Fractional Forum – New York – New York Yacht Club

The “First Fractional Forum – New York” was held at the historical New York Yacht Club on September 17, 2008. The event was co-sponsored by Flagstone Property Group and Domineum, a global solutions company. Flagstone’s Chairman and CEO, Mehmet Bayraktar and Domineum’s Chairperson, Louise Sunshine both welcomed the participants to what would be a morning full of information on fractional ownership and Flagstone’s Miami Development, Island Gardens Miami, A Yachting Resort.

Mrs. Sunshine discussed how pleased she was to be with the illustrious crowd of New York’s preeminent brokers and talked about fractional ownership in today’s financial climate. Fractional ownership has increased 20% over the previous year with $2.6 billion in sales. As the fastest growing segment of the secondary home ownership market, fractional ownership allows today’s purchasers the ability to maximize their assets by having multiple residences around the world for less than whole ownership of a single property.

Mr. Bayraktar discussed the evolution of Island Gardens Miami, A Yachting Resort and how he won the request for proposal (RFP) from the City of Miami in 2001. Following the coordination of all the different components that make up Island Gardens, he announced that he is proud that Island Gardens’ groundbreaking will be held in conjunction with the ULI 2008 Fall Conference. The groundbreaking will take
place in Miami on October 29, 2008.

Jim Whitteron, CEO of Spring Creek Partners gave a history of the fractional industry from when he built one of the first PRC’s (Private Residence Clubs) in Park City Utah in 1992. This type of ownership has evolved from US$5 million in sales to over US$2.6 billion in sales in 2007. He also explained that following many studies on how purchaser’s use second or third homes, fractional ownership in luxury and branded lifestyle
purchases makes a lot of sense.

Philip C. Freedman, Vice President of Residential Sales for The Residences Island Gardens introduced the waterfront development to the brokerage community. Participants included Kelly Mack, President of Corcoran Sunshine Marketing Group, Shlomi Reuveni, Executive Vice President & Senior Managing Director of Brown Harris Select, and Dennis Mangone, Senior Vice President of Corcoran Group.

During Mr. Freedman’s presentation to the brokers, he recommended that the New York brokerage community should refer their clients to his Miami office to see the Island Gardens project which would help them further understand why, in today’s real estate market, that luxury fractional ownership is beneficial. Island Gardens is situated on a 24-acre parcel of land that is the first island when traveling east, leaving Miami and going toward Miami Beach on the MacArthur Causeway. Island Gardens will consist of two hotels including the very first Shangri-La Hotel in the southeast United States and the second will be announced at the groundbreaking on October 29, 2008; In addition, there will be 221,000 sq ft of luxury retail and dining space. Island Gardens will announce the main anchor retailer at the groundbreaking and as Mr. Freedman said “This anchor retailer will validate the purchase at Island Gardens as a smart lifestyle purchase.” There will be 8-12 dining and night club venues from cafés and boulangeries to celebrity chef dining experiences, exclusive night clubs and more.

Island Gardens is a true destination.

Island Gardens Miami isn’t just a residential community; it is also the first 50-slip harbor in North America exclusively designed for megayachts and giga-yachts in excess of 400 feet in length. The Residences Island Gardens Miami will be managed and serviced by Shangri- La Hotels and Resorts. Each one- to- four bedroom residence, available in 1/8 fractions, is fully furnished and finished by Piero Lissoni. The purchasers will also receive a fractional ownership in a three- cabin yacht with the utilization from two to six days depending on the residence size purchased (this is an optional purchase and there is a reduction
of the purchase price if one desires not to participate in the Island Gardens Yachting Club). The purchase prices of a residence at Island Gardens with the fractional membership in the Island Gardens Yachting Club range from US$215,000 – US$850,000 per fraction.

Jason Sheftell, Real Estate writer for the New York Daily News was the moderator for the Fractional Forum. Participants on the panel included: Piers Brown, Owner of Fractional Life; Philip Freedman, Vice President of Residential Sales – Flagstone Property Group; Peter Giamalva, Managing Director of NorthCourse Advisory Services; John Melicharek, Jr., Partner at Baker & Hostetler, PA; and Bob Waun, CEO Vacation Finance
America’s First Second-Home Lender.

Questions asked of the panel: What is the history on the purchasing and selling of fractional ownership?
Peter Giamalva explained that projects like the Deer Valley Club (developed by James Whitteron) had original sales of US$195,000 and today currently sell from $495,000; and that 86% of the surveyed PRC’s showed an
increase in pricing from the initial prices to the current price.

John Melicharek explained that from the legal point of view since Fractional Ownership is just like any other deeded real estate that you own, it can be sold and rented on the open market through a real estate broker.

With today’s precarious finance marketplace can fractional ownership in real estate be financed?
Bob Waun jumped right in to answer this, and noted that although not everyone finances a fractional purchase, 65% are paid with cash or a purchaser securing their own cross-collateralization of their assets to pay outright for the purchase. But for the remaining 35% that want to finance their purchase, he has both domestic and international lenders that will lend mortgage money with as little as a 20% down payment and as a good business man noted that every financing opportunity is based on the buyer’s qualifications.

Philip mentioned that for the Island Gardens purchasers with both Bob’s assistance as well as outside lenders there will be end loan financing available when Island Gardens opens toward the end of 2011; also stating that any financing for the residences will be based on each individual’s personal qualifications.

What is the type of purchaser that buys fractional goods?
It was Piers’ turn to answer and he discussed the International buyers that respond to his website queries. Fractional buyers are the people that are looking for the “Want” item not the “Need” item, and at the pricing that one buys fractional goods it only makes sense that they can acquire the things they WANT whether it’s real estate, yachts, jets, or cars.

Philip brought up the 3 “L’s” of fractional real estate ownership – “Location, Lifestyle and Luxury” as that is what buyer’s are looking for when they analyze their acquisition at Island Gardens.

Question from the floor: When you purchase a fractional residence what are the annual carry costs and how is governance done?
Philip answered this question explaining that at Island Gardens “Our annual carry costs include the following items: Real Estate Taxes, All Utilities, All Insurances, Reserve Refurbishment and Replacement fund that will
keep the residence fresh and looking good and not “Tired”, twice daily maid service by Shangri-La, pickup and return to the airport or sea terminal by one of our European sedans and if you saw the Rolls Royce Phantom downstairs that’s one of them. For the purchaser’s that participate in our fractional yachting club the Captain and Crew, annual maintenance costs, and docking at the Island Gardens Mega-Yacht marina; the only outside costs that a purchaser would have is if they take their yacht out of Island Gardens they are
responsible for fuel, provisions and docking at any other marina. At Island Gardens, the annual costs range from $11,700 – $43,500 depending on the size of apartment purchased and participation in the Yachting Club.

John explained that Governance is done similar to a Condominium association but since there are many more owners, it’s less likely to be as one sided with a single individual ideal.

Jason Sheftell thanked everyone for attending the first or many Fractional Forums.

Philip C. Freedman invited all the brokers, when in South Florida, to visit the onsite Island Gardens Sales Center and the Lincoln Road Preview Gallery in order to convey the full scope of this magnificent project to their prospective clients.

Author Bio
Philip C. Freedman is Vice President of Residential Sales with Flagstone Property Group for Island Gardens. He joined the group in early 2007 and has been instrumental in setting up the sales team and creating affiliations for The Residences Island Gardens Miami. Prior to joining Flagstone, Mr. Freedman functioned as the Vice President of Residential Sales for W Las Vegas Casino Hotel and Residences with EdgeStar Residential; Director of Sales with Premier Sales Group; Senior Vice President of Sales and Marketing for The World of ResidenSea; and Managing Agent with LenCor International Properties.

About Flagstone Property Group
Flagstone Property Group is the US property development entity of Mehmet Bayraktar, a leading mixed-use commercial real estate developer with more than 20 years of experience. Mr. Bayraktar formed Flagstone Property Group in 2001 to expand his real estate development activities, previously focused in Europe, to the US and other global locations. Flagstone Property Group is made up of a team of professionals from
around the world with diverse backgrounds and unique experiences. Flagstone is dedicated to developing properties of distinction that provide a showcase and centerpiece for the communities in which they are built. For more information, please visit www.islandgardens.com

An Industry Taking Shape

Over the past ten years the shared ownership industry has grown significantly. Research shows that fractional ownership sales in North America and the Caribbean reached approximately $2.00 billion in 2007, an increase of approximately 20% over 2006. The fractional ownership market in Europe is in its infancy but has the potential to grow rapidly. Andrew Berry from The Pepper Corporation, an integrated marketing agency and consultancy, takes a look at fractional ownership and the varying options available.

Mixed Use Development
Mixed-use resort development is not a new concept. Since the tour operator holiday market in Europe in the 1960s people have found it very attractive to `live’ in a resort environment. From the consumer perspective mixed-use resorts provide a variety of accommodation styles, sporting and leisure activities, security and a “lifestyle living experience”. From the developers perspective it provides an opportunity to attract different markets, all with different, yet linked, buying motives.

The developer and operator benefits associated with a mixed-use resort development can be summarised as follows:

Risk reduction – by spreading the cost of development across a number of diverse business operations, appealing to a broader range of consumers and linking construction of real estate components to sales, developers can mitigate risk.

Cash flow – the cash flow generated from real estate products is different to that of other hospitality products and can represent a significant acceleration of cash. Such acceleration can help to fund construction or be used to reduce overall borrowings.

Revenue enhancement – operating a mixed use resort development with businesses that are complementary allowing cross marketing opportunities can enhance revenue.

Cost control – operational synergies derived from spreading the fixed cost of operation across multiple business components of a mixed use resort development can result in significant savings.

For many consumers the most attractive option is to own a holiday home outright however, the availability and cost of holiday homes in desirable resort destinations means that for the majority this is not an achievable option.

Furthermore, research has shown that more and more consumers are questioning the need to own a holiday property outright and are, regardless of income, considering options that would allow them to own the amount of time in a holiday home that they can use.

Shared Ownership
Shared ownership has existed on a casual basis for nearly as long as the market for holiday homes. Within Europe there is a history of friends and family grouping together in syndicates to buy holiday homes or other leisure assets such as boats, sports cars and gliders. Whilst these informal arrangements have allowed many to benefit from the use of a holiday home there are inevitably many problems associated with such schemes. The most common problems encountered relate to conflicts over usage, the cost of maintenance and upkeep, who manages the maintenance and what happens when a syndicate member wants to leave.

Developers have recognised that by offering a product that formalises such schemes and incorporates a professional management operation it is possible to broaden their markets, utilize assets more efficiently and enhance the profit potential. As this concept continues to evolve over time it has segmented to meet the needs of different consumer groups.

Fractional Ownership
There are many facets to the shared ownership industry, with fractional ownership being just one relatively new component. However, a lack of consistency in the terminology, with terms sometimes being used interchangeably means here is some confusion regarding the various products that make up the fractional ownership market. This situation is further compounded as the industry continues to evolve and new products are launched that either blur the boundaries between or test our current definitions.

At The Pepper Corporation we have developed some high level product definitions that aim to resolve these problems by identifying the core characteristics of each product. Before considering individual product definitions it is worthwhile defining the concept of fractional ownership, which tends to be used as an overriding term. Typically fractional ownership, when applied to the real estate market divides a property into affordable segments matching individual ownership with usage and dividing the cost of maintenance equally between all owners.

All fractional ownership products have some core guiding principles:

They offer consumers a real alternative to buying a second or holiday home in a resort destination.

They provide the use benefits of a second home without the separate issues of ownership that can be seen as burdensome to the consumer.

They are usually set in a resort development context such as a gated community or mixed use resort development. Thus, additional benefits such as leisure facilities and food and beverage outlets are available on-site.

The properties are looked after by a professional resort management company that ensures that all owner obligations such as insurances and maintenance are kept fully up to date.

They offer buyers a real interest albeit a part interest in the ownership of the asset or property.

However, as we will see later in this article some fractional ownership products, in particular destination clubs, already test these core principles.

Having provided an overview of the core principles of the fractional ownership market it is now appropriate to consider the definitions of some of the key products available within the market.

Fractional Interests
The simplest form of fractional ownership is the basic fractional interest product which is also referred to as a “traditional fractional”. The basic fractional interest was amongst the first to be offered by developers and started as a means to provide each buyer with a share in the ownership of a property, with few other ownership benefits included. A review of the typical characteristics of a basic fractional interest shows that these products are:

Typically sold by real estate developers as a means of reducing price point and broadening the target market. Fractional interests are seen as secondary products to whole ownership holiday homes being offered by the developer.

Usually either a “stand alone” development or are part of a larger real estate development located in a holiday or tourist destination. Those that are part of a larger development are more often than not a secondary product and are unlikely to be distinguishable from the other phases of the real estate development.

Single site products i.e. buyers are purchasing a share in a single property and their use rights relate to that property and can not be transferred to another property in a different location other than through an exchange organisation.

The focus of the product is on the property ownership component plus perhaps some access to facilities that are part of the development such as swimming pools, leisure facilities and maybe a golf course. There tends to be no lifestyle components to the product such as pre arrival concierge and housekeeping.

The services provided by the management company are predominantly property related ie maintenance, insurance, utilities, local taxes, rental management, etc.

Although not a hard and fast rule the duration of the fraction tends to be longer for a basic fractional interest product. Most tend to offer a quarter share, with each owner accessing up to 13 weeks use per year. However, some developers offer basic fractional interests with durations as short as 1/12 share, giving each owner 4 weeks use per year.

The useplan that defines each owners access rights to the property tends to be relatively inflexible and are usually based on a simple rotating calendar concept.

Pricing of the basic fractional interest product has a strong correlation to the value of the underlying property.

Private Residence Clubs
Another product that falls within the overall category of fractional ownership is the private residence club (PRC). Although similar in concept to the traditional fractional ownership product there are some important differences in the characteristics of a private residence club as summarised below:

As with a basic fractional a PRC is likely to be sold by real estate developers but may also be sold by hoteliers or hospitality company. Furthermore, a PRC is more likely to be associated with a five star or luxury hotel brand name.

A PRC is usually either a “stand alone” development or part of a mixed use resort development. Such mixed use developments will typically comprise of an anchor hotel, leisure and F&B facilities and other real estate components.

Although PRC’s are typically single site products they differ from basic fractionals in that access to other properties may be achieved by internal exchange programmes, especially when the PRC is owned or operated by a large hospitality company.

PRC’s are most likely to be based in premium holiday destinations more often than not in areas where real estate is in short supply or commands very high prices.

Typically the individual properties within a PRC are larger and more luxuriously finished than traditional fractional ownership developments.
As well as the real estate management component there is also a lifestyle component to PRC’s . The lifestyle element provides services you might expect at a luxury hotel such as pre arrival and onsite concierge, private lounge, daily maid service, in home catering, etc.

The duration of the fraction at a PRC tends to be shorter than that of a basic fractional, trending more towards the 1/8 share, providing each owner with 6 weeks guaranteed occupancy.

The useplan for PRC’s tend to provide greater flexibility than those associated with basic fractional. They are more like reservation system with some guaranteed access during high season.

Pricing of a PRC tends to reflect the additional lifestyle benefits and services associated with the product well as the underlying property values.

Destination Clubs
Destination clubs are often grouped together within the fractional ownership market however, as mentioned previously they already stretch our definition of fractional ownership. The key way in which destination clubs do this is that for many clubs the members do not own a share in the underlying real estate. As such most destination clubs are “non equity” clubs. However, some clubs can be defined as being “equity based” because members own a share in a real estate company that in turn owns the individual properties or because membership values are linked to the underlying property portfolio.
There are also some very important aspects that differentiate destination clubs from other fractional ownership products. Some of these differentiating factors are:

Unlike basic fractional interests or PRC’s destination clubs are multi-site products with individual homes based in different locations and even different continents

Despite properties within destination clubs typically being individual homes they are fully serviced.

There is a high degree of lifestyle benefits and services incorporated into destination club membership

Members buy into the club not an individual property and can make reservations into any of the properties within the club.

The typical ratio of members to properties is 6 to 1.

One of the biggest differences between Destination Clubs and PRC’s is members exit. Whilst with a PRC members receive the “market rate” when their share is sold with Destination Club members they receive a percentage of their initial joining fee (typically 80%).

Summary
In such a fast moving industry it is important to be clear about the way in which we define products and the terminology we use. However, we should not be too rigid with our approach and ensure that we continually update both as the industry evolves.

Andrew Berry Biography
Andrew Berry is a hospitality industry professional with over 15 years senior level consulting experience for
clients in leisure real estate development, management and operation.

At The Pepper Corporation Andrew focuses on strategic planning, market research, feasibility analysis and
development solutions for mixed use properties incorporating leisure hotels and real estate components.

He has helped numerous clients ranging from international hospitality companies to independent
developers with the design, implementation and management of leisure resorts. Andrew is also involved in the implementation of sales and marketing strategies for clients of The Pepper Corporation.

Andrew came to Pepper from NorthCourse Leisure Real Estate Solutions, a Group RCI company. At
NorthCourse he led a team of professionals, providing market research and advisory services throughout Europe and the Middle East.

During his time at Group RCI Andrew held a number of financial and affiliate servicing roles within RCI Europe and RCI Consulting gaining a strong understanding of the shared ownership and general hospitality industries.

Prior to joining Group RCI Andrew worked for the accountancy firm Touche Ross, specialising in business planning for “start up” ventures.

Andrew has a BA Joint Honours in Economics and Economic Geography and is a member of the Institute of Chartered Accountants in England and Wales. For more information please contact Andrew Berry E: andrew.berry@peppercorp.com, T: +44 (0)20 7479 4500)

The Pepper Corporation
Based in Central London The Pepper Corporation is an integrated consultancy and marketing agency. At Pepper we specialise in hospitality, leisure and real estate consulting with a comprehensive understanding of mixed use development, marketing, sales and operations.

We combine subject matter expertise, in-depth industry knowledge with real experience, pulling together senior bespoke project teams to deliver your business solutions. Our services range from strategic planning, market and project feasibility, product design and definition to developing and implementing marketing and sales solutions.

At The Pepper Corporation we can provide integrated marketing communications through our agency division including; brand positioning, concept development, CRM & data planning, creative design and communications planning. www.peppercorp.com

Hapimag Has An Unique Approach To Timeshares

Hapimag is a European timeshare company based in Switzerland. Kurt Scholl has been at the helm of the group as CEO since early 2003. In the years prior to his appointment, Scholl worked for Hapimag as head of an external consulting team in his capacity as Deputy Director of Financial Advisory and Restructuring Services at KPMG Fides. He grew up in a family of hotel owners in southern Germany and earned a degree in economics and business administration from the University of Fribourg in Switzerland. After a start in
the tourist industry, his career took him into international management consulting and then as, managing director, to a company for environmental experts and into the tire industry. As a passionate golfer and skier, Scholl can pursue his personal interests in his own company today.

An Idea is Born
The three Hapimag pioneers Alexander Nette, Guido M. Renggli and Paul Bensegger established Hotel und Apartmenthaus Immobilien Anlage AG (Hapimag) on 23 September 1963. Their idea was to create reasonably priced condominiums for smaller budgets while allowing the customers (referred to as “partners”) to select whichever destinations they wished within their “own” holiday world.

The founders decided to establish the company as a stock corporation. This feature clearly distinguishes Hapimag from the real estate funds already established at that time in the timeshare business and other such funds that were to follow. Anyone who buys a share in Hapimag receives 12 points each year per share, that can be used to book at any time in any Hapimag Resorts. The only other costs incurred after the share purchase are a modest recurring annual membership fee (to cover the costs of maintaining the value of
the resort portfolio and administration) and the actual ancillary costs for stays at the resorts (electricity, water, service charge). Hapimag set a trend at the time with this point system. It was a completely novel idea on the tourist market and has continued to prove effective to the present day with very few modifications.

In those first years, share sales literally skyrocketed, rising from around 1,000 to nearly 19,000 within three years. The Hapimag concept grew in stature accordingly, although there were setbacks from time to time, some home-grown and some caused by general economic conditions. Over the years, the spectrum of products and services available to partners was broadened. At the end of 1984, Hapimag had 1,310 apartments in its vacation range, triple the number in 1969. Today, it has about 5,400 apartments at 57 locations throughout Europe, the United States and Africa, giving Hapimag partners a large and varied choice. Whatever their preference, from relaxing beach vacations to action-packed days in snow-covered mountains or exciting city trips, Hapimag by sure has the right destinations. Partners obtain access to this entire diverse range of destinations with a one-time investment.

Number 1 on the Timeshare Market in Europe
After the boom years of the first decades, the growth curve flattened out somewhat in the mid-1990s. Nonetheless, Hapimag remained the undisputed number 1 in the timeshare sector in Europe. Hapimag’s real estate development unit completed significant large-scale projects like its resorts in Bodrum (Turkey) or Winterberg (Germany). It also set the highest standards in eco-construction and in the restoration of historical sites. In what was probably an all-time first, the company restored an entire historical Tuscany village, for instance, and converted it into a Hapimag Resort. This conversion breathed new life into the village while allowing it to retain all its Mediterranean charm. The result is a resort that is a new experience for visitors in and of itself.

As we all know, tourism was badly hit around the turn of the millennium by various factors. Hapimag was also affected by political uncertainties and natural disasters like the tsunami, 9/11 or the difficult economic situations in various countries. Sales of shares in certain markets stagnated. The company began posting losses.

From Growth to Consolidation
The new management has taken successful steps in recent years to counter that trend. Marisabel Spitz, Chairman of the Board of Directors, and Kurt Scholl, CEO, have steered the company into calmer waters with hard work and a new management team. The company turned profitable again in 2005, and sales were brought back on the right track.

Over the past three years, product sales and revenues from other activities have been increasing again and reached CHF 260 million in 2007. Important innovations and progress in organization and IT did much to modernize the company and improve its performance capabilities. At the same time, Hapimag devoted more attention to various new and different needs expressed by partners. For instance, Hapimag began running its own golf club: 35 Hapimag Resorts are close to no fewer than 150 golf courses and approximately
15 % of our 300 000 guests are playing golf. Another example is Hapimag’s cooperation agreement with the Club Leisure Group in South Africa, which now allows partners to vacation at resorts in the southern hemisphere as well. In 2007 a new generation of Hapimag shares were issued, Ferienaktie_21 VacationShare_21). They guarantee the partner that the share will be repurchased at its net asset value after 10 years.

The company is tireless in its efforts to show the diversity of the Hapimag world in its present total of 57 resorts and to divide and group these resorts according to partners’ individual interests. In one such effort, Hapimag has been creating a variety of “Worlds of Experience” in its resorts for the past three years.

Based on specific suitability, the offerings at the resorts are accentuated and expanded to match one of the following themes: Active (sports), Family (families with children), Discover (arts and culture) and Relax (wellness, relaxation). In the process, the resorts draw on their own histories and unique settings, replete with their offerings and possibilities, and use these elements to stage a “special show” for visitors. The “Worlds of Experience” mark an initial step towards totally transforming Hapimag’s business plan. This move will allow the company to adapt to the great social and economic changes that have taken place since its founding and to incorporate future developments to a much greater extent.

Setting Off for New Shores
Technology has developed so rapidly in recent decades. Think of cell phones, for example, or the new media (Internet) or increased mobility (low-fare carriers, ICE). These innovations have accelerated the pace of social and societal change. As a consequence, new work models have emerged involving telework, part-time work, the concept of annual working hours or early retirement. The lines between work life and personal life have blurred. New models for living have evolved.

Consumer habits have also altered dramatically. Products now characterize a person’s life style and help to define who he or she is. Having access to a product (through leasing, for example) is more important than actually owning it. And in this age of the Internet, anyone can work, communicate or consume at any time from anywhere around the clock.

Hapimag wants to internalize this new situation. In the future, business will still revolve around its 57 sites in prime locations throughout Europe. They continue to be Hapimag core assets. For a significant majority of the partners, the value of these destinations today still lies in their use as the partners’ “own” vacation addresses, familiar and reliable in quality. Yet the number of users who also stay at the resorts for a wide variety of reasons or purposes other than vacations, is on the rise in a trend that has first manifested itself at the city resorts. For these partners, Hapimag has already become something other than or much more than a company offering them “their own vacation world.”

The resorts are adjusting their features and services to the partners’ needs. All apartments have Internet access for guests now. Hapimag also sees to small details like a sufficient number of outlets for the many electronic devices guests usually have nowadays. The floor plans in the newest resort in Sylt is flexible. Smaller apartments can be combined to create larger apartments suitable for accommodating families. In the new destinations it has chosen, Hapimag has a special eye on having resorts that offer the most diverse range of uses possible. The new project in Salzburg is just one example of this emphasis. Last but not least, the resorts cater to the latest trends, such as the need for wellness and health or for an environment reflecting notions of modern design.

Number of partners – approx. 140 000
Number of employees -  1900
Number of resorts/apartments -  57 / 5400
Number of overnight stays in 2007 – more than 3.1 Mio.
Sales (not profit) -  CHF 260 million
Resorts under construction  – 3 (Hörnum and Dresden,Germany; Salzburg, Austria)

A Slice Of The High Life

Despite constant media reminders that we’re experiencing a credit crunch and a recession is on its way, statistics prove that one sector of the leisure real estate industry seems to be showing a healthy resilience to the economic downturn – and that is fractional ownership. And several European fractional pioneers believe affiliation to The Registry Collection, Group RCI’s luxury property exchange platform, provides a further and compelling sales incentive.

Fractional sales are flourishing, particularly in the US where they have increased by 20 per cent on the previous year, hitting almost $2 billion in 2007. The figure is taken from a report, by NorthCourse Leisure Real Estate Solutions, the consultancy arm of Group RCI, which also found that sales of wholly-owned vacation homes in the US during the same period suffered a 30 per cent decline.

Owning something for the number of weeks of the year you can use it – as opposed to year-round whole ownership – is the basic premise of the fractionals model and it applies to everything, from real estate and luxury holiday homes to jets, yachts and luxury cars. Peter Giamalva, president and managing director of NorthCourse Advisory Services, comments: “The fractional product is clearly robust and set to grow. It appeals to people who want to purchase leisure real estate without the expense and aggravation of a wholly-owned second home, even though they can afford one.”

The current economic uncertainty appears to be having a positive effect on fractional sales, as the managing of expenditure and the value of investments becomes more important than ever. Industry expert Piers Brown, founder of web portal Fractional Life said: “Given the credit crunch and economic uncertainties, it’s clear that property values are far from guaranteed and consumers are questioning the value of 100 per cent ownership of many luxury items.”

The fractional model benefits buyers by enabling them to purchase higher quality products than they might otherwise be able to afford or wish to maintain. For developers, advantages include increased profitability due to a bigger and more diversified market, and a more cost-effective marketing and sales operation because fractionals yield a higher profit per unit sold than timeshare. In addition, because the period of use being sold is far longer, there are less sales to be made before the property is sold out.

Encouraged by the tremendous success enjoyed by the fractionals model in the US, European developers are now showing a keen interest in its potential. One such fractionals pioneer in Europe is Ward Woods, CEO of Spain-based Regency Resorts who entered The Regency Country Club, located in southern Tenerife and an associate of The Registry Collection, Group RCI’s luxury exchange platform, into fractionals sales. Commenting on his initial experience with the fractional product, Woods said: “There’s a tradition in Europe of affluent people owning a holiday home. It’s a traditional aspiration of most people and the fractional model just makes it all the more practical and easier to access.”

Woods believes affiliation with The Registry Collection, gives vendors a unique selling point to offer purchasers. The Registry Collection focuses on opulence, luxury and exclusivity, key elements when marketing to potential fractional purchasers. Ward comments: “The clients feel they’re a cut above the rest and want to go to properties where they’ll be surrounded by people of a similar mindset.”

Membership of The Registry Collection gives fractional owners the opportunity to exchange into some 120 luxury properties across the globe and is a useful sales incentive, according to Woods. “Most clients are primarily buying to visit a chosen property, but the possibility of being able to exchange is great and is an excellent sales proposition. Being able to whiz off to experience other worlds and adventure further afield adds an element of freshness to the holiday home experience for purchasers.”

Stefano Tosato, managing director of Relais Villa Petrischio in Tuscany, Italy, a full affiliate of The Registry Collection, agreed that economic uncertainty could have a positive affect on fractional sales. He said: “Some buyers will see fractional ownership as a better and lower-risk investment than buying wholly-owned holiday property. The fractional product requires a lower capital investment which will act as an incentive in the current economic climate.”

Ron Haylock, chairman of Borgo di Colleoli, also in Tuscany and a full affiliate of The Registry Collection, said people are rethinking their purchasing decisions. “People who have been considering buying whole-ownership units are starting to ask themselves why they need a whole apartment year round when just five weeks will do,” he said.

When asked about the important factors to consider when selecting a luxury exchange partner, Gregg Anderson, vice president, global product management, The Registry Collection, cited a proven track record of success, strong infrastructure, established property portfolio and a solid business plan as key to ensuring developers are in a position to offer their owners true benefits in their purchase. Gregg said that affiliating with an exchange company is a very important step for a developer and he or she needs to have all the pertinent information and history needed to make the right decision for their project and for their current or potential owners.

Anderson said: “It’s important for developers to determine how an affiliation with an exchange company can help sell their property faster and more competitively. When the developer puts the end user’s hat on, it becomes clear that exchange membership only works if there are enough properties in destinations that members want to visit.
Having ‘dots on the map’ is important, but for these buyers, enjoying positive experiences with great amenities is a critical element to success. We continually research which locations our Registry Collection members tell us they want to visit and the type of experiences they are looking for, and then we actively seek out those properties we feel are the right match.”

For more information call Paul Mac Sherry on +44 (0)7710 372 994 or Nick Turner on +44 (0)7960 034 933 or visit www.TheRegistryCollection.com

Perspective’s A LIST – Roy Peires

An interview with Roy Peires, chairman and founder of Club La Costa Resorts and Hotels, a company that is among the leading lights of timeshare in Europe and one that is, by its innovative and progressive approach, defining the standard and shaping the way in which its more than 50,000 members enjoy their holidays.

1. When did you enter the timeshare industry and what led you to do so?

From the age of 19, I got involved in the hospitality industry, in restaurants, and I might have stayed to build a business in that sector but for what I considered to be an even more interesting opportunity that came along. In 1984 I entered the timeshare industry in London and Spain. It began with access to a few units on the Costa del Sol, and as I sold these successfully I began adding more units and over time acquiring more resorts. And soon after this time I started purchasing a landbank on which to build new developments. This was done steadily and gradually to ensure growth was efficiently managed, but also to ensure financial stability and confidence and soon it was clear that Club La Costa was being appreciated by a growing number of satisfied clients.

2. Has your business strategy remained the same over the years or have you adapted it to changing holiday trends?

Today the company has 22 fully owned and managed resorts, with some 2,000 accommodation units in Spain, Tenerife, Austria, Turkey and the UK. This would never have been achieved without modifying our business strategy over time. Our business model has frequently changed to meet the ever changing marketplace. A defining trait of Club La Costa is its ability to respond quickly to trends and also to anticipate them. This is evident in the way that we have developed better resorts and different products,
moving from fixed weeks to floating weeks to multi-destination points based clubs – and even our own yacht club. We are fortunate that, as a private company, we can react rapidly when appropriate and this flexibility keeps us competitive both as a business and in what we offer our owners and marketing prospects.

3. What pivotal moment or moments during the history of Club La Costa contributed in a major way to making the company what it is today?

In 1991 the UK economy was suffering, interest rates had gone through the roof and Club La Costa was forced to find new markets. This opened our eyes to the untapped timeshare markets throughout Europe including the domestic market in Spain, plus those of France, Germany and Eastern Europe. When legislation came in the mid 1990s (such as banning deposits), we reacted positively by launching our three-year
trial membership which was, and still is a very attractive and popular option allowing new members to ‘test-drive’ our product.  It generates large numbers of new members to our off-site sales centres many of whom like what they experience so they upgrade to full membership on their first or subsequent holidays. This two-step sales approach now prevails through all Club La Costa’s on and off-site sales operations with excellent commercial sales results.

4. What made you so passionate about the timeshare business at the start and what about it continues to drive you?

It was immediately apparent to me that timeshare is a fantastic product and an exciting one with so many possibilities. My enthusiasm has been evident in the way we have been able to diversify and reflect the changing holiday needs of our growing membership, driven by the desire to give our owners a holiday experience that not only lives up to expectations but exceeds them. It continues to excite me because
Club La Costa always has something new to say. Standing still is not an option for us – like most successful companies, there is always the need for innovation. Of course, this also makes for good sales and upgrade possibilities too.

5. What are the tangible changes in the holiday experience for Club La Costa members?

We constantly look to increase the levels of luxury, amenities and service that we offer. Developing our own resorts has allowed us to include such things as private Jacuzzis on apartment balconies and quality branded white goods as standard, and we are especially proud to have developed a signature interior design based on our Costa del Sol California Beach resort that sees the use of modern, high quality materials and furnishings. And we continue to look at ways of raising standards. It is important to create excitement within each new project and even more so with the public’s access to and awareness of a vast array of holidays and holiday products via the media and internet. So we are meticulous to ensure we effectively communicate with our members, in order that they can see just what we are doing ourselves and how, via ’cross-utilisation-agreements’, we are also handpicking partner resorts that fit the Club La Costa model and increase the choice available to them. Also our continually evolving websites (member and corporate), and regular e-mail bulletins and printed materials play an essential role in this.

6. In recent years, Club La Costa has been characterised by rapid growth, adding new resorts and a yacht club, what other projects are in the pipeline that you can tell us about?

For a long time, it has been our objective to create a pan-European product to be enjoyed by families of all nationalities – adding new resorts and offering new and varied holiday experiences from short breaks in the British countryside to our luxurious sailing adventures aboard our expertly crewed catamarans. Now we are adding more destinations in the Eastern Mediterranean to cater for all our members including our growing Russian market. We are seeking further opportunities in many new countries with resorts planned for example in Russia, the Dominican Republic and the United States – as central Florida is still a top 10 destination for our core British market. In Europe we already have several new resorts at various stages of development at our Costa del Sol site, in Tenerife and in Turkey. Right now we have started construction in Spain of an exciting new spa and leisure resort, with the first 84 deluxe residences soon to be launched, as
well as a new standalone resort, Rancho Santa Fe.

7. What prompted Club La Costa to move into the freehold property market?

It became apparent that some members, having ‘grown’ in their holiday expectations with us, desired to own a holiday home outright – but without the hassle of maintaining it year-round or leaving it empty most of the time. These members love and trust Club La Costa and for us it was a great way to satisfy our own marketing needs via a rentals programme. Developing resort homes this way allows us to ensure CLC standards of build and design apply, and spurred on by our early successes we have gone on to expand
this programme and we are currently seeking new resort locations. Owners benefit from excellent leaseback guarantees and a ‘peace-of-mind’ investment.

8. In what way do you think you and your company excel above the competition?

We continue to sell because we are ready and willing to embrace change and seek out new opportunities. I know I need to expand and vary the holiday experiences for Club La Costa members around the world and at the most popular holiday locations. In doing so, we plan and succeed in staying one step ahead.

I believe that the timeshare industry is changing so that only the dominant major hotel companies and strongest independents – with great products and truly effective sales and marketing – will survive. Club La Costa will be among them. In the long term these changes are creating an improved industry with an ever improving perception of timeshare, and this can only result in more satisfied customers.

We see the big winners in the hospitality industry are those merging hotels and timeshare into one seamless operation; hence our plans for more hotel units to be developed at our multi-resort site near Marbella, as mentioned earlier, and also at our UK country resorts and elsewhere.

9. Having become an industry leader, is there still an ultimate goal that you work towards?

Yes. Not only do we want to establish a global network of timeshare resorts that will satisfy the hunger for quality holidays for our member families, but ultimately we want to serve them through our own reservation system; which, of course, we already do to a significant extent. In the future, all their holiday aspirations and needs will be satisfied within Club La Costa, it is what we are working towards. We know this is what our members want; it means they can rely on getting a true Club La Costa experience wherever they choose to go.

10. Finally, what are the most important factors in the successful development of your business?

Without doubt, the expertise and commitment of Club La Costa staff is, and always will be, a vital part of the company’s success. I believe we have some of the best people in the business working for us and the ethos and work attitude of the staff, from top management through to our cleaners and gardeners, is excellent.

One of my biggest challenges is finding more good people of the right calibre to work with us at all levels and in all locations. One thing is for certain, dedicated high achievers, will always do well in this industry. They can also be sure of a place with us and an exciting career. Of course, like the company itself, they need to be open to change and not stuck in a rut. Sales and marketing, like every other aspect of the company, is dynamic, adapting to market conditions. There is a lot of despondency being voiced in the holiday market, with airline collapses and the effects of the credit crunch hitting the headlines, but we are lucky, our members have shown they love holidays with their commitment to purchase with us not just once but again and again. They view their hard earned holidays as a priority and necessity, not a luxury.

Our Vision To Develop Resorts And Capture New Markets

Previously we have focused on the proposed expansion of the Lion Resorts Vacation Club through the formation of a joint venture with Kouroushi Bros Ltd, a well established construction and development company, to create Kouroushis Lion Resorts (KLR).

Here we try to summarize the creation of one of the industry’s most exciting growth stories, documenting their aims and objectives for this expansion and the plans for the future, all created as a result of this joint venture company’s combined determination and desire to succeed.

KLR has created three business divisions to fulfil the company’s aim of providing high levels of excellence, innovation and professionalism. KLR Hotels & Resorts, the resort management company and brand; KLR Resort Properties for freehold and fractional sales and marketing, and vacation membership sales and
marketing continues under the Lion Resorts brand.

Director, Jack Mably explained at the time the benefits of the partnership for Lion Resorts; “It’s always been our vision to develop resorts and capture new markets by facilitating the needs of the buyers and end users and our partnership with Kouroushi Bros. will do this and more. We are now constructing purpose built
resorts to facilitate a range of products from freehold, fractional and timeshare.”

The first stage of this ambitious plan of expansion has now been achieved with the opening of the newly constructed Capital Coast Resort and Spa in Paphos, Cyprus which opened earlier in the year.

Built on an area of 29,000m2 and including 113 vacation membership suites the resort is the first purpose built resort to be added to the Lion Resorts Vacation Club portfolio and provides members with all they have come to expect from one of the Mediterranean’s leading vacation membership companies.

“With the expansion of the group it is vital that we ensure a consistent tour flow which not only complements the Hotel division but also supplies good quality clients with the potential to join our Vacation Club.” Sean Thacker, Lead Generation Director.

The Capital Coast Resort & Spa has been designed with the warmth and hospitality in mind that the island of
Cyprus is renowned for. The resort’s buoyant Mediterranean spirit captures all its guests, welcoming them to enjoy and relax amongst its excellent hospitality and services.

Guests can enjoy elegant classical modern exterior and spacious contemporary modern interiors that offer
unobstructed sea views from within the resort and comfort from its furnishing and surroundings.

Onsite facilities include an a la carte restaurant, pool bar, evening entertainment, large outdoor swimming
pool, onsite shopping facilities, and wellness and spa facilities.

Construction on the second new development in Cyprus, the Amphora Hotel Resort & Spa is still ongoing with the first of three phases scheduled to open in summer 2009, with full completion and opening due in 2010.
The five star Amphora Hotel Resort & Spa was previously a derelict wine factory and covers an area of 40,000m2 on a prime beachfront location in Kato Paphos. This self contained beachfront resort will cover one of the largest plots of any of the hotels in Paphos and will be a key aspect of Lion Resorts’ growing portfolio. The hotel will consist of 73 hotel rooms, and 4 suites, and the timeshare accommodation will comprise of 34 one bedroom suites, 38 two bedroom suites, 2 three bedroom suites, and 3 three bedroom villas with private pools. With an incredible amount of on-site facilities, uniquely designed architecture, and stylish interiors, The Amphora Resort and Spa will be among the best in Cyprus. There will be a retail village comprising of 19 units which have been taken up by leading worldwide brands; numerous swimming pools (9+) both indoor and outdoor; one of Cyprus’ finest, and most tranquil spa facilities, including a thermal suite that offers the user a variety of intense relaxation experiences; various restaurants and bars located throughout the resort with top class staff; many facilities designed especially for children, and much more
besides. Architecture and interiors are by Scott Brownrigg and incorporate the wine producing history of the site’s previous owners fused with contemporary modern interior design. This intense attention to detail means designing their own resort in conjunction with a quality developer will make Lion Resorts the vacation
membership company of choice across the Mediterranean.

As well as these hotel and resort developments, a third project, due to commence construction early in 2009
is the development of a freehold gated community. Andromeda Bay covers 40,000m2 and is adjacent to Capital Coast Resort & Spa. Jack Mably, Managing Director of KLR explains, “Andromeda Bay will be the first sea front gated community of luxury properties in Paphos. Buyers will have the option to purchase either freehold or fractional ownership, or on our Buy to Use to Let Scheme, which will be managed by our resort management company.”

KLR’s business development has been focused on acquisition of new affiliate resorts through expansion within current destinations or entry into new destinations. The company merged with another Cypriot timeshare developer, Trustwise Holiday Resorts, earlier this year, adding a further 2 resorts to their portfolio in Cyprus, as well as villas in Florida and the potential for further development in Cyprus and Egypt.

Expansion of sales and marketing operations across the Middle East was one of the main attractions for KLR when considering the potential benefits of a merger with Trustwise Holiday Resorts. With Trustwise Holiday Resorts being primarily focused on destinations across Egypt and its neighbouring countries the growth potential for the Lion Resorts Vacation Club is huge.

Already the benefits of this merger are being felt down in Sharm El Sheikh, where the latest addition to the Lion Resorts Vacation Club, is about to commence vacation membership sales and marketing activity.

The resort will be the 3rd added to the LRVC portfolio in Sharm over the last 18 months and Sales Director Matthew Metcalfe is optimistic about the impact this latest addition will have on sales forecasts for 2009. “The resort itself has over 250 rooms and we hope that through our innovative lead generation programs
we would expect to generate at least an additional 100 qualified tours per week primarily from guests staying onsite. As most people have found when considering locations for potential sales operations,
a deciding factor for us was the ability to operate a sales and marketing operation all year round. Obviously we suffer from some seasonal variations but by and large these are minimal when compared to European tourist destinations. Hopefully we can effectively utilize this latest addition to our portfolio to continue to drive sales in the region.”

Continued expansion across Egypt continues to be high on the list of priorities for Lion Resorts, with an increasing number of resorts currently being investigated as potential additions to the portfolio.

The as yet undisclosed resort in Sharm El Sheikh is a five star property with over 250 deluxe rooms and executive suites with most rooms enjoying a sew view. The hotel has direct access to the beach at Nabq Bay and is located alongside one of the natural wonders of the world: the Red Sea, a perfect location for snorkeling and scuba diving including miles of breathtaking beaches and endless sunshine.

Over the next 12 months a process of renovation and refurbishment will take place across the whole resort enabling it to become one of the leading properties within the Lion Resorts Vacation Club portfolio ensuring members are guaranteed the same quality and service at all of the group’s destinations.

2008 has also seen the launch of the Lion Resorts Vacation Club, bringing Lion Resorts from single destination memberships to an all encompassing multi-destination vacation club. Customers purchase membership in weeks according to unit size and seasonality. Their membership entitles them to holiday at any of the resorts within the Lion Resorts portfolio as well as taking advantage of other benefits associated
with membership including special offers on accommodation at member resorts; member preferred rates through the company’s own travel agent, Lion Travel Services and membership to exchange company, RCI. Membership to the Lion Resorts Vacation club ranges from £4,000 to £30,000 per week for full membership,
with many new members choosing to “test-drive” the membership by joining with the entry level “Experience” package.

Lion Resorts’ Sales Director, Matthew Metcalfe summarizes Lion Resorts last 12 months and future sales growth;

“We closed the year in 2007 with over 200 sales and marketing employees and a net turnover of £8 million and we have forecast that by the end of this year our sales and marketing employees will have increased by 40% and our annual net turnover to be in excess of £12 million. This is largely due to the launch of the
Vacation Club, as well as our expansion this year with additional sales centres and resorts in Cyprus and Egypt. Of course, none of this could have been achieved without the ongoing success of our current sales centres. We have also entered the German, Russian and Greek-Cypriot markets, dramatically increasing our target audience.” Over the next two years with further sales centre expansion and the opening of Amphora Hotel Resort & Spa, Lion Resorts have forecast a turnover of £25 million in 2009 and an increase to over
350 sales and marketing personnel.

One of the main driving forces behind this expansion has been the introduction of a variety of lead
generation programmes designed at giving an increased number of potential customers the opportunity
to visit one of our resorts prior to purchasing membership.

“With the ongoing problems related to destination marketing strategies we have a policy of continually developing our source market activities to attract clients to one of our resorts.

Clients booking a holiday to one of our resorts have the option to discover more about our products in friendly surroundings. We find as a company in this sort of relaxed atmosphere all our stays enjoy the experience offered.” Sean Thacker, Lead Generation Director.

So where next for KLR and the Lion Resorts Vacation Club? Well in keeping with the methodology that has served them so successfully so far, Lion Resorts have decided to keep In line with the demands of their growing member base, and as such, the Canary Islands, with a preferred climate and constant temperature throughout the year, and splendid beaches of fine sand are the next top destination being sort after by
the groups directors.

It seemed a natural move explained Sean Thacker, “not only has it been a constant request from our owner
base, but from a business perspective the islands represent an area where a large number of our middle and
senior management first started in the business. As well as providing the opportunity for many of our current employees to relocate to warmer climates for the winter months it also gives our members increased holiday possibilities all year round.”

At the time of writing discussions were at advanced stages with a selection of high end hotels/resorts and developers across the Canary Islands. Further announcements relating to specific opportunities available for Lion Resorts operations in these destinations will follow once discussions are completed and agreements finalised.

Lion Resorts’ business is diverse with growth and success; there are still challenges to face. Jack Mably tells of the challenges the company faces in recruiting the right people for the job.
“The one thing restricting growth is the challenge of finding key personnel. When we open new sales centres we need to recruit experienced middle managers and when we enter new markets we have the further challenge of finding multi lingual staff. We do experience a very low turnover of employees, people tend to choose to work with us, train with us, and stay with us. But we need to find more to help us grow.” Lion Resorts currently employs over 300 employees in sales & marketing, administration, customer service, travel services, accounts, and HR. Sales teams and administrators are located at each destination and resort, with the main Head Office based at the Capital Coast Resort & Spa, Paphos, Cyprus.

With six resorts in Cyprus and a seventh due for completion as well as resorts in Zante, Sharm el Sheikh, Egypt and in the near future the Canary islands, Lion Resorts are able to offer potential candidates with a variety of lifestyle choices. Opportunities for quick career progression are available for individuals who show the drive and ability to succeed with Lion Resorts.

KLR Director, Andrew Chapman comments on career opportunities with KLR and what key characteristics are
important in the new recruits. “With growth there is the creation of new positions, so this is a good time to
consider joining us. Jack has explained the challenges we have faced in recruiting sales middle managers, but we also have the challenges of finding qualified and specialised back office personnel. We have departments in Marketing, Finance, Accounts, HR, IT, Customer Service and Telemarketing and we are continually recruiting to support these functions to ensure we can continue to deliver a high level of service
for our members.” Of the company benefits, Lion Resorts Internal Services Director, Philippa Davis adds, “We
offer all our employees a full company induction and training program, and there are relocation packages available for some of our company positions.”
For more information about careers with KLR, email careers@klrdevelopers.com.

Hilton Vilamoura Continues Club’s Success With Mixed Use Resorts

When the elegant and inspiring Hilton Vilamoura as Cascatas Golf Resort & Spa opened for business in the Algarve last year, it not only became the first hotel resort to fly the Hilton International flag in Portugal, it also marked another significant step in rolling out the Group’s successful strategy of combining
timeshare with luxury hotels.

It is said to be a strategy which flies high even though hotel operators have often seen timeshare as a competitor to be kept at arm’s length, says Richard McIntosh, managing director of the Hilton International Grand Vacations Company (HIGVC) and the man now charged alongside his US colleagues in expanding the timeshare operation around the world.

The Portugal mixed-use venture is the first Hilton Grand Vacations Club resort to open in mainland Europe in addition to its three existing resorts in Craigendarroch, Dunkeld and Coylumbridge, all in Scotland.

HIGVC, which also has a franchised operation in Egypt’s Sharm El Sheikh, is a Group RCI affiliate and operates as part of the larger Hilton Grand Vacations Club business – which has 46 resorts primarily in the US.

As guests and club owners alike luxuriate under the Algarve sun in the cascading waterways, grottos and pavilions which characterise the Vilamoura resort, they are, perhaps, proof of how well the challenging combined hotel and timeshare operation works in practice. Indeed, the guests are potential vacation ownership candidates because they have an opportunity, during their stay, to attend informative sales
presentations and see, firsthand, the superbly fitted apartments which are on offer.

Richard McIntosh, who started his career as country club manager at the Craigendarroch timeshare in Scotland back in 1985, reckons it’s a winning combination. “The biggest challenge is the fact that hotel operators often view timeshare as competition,” he said. “But we have research to show that when somebody purchases a timeshare they go on to stay in the company’s sister hotels more than previously because their loyalty to the Group brand increases.

“On average, occupancy at our timeshare properties runs at 95 per cent-plus all year round, so timeshare brings clients to the Group’s hotels throughout the year. In this way, the captive audience using our combined site facilities automatically increases the spend into our hotels.”

It’s a view which has to be heard. Mr McIntosh has years of unrivalled experience behind him, in a career which has seen many changes and takeovers during HIGVC’s development. It was following the latest takeover last autumn, when Hilton Hotels Corporation was acquired by Blackstone Private Equity, that he was asked to undertake a new mission to help expand and develop the timeshare business.

“I’m excited about the opportunity to grow our business now I have been given a clear remit to go out and do so,” continued Mr McIntosh, who is clearly thrilled at the prospect before him as he develops a business and a concept which he is proud to champion. “It’s a big challenge, but it’s what I have wanted to do for a long time.”

He explained that Hilton Grand Vacations was researching how best to achieve the expansion and he was considering various options, working alongside his US colleagues as the European and US businesses, previously separate companies, now operated as one. They were already looking at possible new projects in Japan and Asia.

Although the way forward may not necessarily follow the Portugal and Scotland models, a tour of the new Five Star Hilton Vilamoura as Cascatas Golf Resort & Spa does reveal the innovatory style and high quality standards which have been established by Hilton in the pursuit of a memorable timeshare experience for both existing and potentially new owners.

Created around a massive, cascading water feature with magnificent pools and relaxation areas, plus the outstanding range of Hilton signature restaurants and bars, all reflecting the best cuisine which Portugal and the rest of the world has to offer, the architecture allows for the maximum exposure to the Algarve’s famous clear sunlight and blue skies.

The Vacation Club apartments are an integral part of the hotel and resort design and they offer a standard of décor and fixtures to satisfy the most fastidious of tastes, with fully fitted kitchens, luxury bathrooms and beautifully furnished lounges and bedrooms. It is the integration factor which makes the spacious 69 one and two-bedroom apartments even more attractive, both in terms of their immediate surroundings and the never-ending array of facilities which are shared with the hotel’s guests.

Many of the amenities can be seen from the timeshare balconies. And for those that don’t offer views over the immediate central water feature and its opulent environs, there is another vista which takes in the immediately adjacent golf course – the Algarve is famed around the world for its golf – which itself is a major attraction at the Vilamoura resort.

It is the first Hilton hotel in Europe to have dedicated golf facilities, including a pro shop, simulator and even a club-making service. Many fine golf courses are within easy reach of the resort.

Add to this a beach club, an exquisite state-of-the-art 2,800m2 spa which lays claim to being the biggest in Portugal, and exceptional facilities for children, including their own pool and Paradise Island Club, and the entire resort comes into focus as a fine example of what Hilton Grand Vacations is all about.

On the other hand, Hotel residents can see for themselves just how Club owners benefit from sharing the joint facilities and can be encouraged to investigate further. It certainly puts the ‘Hilton family’ concept into a wider perspective. The Hilton Grand Vacations business at the resort is managed by Project Director, Tony Pue, who joined the business in July 2008, following almost a decade with Pestana, with experience of working both in the Algarve and Madeira. Richard McIntosh commented “we have been very fortunate to capture Tony, as he brings with him a wealth of experience, which is already translating into business success. “

The Hilton name and identity is, of course, recognised throughout the world and is an icon for the hotel industry, with a remarkable history which began back in 1919 when Conrad Hilton went out to buy a bank in Texas and came back with a hotel!

It was in 1964 that Hilton International was spun-off from the Hilton Hotels Corporation with an agreement that gave HHC the exclusive right to use the Hilton name in the US and HI the exclusive right to control the use of the name throughout the rest of the world.

Hilton Grand Vacations Company began as a joint venture between HHC and Hilton Grand Vacations Limited in 1992 and the first vacation club-developed property opened in LasVegas next to the Flamingo Hotel in 1994. Two years after that, Hilton Grand Vacations became a wholly-owned subsidiary of Hilton Hotels Corporation.

Over the years since 1919, the Hilton story has been one of developments, achievements, ‘firsts’ and organisational and ownership changes sufficient to fill a book.

Perhaps it is this ability to both create and react so favourably to change that is reflected in the current push now being overseen by Richard McIntosh for HIGVC. His career has been very much about change.

After becoming country club manager at the Craigendarroch resort, he went on to join the timeshare sales and marketing team before his appointment as general manager, overseeing both the timeshare and hotel operations.

The Stakis Group took over the resort in 1996 and brought with them the two other Scottish timeshare resorts at Dunkeld and Coylumbridge. Then, three years later, the Hilton Group bought out Stakis and the timeshare and hotel elements at the three resorts were again separated, with Mr McIntosh being given responsibility for the Group’s timeshare operation, or HIGVC.

Faced with so many changes, how did he react? “The biggest challenge with each takeover was pushing to expand the timeshare side of the business,” he said. “The Scottish timeshare resorts brought across with Stakis were given a very low priority.”

At that time, Mr McIntosh recalls, he was working for an operation in which the hotel side accounted for 99 per cent of the business.

Throughout the years, he has had to work hard to ensure the timeshare element of the businesses received the support and the attention he felt they deserved. It was this dedication to the cause that allowed him to prove conclusively that placing timeshare accommodation next to luxury hotels on a shared amenity basis was a plausible and potentially highly successful option.

As well as all the obvious advantages which are on offer to Vacations Club owners at mixed use resorts, the Club is a points-based programme so they can also enjoy the many vacation options associated with that set-up.

So, what of the future, for both Hilton Grand Vacations and Richard McIntosh? The two strands are, inexorably, linked.

For the business strand, he sees a number of options to be considered in the quest for expansion and development.

“We will be looking at business opportunities along various business models for the Vacation Club,” he said. “It might be that Hilton is the primary developer or we might look at things such as licence agreements and franchises similar to the model we operate in Egypt, or even affiliations.”

For Mr McIntosh there is an additional opportunity opening in his career. He is also taking on the two-year Chairmanship of OTE, the Organisation for Timeshare in Europe, which, it is considered, will be good for both Hilton and the Organisation itself.

The OTE was established to improve representation for reputable companies in the timeshare sector and promote fair trading, quality within, and growth of, the timeshare industry. According to its own website, its members “lead the industry in their commitment to strong ethical standards with the aim of raising the standards of the industry as a whole” to ensure fair trading and satisfaction of timeshare owners.

With more than 130 members from all sectors of the industry across Europe, the OTE works with governments at a national level to help create fair legislation that safeguards the interests of the consumer and “encourages the positive development of the industry”.

So, Richard McIntosh has a full agenda in the weeks, months and years ahead. Experience counts for everything in a changing world and his will be a vital element in taking Hilton Grand Vacations forward into the next, exciting phase, of its unique development.

T: 00 351 289 300 840
E: vacations.vilamoura@hilton.com
www.higvc.co.uk/vilamoura