.

4. In your first few months, what have been your greatest challenges so far?

My greatest challenges so far have been spreading my time between the numerous constituencies of the business and meeting as many of our partners as possible. So far, I have met many of our affiliates, visited most of Group RCI’s European offices and met many of its people. There are many more yet to meet and I thoroughly relish doing that.

5. Moving forward what are your short-term and long-term goals for Group RCI in the coming months and years?

My short-term goals for Group RCI are to enhance its customer and partner focus, further develop its product set and to set a course for accelerated growth. Longer term, my objectives are to open and establish new destination markets for our customers and members, to work with our affiliates to develop new products and business opportunities, to introduce our products to new customer groups and to constantly improve the overall level of customer and member satisfaction.

6. What do you think will be the main differences in the timeshare / shared ownership industry ten years from now?

The shared ownership industry is undergoing a great deal of change right now. All constituencies must work together to improve its reputation and quality. Personally, I’m very excited by Group RCI’s focus on
innovation and hybrid products which are designed to deliver more flexibility to both members and developers, creating new lead generation and revenue generation opportunities. The next ten years will see a slower growth rate in leisure whole ownership and a resurgence in shared – both timeshare and fractional. It will see a clouding of the line between rental and traditional exchange products, with the success stories coming from consistent quality and value. Globally, improving living standards and an increasing premium for quality leisure time will afford our industry an enormous growth opportunity over that period.

7. Are there any new developments within Group RCI which we should be aware of?

We at Group RCI are working extremely hard to create a better future for our affiliates and customers. Our biggest innovation so far this year has been the launch of The Group RCI Rental and Exchange (R&E) programme, which has fantastic benefits for both developer and consumer. It provides developers with the opportunity to sell whollyowned, deeded properties with the add-on of a rental and holiday exchange component, using the scale of our operation to generate a reliable rental income for purchasers,
as well as offering the bonus of a holiday through our exchange network. It is unique to the leisure property market.

Our new Owners’ Club is an extension of the R&E programme, whereby our holiday cottage owners deposit at least four weeks’ time into our exchange and rental network in return for an exchange holiday.

Our focus is on creating products, services and programmes designed to increase the choice of properties for our members and leads for our developers, as well as strengthening the offer at the sales deck. Ultimately, our strategy is to be pro-active in helping to grow this business for everyone involved.

We have also been working to strengthen member benefits with enhancements to Group RCI Points and by improving our member search process on www.rci.com. Members can now search for their perfect holiday using a filter system, starting with a map, to locate the resorts having all the amenities they might wish for on their holiday and the results will appear either on a Google map or as a resort listing. The system will be rolling out across Europe in multiple languages, ensuring a more transparent delivery of the Group RCI products, as well as being a faster and fun way to search.

8. In listening to the developers you’ve met, what has impressed you as the key messages?

The overriding messages, from Group RCI’s developers I have met so far, are the need to continue to add value to the developers’ business models and to provide superior member service and satisfaction.

9. What areas, from a product perspective, do you see as presenting the best development opportunities for the industry?

As developers invest in more mixed-use resorts to optimise sales potential, the products that will present the best opportunities will be those that offer the developer and owner the most flexibility and value add. The industry winners will be those with sales and marketing expertise, product range and depth and service quality.

10. In what ways do you believe Group RCI can help existing developers overcome obstacles to growth and expand their business?

Group RCI will help existing and new developers grow their businesses in a large number of ways. Needless to say we are the leader in scale, quality and experience in the exchange industry. We have unmatched access to resources, expertise and industry knowledge. We believe we have the widest range of products which will assist developers to grow their businesses during the decade ahead, irrespective of economic
uncertainty and the ever-changing business landscape.

In change we see opportunity. And with the right partners, the right product at the right price, we see endless opportunities for our valued affiliates.

Convention Review – Tourism, Development Driver for Mexico

AMDETUR (Mexican Resort Development Association), held its XXII Annual Convention in Mexico City last June 18th, 19th and 20th, under the title “Tourism, Development Driver for Mexico”.

The opening ceremony was lead by the Minister of Tourism, Rodolfo Elizondo, who emphasized how Mexico has been consolidated as an attractive country to invest in, which the Ministry of Tourism Investment
Projects National Census Office figures confirm, having registered an accumulated tourism investment in the past 16 months of 6.267 billion dollars.

This event, positioned as one of the most important forums of the vacation ownership and tourism industry in Mexico, gathered prestigious speakers and panelists with deep knowledge on this industry, who shared information and discussed the achievements and the challenges yet to face, and the way to continue to structure the channels of growth of this important and dynamic industry.

Among the participants were Miguel Gomez Mont, CEO for the National Trust Fund for the Development of Tourism (FONATUR), who was a panelist in the “Effective Strategies to Drive Tourism in Mexico” panel, where
relevant themes were discussed such as the proposed reforms to the Tourism General Law, the tourism destinations infrastructure services needed, and about tax facilities to promote tourism investment. Oscar
Fitch, CEO for the Tourist Promotion Council of Mexico, addressed the delegates and he informed them about his organization’s achievements and all the different tourism promotion campaigns it performs, as well as the efforts in publicity, contributions and cooperative programs with destinations entities in different countries. This organization has grown to have 18 offices internationally to promote Mexico.

Other prestigious speakers were Carlos Vogeler, President of Affiliated Members for the World Tourism Organization, who said tourism represents 12% of the international consumer spending, 10.3% of the
world gross domestic product (GPD), and 234 million jobs (1 in 12 jobs, 8.2% of total world employment).

Howard Nusbaum, President for the American Resort Development Association (ARDA), explained that the sales of traditional timeshare inventory in the United States topped $10.6 US billion in 2007. This represents a 6% increase over 2006 sales and 13% compounded annual growth since 2003. He also said that in 2006 timeshare accounted for over half a million jobs across the country for people directly involved in the industry and created through consumer spending by the owners during their vacations.

Other speakers included Peter C. Yesawich, Chairman and CEO of Ypartnership, a frequent commentator on travel trends in such publications as The New York Times, The Wall Street Journal,  Newsweek and Business Week, who has been listed in Who’s Who in America, and also named one of the 25 Most Extraordinary
Marketing Minds by HSMAI. Jorge Ferrari, Great Place to Work Institute President for Mexico, Central America and the Caribbean, shared information about the institute, which operates in 40 countries with over 15 thousand participant enterprises and over 10 million of polled workers. Roberto Servitje, Chairman of the Administration Board for Grupo Bimbo, one of the most important baking companies in brand and trademark positioning, sales and production volume around the world.

On his side, Jose Carlos Azcarraga, Chairman for the Mexican Association of Tourism Developers (AMDETUR), emphasized the importance that tourism has been for Mexico one of the best tools to generate wealth through investment and employment, furthermore having the opportunity to distribute it among different regions in the country, where other industries could hardly get through. “We are the most dynamic sector within our country’s economy, with an 80% growth rate in the last five years”, he said. He also invited
each and every industry member to enhance their creativity in order to find new ways for our country to adjust to the needs of a changing market, as well as the economic circumstances. “Our industry has
much more to offer. Even when figures are impressive as they are today, we can achieve greater results by working together with the official sector and making structural changes within a sustainable development”.

About AMDETUR
AMDETUR covers 90% of major vacation ownership resort developments through its affiliated local associations, which serve the most important tourism destinations in Mexico, such as Cancún and the Riviera Maya, Los Cabos, Acapulco and Puerto Vallarta, among others. It is also part of the Tourism Advisory
Council, presided by the Mexican President, Felipe Calderón, and is a member of the National Tourist Business Council (CNET), umbrella body of the travel and leisure industry.

It is also a member of the Tourist Promotion Council of Mexico (CPTM) and the Tourist Executive Committee of the Ministry of Tourism. In an international level, AMDETUR presides the Latin American Federation of Resort Developers and is a member of the Global Alliance for Timeshare Excellence, which includes United
States, Latin America, Canada, Europe, Asia, South Africa and Australia associations.

Bermuda Beckons– The Reefs Club Offers A Rare Opportunity For Foreigners To Own Real Estate On The Small Island

Bermuda, an island known for its laid back, refined lifestyle and pink-sand beaches, is located 650 miles east off the coast of North Carolina. Flights from several East Coast cities reach the pristine shores of Bermuda in just two hours, a proximity that renders the island an ideal second home destination for many Americans. Until recently, however, real estate ownership for Bermuda enthusiasts was usually not within the realm of possibility for most non-Bermudians.

A government policy, expanded in 2005, restricts the amount of real estate that can be offered to foreigners, thus drastically limiting the supply of vacation homes available on the island of just 21 square miles. With only 10 homes for sale starting at $4.4 million and 15 condos with an average price of $2.4 million on the market, real estate opportunities are limited and virtually unattainable for most, according to Rego Sotheby’s International Realty agency. As a result of the undersupply and over demand of whole ownership properties and their exorbitant prices, fractional ownership has become the hottest trend to hit Bermuda.

The Reefs Club, a new private residence club poised to open in 2009, is making luxury home ownership on the island more accessible to Bermuda enthusiasts. It is being constructed next to The Reefs, the island’s most award-winning hotel, and will offer hassle-free, luxury vacations at a fraction of the price of traditional island homes.

“Right now there’s such a limited supply of real estate in Bermuda,” explains Buddy Rego of Rego Sotheby’s International. “Locals are not able to sell property to non-Bermudians. Residence clubs such as The Reefs Club fill a niche. They’re selling to people who want a vacation home in Bermuda, but don’t want the multi-million dollar price tag.”

Now in its 60th year, The Reefs is widely recognized as Bermuda’s best resort by all the major travel publications, including Condé Nast Traveler and Travel+Leisure. The Reefs is committed to offering the same first-class, award-winning service and hospitality to families wishing to own a second home in Bermuda.

“The more we researched and asked our guests about fractional ownership, the more we realized it’s ideal for people who want to own something in Bermuda, don’t want the year-round responsibilities, and want to be able to keep it in the family,” says David Dodwell, The Reefs Club developer. “Since before we even broke ground, the response from repeat guests and their families has been exciting,” Dodwell says. “And because they’ll own a piece of The Reefs, they can come more often and enjoy the dining, the spa, and the private beach.”

The Reefs Club features elegantly furnished two- and three-bedroom residences with unobstructed ocean views seen through dramatic walls of windows. Residences are just steps away from the hotel’s three gourmet restaurants, a spa, a private pink sand beach, and snorkeling with world-class diving closeby. Amenities include an owner’s lounge, infinity-edge pool, fitness center and rooftop putting green with impressive views of the Atlantic. An on-site concierge coordinates dinner reservations, golf tee times, spa appointments and various island adventures.

Two-bedroom residences at The Reefs Club are currently priced at $350,000 while three-bedrooms are listed at $410,000.

“This price point is also attractive to British visitors to Bermuda,” Dodwell reports. “Because the Bermuda currency is tied to the American dollar, British tourists are enjoying unprecedented value in addition to the ease of getting here from London thanks to non-stop service on British Airways from Gatwick.”

In fact, the number of visitors from the United Kingdom to Bermuda in 2007 increased by 12.5 percent over the previous year.

Dodwell enlisted the pioneer of the private club concept and industry consultant DCP InternationalSM (DCP) to advise on this ambitious development. DCP launched the world’s first private residence club, The Deer Valley Club, in Park City, UT in 1992 and has since consulted with numerous developers on successful residence club projects throughout the United States, Mexico, the Caribbean, Italy, and beyond.

“Residence clubs are a sensible way to own in any market, but especially now that developers have adjusted purchase prices to reflect today’s economy. The value of residence club vacations exceeds annual ownership
costs, so owners have real estate equity and save money relative towhat they would spend on luxury vacations,” says Steve Dering, president of DCP International.

Highly respected resort market research firm Ragatz Associates reported continued growth in the residence club industry in 2007 with an estimated sales volume of $1.2 billion, a 12 percent increase over 2006.
Residence clubs are also ideal for those who want to spend several weeks per year at their home, but don’t want the hassles of maintenance, security and insurance costs associated with traditional whole ownership.

Although often confused with timeshares and destination clubs, private residence clubs differ greatly in that club owners actually own deeded real estate, which can be sold or willed like any other form of real estate.
Owners may reserve accommodations well in advance, and on a short-notice, space-available basis. They are also entitled to vacation in any residence in their category rather than being limited to a specific residence. This policy allows for greater flexibility and availability for owners.

MORE INFORMATION
The Reefs Club is also part of the Elite AllianceSM – an exchange program offering owners luxury vacations at other private residence clubs in other fine destinations including Key Largo, FL; Deer Valley, UT; Huatulco, Mexico; and Jackson Hole, WY.

The Time Is Right For Fractional Developments… If You Know What You’re Doing

Despite what journalists are reporting, today’s vacation home real estate market has evolved into something great. Great not only for the well-todo yet savvy second-home buyer, but great for land owners as well. For
two decades the fractional ownership industry has steadily grown in size and popularity, and now our collective mouths are drooling over what has become an even juicier opportunity for buyers to drastically lower expenses and developers to exponentially increase profits. It’s not Easy Street, though. Many land owners have paid the price for neglecting to read the big fat disclaimer that says, “If you don’t do it right, you’re not going to have any buyers.” Simply dividing condominiums into eighths, tenths or twelfths and
adding “Private Residence Club” to the name doesn’t add up to success.

A fractional club needs extra focus and attention in order to make it an attractive proposition to the buyer. There is no master template with all of the answers for a Residence Club in every market. For a club to succeed, it must have an ownership structure that works for the location, an effective and equitable reservation system and a clear marketing plan.

“The Private Residence Club model, if structured correctly (and that’s a big if), is a very logical system and can be successful in any desirable resort location” says Eric Pierce, founder and president of Pierce Group. The consulting firm specializes in the design, sales and marketing of Private Residence Clubs, the luxury segment of the fractional ownership market.

According to Pierce, the key to a successful fractional project is the ability to focus and adapt to each market. “A significant amount of attention needs to be paid not only to the project parameters but the market, its location, seasonality, culture, and what makes that property special,” says Pierce. It appears that others are hearing his message; Pierce Group has been busy lately. Clients now include West Paces Hotel Group, the Atlanta-based hotel organization founded by famed Ritz-Carlton CEO Horst Schulze, which
owns the ultra-luxury Capella and Solis brands. Pierce Group has provided services for club program, design, sales and marketing for West Paces and is included in plans for future Capella or Solis brands around
the globe.

Beyond structuring the Club concept appropriately is creating a unique lifestyle that appeals to buyers and really sets the property apart. That’s the goal of one Pierce Group client — Hemingway Hotels and Resorts.

Drawing on the mystique and character of Ernest Hemingway, the plan calls for developing exceptional private residence clubs in luxury destinations around the world where the author lived or visited in his adventurous travels. These destinations include Paris, Venice, Key West, Sun Valley, the Caribbean, Kenya and Havana, and also will include other luxe locations where Hemingway would have felt at home.

“Working with Mr. Pierce has been an eye-opening experience for us,” says Hemingway Hotels Founder and President Matthew Weld. “He has an expert level understanding of not only how to design, sell and market PRCs, but how to avoid those common mistakes that developers often make when trying to do this on their own.”

Pierce Group’s efforts are concentrated on market focus, reservation system design, sales training, sales messaging and increasing sales velocities. Lowering expenses and carrying costs provide higher profits for his clients, says Pierce. The company’s suite of services also includes comprehensive feasibility studies on future projects as well as audits on current projects.

Private Residence Club developers who are experiencing less than optimal sales results would benefit from a Pierce Group project audit. “Call it a progress report of sorts,” says Pierce. “We provide exceedingly valuable feedback to developers that pinpoints why their sales are lacking.” According to Pierce, today’s sluggish economy is always an easy target and seems to be the default answer for lackluster performance, but a strong audit of the property can oftentimes point the finger at other culprits. Weaknesses may lie in the reservation system, sales training, sales personnel, or in the marketing method and message.

“There are many square pegs and round holes in the fractional real estate business,” Pierce says. “Without the expertise to recognize them, a great potential can be squandered on the wrong fit. Many enthusiastic developers have paid dearly for their marketing and sales missteps.”

In creating his company, Pierce cites a desire to take the valuable knowledge he’s gained throughout his career and wrap it around his core understanding of sales and what it takes to move product. ”I’ve been selling one thing or another since college,” says Pierce. “In fact, I remember rescuing my dad’s old neckties on the way to Goodwill and holding a “Tie Extravaganza” for my fraternity brothers. I made something like $180! In my opinion, you can’t truly understand sales and what it takes to be successful if you haven’t spent a lot of time on the front lines actually doing it.”

And “done it” he has. Pierce has sold everything from neck ties to radio advertising to computer hardware, and most notably luxury Destination Club memberships with industry giant Exclusive Resorts. “That was fun,” he says. “We were a company of six employees and pulled off what many believed was impossible, selling a dream idea to wealthy early-adopters looking for a better way to vacation. But we knew we had something special.” Pierce refers to the non-equity Destination Club concept that many people initially said “no way” to. Now Exclusive Resorts has hundreds of employees and thousands of members. Says Pierce, people now are saying ‘way!’

Prior to launching Pierce Group, Pierce was responsible for all aspects of Private Residence Club development as senior vice president for DCP International. Working side by side with developers, he was responsible for club design, budgeting, pricing, sales, marketing, hospitality management and legal registration. Now his main focus with Pierce Group is to improve upon what is currently out there. Pierce admits that for such a strong and growing industry, there are few options for developers today. “What differentiates us is our
laser focus on the bottom line, which of course is sales. To back that up, our professional fees are solely based on the sales results that we provide.” It’s a concept client Matthew Weld embraces. “It’s refreshing to find a company so focused on selling our message. Everything that we have paid Pierce Group so far will be taken out of their future Professional Fees. Now we know for sure where their focus lies.”

The Private Residence Club concept was born at the Deer Valley Club in Park City, Utah in 1991, where it was an overwhelming success. Since then the industry has grown to hundreds of clubs in dozens of countries around the world. Many agree however, that this is just the tip of the iceberg. According to the 2008 Annual Fractional Interest Report by NorthCourse®, in the US, Canada and the Caribbean, high-end luxury fractional real estate sales were more than $1.9 billion in 2007, up 18% from 2006.

“We are seeing significant growth in the luxury hotel market,” says Pierce. “Five-star hospitality brands like Ritz Carlton, St. Regis, Fairmont, Four Seasons, Rosewood, Auberge, Capella and Viceroy are currently involved in or planning to enter the Residence Club market.”

Pierce Group provides free introductory project assessments, and for a limited-time is offering developers comprehensive feasibility studies or project audits at a reduced rate. For more information, contact Pierce Group at 864.878.6622 or visit www.PierceGroupConsulting.com.

BIO
Eric Pierce was born and raised in Tacoma, Washington before receiving his Bachelors of Science degree in Business Marketing from the University of Idaho. Considered an expert in luxury fractional ownership, he
offers a unique mix of project development, sales and sales management experience in both the equity and non-equity fractional residence club industries.

His related work experience includes Exclusive Resorts, The Leading Residences of the World and Destination Club Partners. After spending time in Boise, Idaho and Denver, Colorado, Mr. Pierce now resides in Pickens, South Carolina with his wife Julie and kids Nicholas and Grace. Mr. Pierce is a member of the Urban Land Institute.

Residence Club Pioneer DCP International Revolutionizes Second Homeownership

Steve Dering, DCP Founder and Consultant to Developers Reflects on the Growing Industry

Multitudes of luxury second homes rarely used by their owners are a common staple of most resort destinations. Every year, these homeowners spend tens of thousands of dollars on taxes, maintenance and security on properties that sit vacant the majority of the time.

In the late 1980s a Park City, UT advertising executive and former marketing director of the town’s prestigious ski area Deer Valley Resort, sought to develop a more sensible form of vacation homeownership. Steve Dering, a Maryland native, moved to Park City in 1973 when it was a near dormant ski town – long before the Olympics and the Sundance Film Festival propelled it into an internationally known destination.

Dering noticed a plethora of luxurious vacation homes in Deer Valley being used an average of four weeks a year. Finding this an expensive ski vacation when he calculated the cost per day that owners use their homes – not to mention a wasteful practice – he reasoned that developers could sell properties as fractions, allowing buyers to pay considerably less while affording them the same amount of use they would get from whole ownership homes. Moreover, Dering realized that these properties could offer hotel-style services and amenities since the costs would be spread over a significantly larger owner base, allowing for more enjoyable and carefree vacations.

“My goal was to develop a way for people to improve their vacation experiences by eliminating the maintenance headaches that second home ownership typically entails,” Dering explains. “In a place like Deer
Valley, you have to deal with snow removal, broken pipes, and cosmetic repairs following harsh winters, and summer landscaping. My vision was to have all of this taken care of for owners by property staff.”

From these ideas, the Deer Valley Club was born in 1992, a decade following the ski area’s inaugural season. The Deer Valley Club would serve as a prototype for what would become known as private residence clubs, a
luxury form of fractional ownership. As the first development of its kind, the Deer Valley Club offered on-site storage for its owners, allowing them to travel to their residences without the excessive baggage ski vacations require. Prior to owner arrival, club staff had ski gear placed in owner lockers and clothing laid out in the residence. Other convenient services included airport pick-up, pre-arrival grocery shopping,on-site concierge, and housekeeping.

One of the challenges this new vacation ownership concept faced was the comparison to timeshare when in fact it is completely different. Private residence clubs have only six to eight owners per residence, are more luxurious properties, and offer deeded real estate ownership that can be sold, willed or transferred like any other form of real estate. Timeshare is the purchase of a specific week of vacation time hence 50 owners per residence. Residence club owners enjoy greater flexibility in that they can reserve planned weeks in advance and may also reserve on a short-notice or space-available basis. Club owners are not wedded to a specific residence, a factor that allows for even more flexibility – they may vacation in any residence within the
category they purchased.

The Deer Valley Club proved to be a highly popular concept to those interested in owning ski property, allowing buyers to have a ski home in a prime ski-in, ski-out location with first-class services for a fraction of the cost of whole ownership. Originally the developers anticipated selling out the property for $13 million as condominiums; however, the residence club results far exceeded their expectations – the club sold out for a total of $22 million.

This real estate success story had developers in other ski areas eagerly knocking on Dering’s door. As a result, he founded DCP InternationalSM, a company that would expertly deliver the residence club concept to other popular resort destinations by consulting with developers on the sales, marketing and design of such properties. While Dering has kept his home in Park City, DCP set up its operational headquarters in Chicago and has project managers in various other locations throughout the country who work hand-in-hand
with developers.

During the sales phase of the Deer Valley Club, there were some interesting observations. “Early on, the biggest surprise was that almost all our buyers could afford their own Deer Valle home,” says Dering. “But they did the same math I did and recognized that traditional second home ownership made little sense for them. They also found that residence club ownership would be considerably more convenient.”

Throughout much of the 1990s, DCP International helped developers launch private residence clubs in other western ski resort towns, including the Christie Club in Steamboat Springs, CO and Franz Klammer Lodge in Telluride, CO.

“After introducing the product to various ski areas, it occurred to me that luxury fractional ownership could be a successful endeavor in any type of resort destination where second home real estate is very expensive,” Dering recalls. “It seemed reasonable that people who are frequent visitors to specific beach destinations, golf destinations, and even urban areas would be likely enthusiasts of private residence club ownership.”

Looking to expand the residence club concept to additional vacation destinations, DCP International introduced the first residence club in Bermuda with The Residence Club at Tucker’s Point and the first residence club in Mexico with Club Quinta Real in Huatulco. They are now consulting on a second property in Huatulco, Encanto Villas & Residence Club, whose first phase is due to open in winter 2009.

The company was also a pioneer in the urban market by creating The Phillips Club in Manhattan near Lincoln Center – the first private residence club in a major metropolitan area. The sold-out Phillips Club spawned Phillips Club II, currently in sales. Whisking the concept across the Atlantic, DCP helped create Europe’s first urban residence club, Palazzo Tornabuoni in Florence, Italy – a property that is attracting both American and
European buyers.

“The Europeans are really embracing the concept of fractional ownership, and now we have a London office to oversee our growing number of properties,” Dering comments. “Moreover, with the weakened dollar, Europeans are finding tremendous value in purchasing residence club memberships off the continent. For example, we have a second project in Bermuda, The Reefs Club, which is being marketed to the United Kingdom. This is a great deal for the Brits given the Bermuda dollar is tied to the U.S. dollar, and there is nonstop flight service from London.”

The Reefs Club is a project tied to a luxury hotel. The Reefs is Bermuda’s most award-winning hotel and boasts a remarkable number of repeat visitors year after year. For these enthusiasts of the hotel and Bermuda, The Reefs Club is a sensible purchase, especially in light of government restrictions on whole ownership properties being sold to foreigners. These restrictions have driven home prices well into the millions and have greatly limited the supply, making Bermuda an ideal location for fractional real estate, which can legally be sold to non-Bermudians.

David Dodwell, developer of The Reefs Club who engaged DCP says, “Many East Coast cities offer two-hour, non-stop flights to Bermuda, making us a convenient second home destination. We are providing repeat visitors the opportunity to own a luxury residence on the same secluded pink-sand beach The Reefs is renowned for and to enjoy the same type of first-class service the hotel offers.”

Owners of The Reefs Club will have their own amenities such as an infinity-edge pool, rooftop putting green, and owners’ lounge. Two-bedroom residences start at $350,000 and three-bedrooms are priced at $410,000 for a one-tenth share – a significant value considering the whole ownership homes currently listed on the island start at $4.4 million and condos average $2.4 million.

DCP has been enlisted by several developers in Florida, the latest of which is Magnolia Private Residence Club on coastal Highway 30-A between Destin and Panama City on the Panhandle. The club is offering three-bedroom residences priced at just $159,000 for a one-eighth share.

“Many developers who initially created their projects to be whole ownership, have been adversely affected by the soft market, particularly in Florida,” Dering explains. “They are now looking for new and creative ways to sell. They are discovering that private residence clubs are a logical solution since they are a lifestyle purchase that come with a real estate deed as opposed to an appreciation driven real estate investment..”

Magnolia Private Residence Club is largely appealing to a regional market – those within driving distance from Atlanta, New Orleans, and other nearby cities. Dering believes close proximity will be a significant draw, and the company is expanding into more regional markets. “The ability to vacation at a club anytime there is availability is particularly attractive for people who frequent these destinations,” he notes.

DCP is also planning to expand more into Europe. Dering expects to add three to five more clubs there in the near future.

Even during this time of economic uncertainty, DCP is consulting on a growing number of projects. According to resort market research firm Ragatz Associates, the private residence club industry grew 12 percent in 2007 over the previous year. DCP reports to have more than $2 billion either sold, under contract, or in development.

After 18 years in the industry, Dering has observed that consumer awareness and acceptance are growing rapidly as more clubs enter the marketplace. He adds, “As is the case with developers, the current soft real estate market has affluent buyers looking for a vacation home alternative that is lifestyle driven, not investment-driven. Our product delivers value in all market conditions because the carrying costs are much lower while the level of services and amenities is much higher than traditional real estate. Hence, the vacation value exceens the annual cost of ownership.”

As far as the future of the private residence club industry, Dering says, “All indicators point to continued growth. For me, the most important barometer is owner satisfaction, which continues to be high at all our clubs.”

He adds that the two comments most heard from owners are “It just makes so much sense,” and “The only thing I have to worry about is when I’m coming back.”

Dering’s opinion is supported by other industry experts.

“Residence clubs continue to be the fastest growing segment of the luxury vacation home sector,” notes Dr. Richard Ragatz, founder of Ragatz Associates, a leading real estate research firm. “This growth is attributable to greater consumer awareness and extremely high owner satisfaction. Increasingly, affluent buyers are recognizing that residence clubs offer distinct advantages over wholeownership and timeshares.”

With such an enthusiastic response from owners and developers, DCP International is poised to remain an industry leader and continue to deliver successful residence clubs to worldwide destinations.

MORE INFORMATION
For more information on DCP International’s projects and developer services, visit www.dcp-international.com.

Seasons Holidays: Success Built On Responding To Customer Needs In The 21st Century

The Seasons story started in the early 1990s as the Laugharne Park Partnership. In 1996 Knocktopher
Abbey and Burn Park were purchased to form the multi-destination timeshare club, Seasons Holidays
plc. The Seasons portfolio now includes eight owned or managed Seasons resorts in the British Isles
and Europe, making the company one of the UK’s market leaders.

Currently the company owns and operates 6 resorts in the British Isles. Laugharne Park, overlooks Carmarthen Bay in Wales; Burn Park is on Cornwall’s north coast; Knocktopher Abbey is in the Republic of Ireland; Brunston Castle is a superb golfing destination in Ayrshire; Whitbarrow Village lays between Penrith and Keswick in the unspoilt Northern Lake District and, the most recent acquisition, Clowance Estate and Country Club in the heart of the Cornish countryside, between Falmouth and St Ives.

Seasons Holidays owns a resort in Lanzarote called Club Tahiti and Forest Hills on Spain’s Costa del Sol and members can also enjoy holidays in the Algarve at the Alto Club in Alvor near Praia da Rocha.

Customer needs in the 21st century
Seasons Holidays are designed to meet the needs of the responsible twenty-first century holiday  homeowner; perfect for those wishing to ensure that their holidays have a positive impact on society and the environment.
The Season Holidays resorts provide major economic benefits to the local rural communities in which they are located though year-round occupancy and a constant stream of visitors, which means plenty of work all year for local people. Since buying a holiday home on a Season’s resort has no inflationary impact on local house prices, it is not a decision likely to lead to a local family being deprived of a home either. Of course, within the UK there is no need to fly and so there are environmental benefits and above all, the resorts are carefully designed to preserve the beauty of the location.

Affordable Luxury
Seasons Holidays now has 23,000 timeshare members and in 2008 more than 75,000 guests will enjoy a holiday at a Seasons’ destination. The floating time, floating resort concept means that Seasons’ owners have the flexibility to enjoy different resorts each year within Seasons. Through Interval International, members also have access to more than 2000 affiliated resorts worldwide.

The highly successful Seasons Estates Limited was created in 2004, and heralded Season’s diversification into buy-to-let holiday homes. The management team wanted to develop more of the plots on Season’s UK sites and improve the guest experience.

The company has built and sold more than 100 properties, located on two of its most popular resorts, Brunston Castle in Scotland and Whitbarrow Village in The Lake District. Virtually all of the leaseback homes were sold off-plan. This has generated sufficient profits to spruce up many of the resort facilities.

As part of the deal, purchasers are offered the added incentive of rental income, which is much higher than residential buy-to-let offerings. This makes it an attractive proposition for those who are still jittery about investing in the stock market and are looking for a decent return for their money, and is particularly appealing to those who have paid off the mortgage on their home.

Each owner is guaranteed four weeks of personal use each year. They are entitled to swap any or all of the weeks with any other resort within the Seasons worldwide holiday portfolio.

Buy-to-let homes are expensive and way beyond the reach of many of Season’s members. But equally, the Seasons team are well aware that whilst timeshare has many advantages and meets perfectly the needs of some customers, others would not consider the idea. So the team looked to develop a new fractional ownership product.

Leslie McCann, Group Marketing Director explains the rationale behind the move: “In our efforts to continually innovate and offer products to meet today’s customer needs, we wanted to develop something that stayed faithful to the positive aspects of timeshare but offered more flexibility and an investment opportunity, combined with an easy exit route. We came up with the 8 keys concept.”

8 keys works by giving customers multiple benefits. Customers purchase a 12.5% stake in a property. So each house has 8 owners. This entitles owners to 6 weeks of luxury holiday per year (One peak, three high, one mid and one low). Due to relative high values for UK holiday cottage rentals, a healthy annual income from half of the weeks owned is generated and this protects the owner from costs.

Seasons also offers purchasers a guaranteed exit route whereby they receive 12.5% of the net sales proceeds when the property is sold in 16 years. This combination of no annual costs and a built-in resale strategy overcomes some of the objections to timeshare.

Leslie McCann adds: “Our fractional purchaser is typically between the ages of 45 and 60. Our research identified that our owners feel comfortable with enjoying holidays for 16 years and a pro-rata share of any
property gain. It so happens average house prices in the UK have doubled over the last 16 years. As the UK population ages, there will be more demand for luxury holiday homes in prime locations and we believe Seasons is perfectly positioned to meet this growing need.”

Seasons Holidays has offered 8 keys to current timeshare members. Many have bought it as an upgrade to their current package. So far this strategy has generated more than £4.5 million completed sales in 2008 with a similar amount under contract. Timeshare sales turnover has not suffered. This is extra business for Seasons.

This summer will see a test of the 8 keys concept on the open market by leaflet drop and advertising aimed at successful people who want a luxury holiday home in an idyllic location, at an affordable price, and also at consumers who may have been considering the purchase of a static caravan or holiday chalet.

The Secret of Season’s Success
Crucial to Season’s success is the speed with which it is able to respond to a changing environment, developing new products and finding beautiful niche destinations. Seasons is a privately owned company with its Chairman, Barry Hurley; Marketing Director, Leslie McCann and Finance Director, David Clarke spending their time and energy focussing on their customers and the well-being of their staff. The hands-on approach of this management team, combined with their many years experience, enables them to make and implement decisions quickly. This formula certainly seems to work and has built the company a loyal staff and customer base.

Season’s staff and management work hard to understand customers and the company has an excellent track record in persuading members to deepen their relationship with Seasons. Members regularly upgrade to enjoy more weeks or larger cottages and villas.

Barry Hurley, Chairman of the Seasons Group, believes that a focus on treating staff well and providing excellent development and promotion opportunities has been critical to the firm’s success and will continue to be crucial as the company grows.

“We are very proud of our excellent staff. They are the public face of our company. Everyday they interact with our existing and potential customers and build relationships with them. Our customers really appreciate the efforts our staff go to make them feel comfortable and to accommodate their wishes. Beautiful locations aside, it is this relationship with staff that brings our customers back for more.”

Innovative products; innovative marketing
Seasons Holidays is unusual in that it no longer cold calls in the search for new customers. The 500 phone canvassers have been replaced by a small dynamic team that focuses on experiential marketing and customer referrals. Turnover and inherent profitability has increased since the change in strategy, with customers responding very positively to the opportunities offered to try out a Seasons Holiday.

The company also sponsors the Seasons Holidays Queen Mother Champion Chase at Cheltenham Festival. Taking place on the second day of the Festival, this prestigious race is the second most valuable steeplechase of the four-day event with prize money totalling £310,000.

Season Holidays has become a familiar name within the racing community. The Festival sponsorship is part of a dynamic marketing campaign to raise awareness of the brand which includes the distribution of millions of leaflets around the UK to postcode areas with an above average interest in horse-racing and becoming one of the first platinum marketing partners on Racing UK TV earlier this year.

Leslie McCann, Seasons’ Group Marketing Director, comments, “The link between racegoers and consumers interested in purchasing Seasons holiday accommodation is ideal and has generated huge interest. It is a focused strategy that has really paid off”.

Providing affordable solutions for customers
Seasons Holidays based its business on offering very affordable timeshare memberships to customers. Experience has shown that many of the customers come back for more: buying more weeks, more locations or better properties.

The move into offering outright purchase of buy-to- let properties costing between £200,000 and £350,000 was aimed at the wealthier investor. And now the move into fractional ownership through the 8 keys concept, offers a luxury alternative for those with more limited funds to invest.

Season’s success is built on offering customers the chance to have their ideal holiday home in a beautiful location with fantastic facilities. Seasons Holidays offers a luxury lifestyle at affordable prices and this is why it will continue to be successful.

For further information about Seasons Holidays, please visit www.seasonsholidays.com and www.seasons8keys.com. For careers information, please call 01994 427332.

This is Clowance …
Nestled in the heart of the Cornish countryside, between Falmouth and St Ives, Clowance is set in 97 acres of beautifully landscaped parkland and woodlands complete with an 18th century manor house. Facilities include a multi-million pound leisure centre, including indoor heated swimming pool, gymnasium, sauna and solarium; the Beauty Oasis Clinic; two restaurants and bar; a four acre lake; tennis courts; croquet lawn and an 18 tee, nine-hole golf course.

Just imagine, your own luxurious holiday home at a fraction of the usual cost, and with all the benefits of a prestige holiday resort.

The St Piran lodges are excellent value, offering an unbeatable combination of luxury – 3 bedrooms,
3 bathrooms, quality fitted kitchen, private sauna, Jacuzzi, hot tub and balcony – set in the beautifully landscaped parkland of the Clowance Estate in Cornwall.

Seasons and Interval International seal long-term deal providing greater flexibility for members

Interval International, Seasons’ exchange partner for the past seven years provides high quality alternative holiday options. Through Interval International members also have access to more than 2300 affiliated resorts worldwide. During 2007, thousands of holidays were organised by Interval both for Seasons’ members and into Seasons’ resorts. Due to the strength of this successful relationship established in 2001, Seasons have decided to extend the agreement.

“It’s been a privilege partnering with Seasons over the last few years,” said Darren Ettridge, vice president resort sales & service (Europe). “Seasons is one of the timeshare industry’s leading developers in Europe and is known for the quality of its resorts. We are therefore exceptionally pleased that Seasons has chosen to renew its affiliation to Interval for a further seven years. The company has been and continues to be an exceptional success story due to its strong leadership and innovative marketing.”

“We’ve had a terrific working relationship with Interval since we became an affiliate in 2001“, said Leslie McCann, Group Marketing Director for Seasons Holidays. “And, we are excited to be working with Interval as we launch new projects and products such as fractionals. We like to be flexible and Interval helps us to achieve that.”

Interval International is a leading provider of exchange, travel, and leisure services to resort developers and vacationers worldwide. Based in Miami, Florida, the company has been a pioneer and innovator in serving the vacation ownership market for more than 30 years. Today, Interval has a network of over 2,300 resorts in excess of 75 countries and offers its clients and nearly 2 million member families high-quality products and programs through its 28 offices in 17 countries.