Premier Developer Grupo Grand Coral Promises Secure Investments, Diverse Offerings & Ideal Location

Numerous Opportunities in Riviera Maya Attract Buyers and Developers from Across the Globe

Mexico is one of Latin America’s fastest growing vacation destinations with tourism being the third largest revenue source for the country. The Yucatan Peninsula accounts for more than half of those revenue numbers and it continues to grow each year. Initiating a series of properties in the ideal Riviera Maya region,
Grupo Grand Coral presents an array of diverse product offerings, while promising complete investment security and support.

Located only 30 minutes from the Cancun Airport and five minutes from the popular coastal town Playa del Carmen, this $2.5 billion investment spans across 561 lush oceanfront acres (227 hectares), contributing
to the great urban expansion of the region. Blending notable brands, hotels, expansive resorts, an 18-hole Nick Price golf course, entertainment and retail/restaurant outposts, Grand Coral Riviera Maya will be an
unmatched grand oasis.

Grand Coral Riviera Maya neighbors downtown Playa del Carmen and its popular Fifth Avenue, a vibrant street lined with fantastic boutiques and restaurants, which actually continues into the grounds of the
project. Construction phases are estimated to take place over the next ten years and $700 million has been invested to date.

Already underway is Mareazul which includes 300 luxury beachfront condominiums. The development will offer a fine selection of amenities including a spa, Botanical Zen garden with Mayan sculptures, beach club
with private cabanas.

“Grand Coral Riviera Maya will truly be the first of its kind in the region,” states CEO Jordi Mercadé. “This master development presents a great opportunity to developers and investors to be in an impressive gated
community with multiple real estate options.”

The selection includes a variety of land lots, “there is really an opportunity for developers and investors at every level and we will work with each one individually to meet their needs.”

The 18-hole golf course will be designed by Hall of Fame golfer Nick Price, who said, “I am very excited with the opportunity to design the golf course for Grand Coral Riviera Maya.” It was the uniqueness of the
project that attracted Price to design the course located on the outskirts of Playa del Carmen. “The project will have the feel of an urban resort something that is very unique to the area. For several years I had vacationed here enjoying the fishing, good food and wonderful people and I am happy to be back here now to design a course in the vibrant city of Playa del Carmen,” said Price. The golf course will take approximately two years to complete. In what will be a first for Price, the project will feature the Nick Price
Residences, consisting of 123 residences available for full or fractional ownership, located adjacent to the clubhouse with views of the course.

Investors and developers will also be pleased to know that Grand Coral Riviera Maya is incorporating numerous eco-friendly components to protect the surrounding environment as much as possible. More
than 75% of the land will be kept in its natural state or turned into recreational parks and gardens in order to contribute to the preservation of the environment.

Furthermore, all greenery removed during construction will be housed in a greenhouse until ready for replanting. “It is very important for us to work in harmony with the land and we will encourage this lifestyle with all developers and future residents of Grand Coral,” adds Mercadé.

Riviera Maya is truly a paradise region in Mexico that welcomes thousands of visitors annually. Abundant in pristine nature both on land and beyond the shore, this area is home to the world’s second largest
barrier reef which lies in the ocean waters bordering Grand Coral. On land, residents and visitors have never-ending recreational activities to choose from including ancient Mayan ruins at nearby Tulum and the famous
Chichen Itza (located only two hours away), swimming a magical underground river at Xcaret, adventuring the exotic park at Xelha, or simply enjoying a peaceful afternoon soaking in the sun on the white sandy beach. Playa del Carmen’s renowned Fifth Avenue presents numerous stores, eateries as well as a thriving nightlife.

A Range of Product Offering:
The company’s portfolio features developments of several properties in the Riviera Maya region including Emerald Residential Tower & Spa (Cancun), Mareazul and Nick Price Residences (within Grand Coral in Playa del Carmen). With varied prices and an assortment of featured amenities such as hotels, golfing,
entertainment and retail/restaurant shops, Grupo Grand Coral has created an enclave of opportunity for tourists and investors alike.

• Emerald Residential Tower & Spa is a 20-story tower containing 106 luxury condos. Its location is one of the last pieces of land in the Cancun hotel zone directly on the beach. An amenity-rich project, residents are provided with concierge services, a management office and a state-of-the-art fitness center and spa. With 157,240 square feet of land and 269 feet of sea front, it is the best option for investment. In just two years the development has already achieved 70% sales. The development is fully completed and ready to move in. Prices range from approximately $1.2 million to $2.9 million.

• Mareazul, part of the Grand Coral Rivera Maya complex, is already well underway and will feature 300 luxury beachfront condominiums, offering a choice of two, three and four spacious bedrooms. Each residence features balconies with private Jacuzzis and fully-equipped kitchens. The community will also include 24- hour security and 650 feet of white sandy beach. Prices start from the low $600,000 to $1.5 million. Completion is scheduled for 2010.

• Nick Prices Residences In what will be a first for Hall of Fame Golfer Nick Price, Grand Coral Riviera
Maya will be home to Nick Price Residences, 123 stylish homes located adjacent to the spectacular 18-hole Grand Coral Golf Course. The Residences will be a hideaway that will provide comfort, privacy and luxury to those who dwell in them. It will include exclusive membership to the Grand Coral Beach Club. Extraordinary common areas include Paddle-tennis courts and pools. The resort boasts over 170,000 sq. ft. of sculptured gardens, lakesand pools and homes ranging from 862 square feet-1,410 square feet. These homes also come with a golf cart and represent a remarkable investment opportunity; 92 homes are available at full ownership. Homes will also be offered for fractional ownership. Prices for full ownership range from $279,000 to $490,000.

A Secure Investment:
One of the best assets of Grupo Grand Coral is the fact that the company is backed by prestigious
financial houses Bancaja and Banco de Valeancia, both part of the five largest financial conglomerates in
Spain. This alone displays the security of investment in their products, as well as guaranteed financing. Depending on a specific development, financing from 60-70% is available, despite the global economic climate. Furthermore, the success of the developer is also displayed in all of the “anti-crisis” commercial plans in order to maintain the rate of sales. And unlike many other master developments in the region, Grand Coral Riviera Maya is the only master development in the Mexican Caribbean that secured all of the necessary permits and licenses to move forward with construction, which again displays the developer’s
commitment to the project and support to potential investors.

Nick Price
Nick Price was elected to the World Golf Hall of Fame in 2003, after competing at the highest level in golf for four decades. Since turning pro in 1977 and joining the PGA tour in 1983, Price’s professional achievements have included three Major championships and 18 PGA Tour wins. Price won 15 PGA Tour tournaments in the 90’s, a remarkable achievement matched only by Tiger Woods. He was ranked number one in the world in 1994, a position he held for 16 weeks. He was the recipient of the 2002 Payne Stewart Award given for upholding the traditions of the game and in the same year, Price was the first recipient of the ASAP Sports/Jim Murray Award, given to a professional player for his cooperation, quotability and accommodation to the media. In 2005, the USGA presented the 2005 Bob Jones Award to Price in recognition of his distinguished sportsmanship in golf. A global icon in golf, Price represents all that is good about the game. Price began designing golf courses in the early nineties and brings to all of his design projects a personal familiarity with the great golf courses of the world and a commitment to provide golfers with a challenge that is interesting and enjoyable for all golfers. He limits his work to two or three projects a year to be able to provide a personal, hands-on approach to designing golf courses with a focus on dedicating time, energy and knowledge to his projects to make each course unique. He has designed courses in the United States, South Africa, Zimbabwe, Europe, Ireland, Dominican Republic and Mexico.

VOASA Conference, South Africa

The Vacation Ownership Association of Southern Africa (VOASA) held its first conference in South Africa on 24th May and 26th May 2009. Once known as the Time Share Institute of South Africa (TISA), this convention saw the official launch of VOASA’s new name, logo and identity, signalling a re-invention and dramatic change for the industry body and enabling it to grow with changing marketplace to incorporate fractional ownership and other shared ownership product types.

The conference opened with a presentation by keynote speaker Mr. Howard Nusbaum, President of the American Resort Development Association, reviewing the shared vacation ownership industry in the USA and highlighting the effects of the global credit crisis.

Toni Anderson who is a Certified Assessor described the benefits of star grading. The Tourism Grading STAR System assesses, monitors and brands South African Tourism products. She explained the process involved
for a resort to receive a star grading and went on to tell us that it will contribute toward the sustainable tourism growth in South Africa.

Brendan Hughes, who is a Senior Consultant at Michalsons Attorneys, spoke about the significant impact that the new Consumer Protection Act will have. “The Act will have a significant practical impact on the nature of contractual warranties provided to consumers, refund policies and the general formulation of
contractual terms and conditions, particularly standard form contracts and the way in which those contracts must be interpreted by courts,” He carried on to say ‘Although the Act puts up several new legal hurdles for
businesses to clear, it also offers businesses the opportunity to promote confidence and certainty in their offerings to consumers, and this will ultimately help drive consumer purchasing decisions,’ said Brendan.

Professor Piet Delport of the University of Pretoria gave a very informative presentation concerning the interaction between the Share Blocks Control Act 1980 and the new Companies Act. Highlighting the duties and liability of directors, corporate governance and the enforcement of duties and rights of shareholders, Professor Delport also covered transitional arrangements with regards to the implementation of the Act.

The shared vacation ownership industry has taken on its responsibility of implementing ways to help decrease global warming, and as such the VOASA conference attracted delegates like Greg McManus of the Heritage Environmental Management Company and Barney Beukes of SIRAC to address the audience of resort developers. Greg discussed environmental rating and management systems for responsible tourism whilst Barney presented to delegates SIRAC’s energy-saving heat pumps. ‘Hot water is the major consumer
of power in a home,’ said Barney. ‘By utilising a SIRAC heating pump you can save 65 per cent of your water-heating costs by employing the free solar energy that is available. The SIRAC heating pump is ozone-and globalwarming- neutral and it has been accepted by the Montreal Protocol.’

Henry Greyling from Seef Fractional talked about the growth of Fractional ownership in South Africa and gave us an insight into the regions where fractional sales are predominant which include Exclusive Golf Estates,
especially those with spas for the ladies. Other leisure developments including bush lodges are particularly popular as well. The most popular regions in South Africa are currently Kwasi Zulu Natal and Cape Town.

Deon Robbertza from Zoom Advertising which is the first advertising company in South Africa to be 100 per cent carbon neutral discussed the subject of ‘Adapt or Die – The Conscious Brand’. ‘It’s about single-planet living and offering consumers an ethically correct choice, ’Deon said. ‘It’s about leaving our environment in a better state than we found it for our children but also sustaining realistic business growth. “There is no point waiting for consumers to demand this choice – we should be offering it as a matter of principle”.

Dirk Wilson from Fractional Advertising simplified the often confusing subject of internet advertising. He ran through 11 fundamentals of internet marketing success. Some advice he gave was – optimise each page, add Google Analytics to your website and always use quality images & banner adverts which will motivate viewers to click. Dirk explained the growth in internet use in South Africa to highlight to importance of
the internet to your business. “With a rapidly growing internet user base – combined with faster & larger bandwidth allocation, South Africans are only on the tip of the iceberg in terms of market penetration. By 2010 an estimated 30+ million South Africans have fast internet access on their mobile phones alone.”

VOASA went on to recognise pioneers in the industry with an awards ceremony. Award categories, and winners, included: Industry Team of the Year (Kwa Maritane Bush Lodge); Industry Performer of the Year (Judy Pousson of The Holiday Club). A Lifetime Achievement Award went to Brian Stocks of Sun International Vacation Club, and Service Excellence to Dirk Wilson of FractionalOwnership.co.za. Dirk commented
“We are delighted to be acknowledged and rewarded by the industry for our hard work and efforts, particularly over the past year or so, it’s a team effort so thanks to our team for going the extra mile on many occasions as well as our clients for all their support”.

All the delegates at the conference also signed a FIFA soccer ball to demonstrate their dedication to, and support of, the 2010 World Cup festivities which will play a major part in boosting South Africa’s tourism next year. More on this subject will follow in a later issue.

In between sessions delegates were treated to refreshments and lunch, plus wine and chocolate tasting, South African dancers and a luxurious gala dinner, with free flowing drinks, several course meal and
entertainment making for a very successful and well organised business and social gathering of key industry players.

VOASA stands for ‘Vacation Ownership Association of Southern Africa’. It was previously known as TISA (Timeshare Institute of Southern Africa).

The name change was necessary in order for TISA (now VOASA) to evolve with the everchanging industry, an industry that is constantly introducing innovative new products and propositions – products such as Points Clubs, Fractional Ownership and Destination or Private Residence Clubs, which fall within the shared
vacation ownership category set out in the Property Timesharing Control Act No. 75 of 1983 and / or Share Blocks Control Act No. 59 of 1980. Though these new products are considered to be different from standard shared vacation ownership, they still require representation by an industry body.

Each prospective member’s application and documentation will be vetted, not only for legal compliance, but also for consumer protection. All members of VOASA are required to adhere to the industry Code of Conduct. VOASA is committed to strong ethical standards. This is essential to promote the long-term interest of the shared vacation ownership industry in Southern Africa.

For more information visit www.voasa.co.za or call +27 (0)21 914 9693

VOASA Golf Tournament
The VOASA event kicked off with a golf event which was held at the Royal Johannesburg and Kensington Golf Club and sponsored by RCI.

Royal Johannesburg & Kensington Golf Club is one of the most prestigious golf clubs in South Africa. In its almost 130 years of existence, it has hosted 7 South African Opens and numerous other major tournaments. Royal is home to the biggest annual professional golf event in Africa, the Joburg Open, inaugurated in 2007, and has hosted the International Final Qualifier (Africa) for the Open Championship for three years in succession.

It was a fine day with 5 teams battling it out for first place, but in the end the winners were Connie Harding, Allan Roberts, Albie Roux and Phil Engelbrecht who each won a golf cart.

Fractional Summit 2009 Convention Review

Fractional real estate professionals were brought together on Thursday 23rd and Friday 24th April in London to attend the second annual Fractional Summit.

The Summit was held at the prestigious Hilton Metropole and organised by Fractional Life with headline sponsorship from Registry Collection and sponsors: FOC – Fractional Ownership Consultancy, Citadel Trustees Ltd, DCP International, Castello di Casole – Timbers Resorts, Preferred Residences, First American Title and yooPhuket. The event attracted over 210 fractional property developers, brands and service operators together with leading property journalists.

The theme of this year’s conference ‘Fractional ownership: the rewards and opportunities’ ensured a good turnout with delegates from all around the world including Denmark, Italy, Spain, France, Portugal,
Republic of Ireland, USA, Cyprus, Turkey, Mexico, Thailand, South Africa, Dubai, Russia, Australia, Cape Verde, Lebanon, India, Croatia and the United Kingdom.

The event gave fractional professionals from around the world an overview of the current state of the industry in Europe with a two-day programme of presentations and panel discussions.

One of the recent causes for concern, which is linked to making consumers more aware of fractional ownership is the lack of a clear definition of the product, with different developers using different terminology in their marketing materials. On this subject, Preben Vestdam, Principal and CEO of Valhalla
Associates discussed industry definitions of luxury fractional ownership, Destination and Private Residence Clubs and the requirements of each. He spoke about and highlighted the main differences between
Destination Club, PRC, fractional ownership and timeshare and ran through everything the potential fractional developer who may be considering adding one of these to his mix of products needs to know, from business models in usage plans, preferred locations, pricing methodology, and success and failure factors.

Despite managing to achieve increased positive press coverage over recent months, there’s no denying that the fractional property market in Europe is very much in its infancy, so it was very inspiring to hear from Sarah Rezak who is a senior consultant from Ragatz Associates. Sarah presented figures to show the size of the US fractional industry and how the marketplace has grown to be worth $1.6 billion dollars in 2008 (down from $2.3 billion dollars in 2007). What is interesting is that many UK and European consumers buying trends tend to follow shortly behind the US. Currently in the US there are 138 Private Residence Clubs and 12 Destination Clubs. Sarah shared with us some interesting statistics about the satisfaction levels of
fractional owners – 87% of Fractional Owners and 95% of Private Residence Owners said that knowing what they know now about their purchase, they would do it again.

Following on from an interactive panel session talking about the fractional hotspots around the world we were introduced to Marc Koerts, Managing Director, Avenio Prieuré and Marina Palmerio of Timbers Resorts.
At a time when many real estate developers are considering whether to change the mix of their property and may be considering a shared ownership offering we heard from two very different fractional developers, Marc
Koerts shared with us his journey from being a self-confessed ‘fractional novice’ last year to, 12 months on successfully launching his mixed use “Avenio Prieuré” fractional ownership development in Provence, France
– his resorts were featured in Perspective Magazine in June 2009 (available online at www.theperspectivemagazine.com). Marina Palmerio presented Timbers Resorts’ and Castello di Casole’s vision. She explained that for many, their dream is to own their own home in Tuscany, Italy and that
Castello di Casole offers one of Tuscany’s most remarkable villas and surrounding estates, but also the option of whole or fractional ownership.

Nick Turner, Vice President & Head of New Developments – Europe for Registry Collection discussed the growing trend of converting traditional real estate into Fractional Ownership and gave an overview of where
the fractional industry is today. His session highlighted that there are 4 main typical destinations ski, golf, beach and urban. The cost of a fractional ranges from $99,200 to $247,000 and the units are fairly large – 1670 sq ft – 2500 sq ft. The largest potential growth areas would likely be Spain, Italy, Portugal, UK, France, Cyprus and Croatia. He went on to explain how the exchange programme with Registry Collection which is the largest in the world can add huge benefits to the Fractional offering by giving the fractional owner access to 160 of some of the world’s most exclusive resorts.

As a break from concentrating on the property arena, Richard Thomas, Director of Marketing for Jet Republic gave us an amazing insight into the world of Fractional Jet Ownership. He told us about the Jet Republic mission: to revolutionise private jet travel with dramatically improved service in the air and on the ground.

Despite the current economic climate he said that they have put their money where their mouths are and have just placed the largest order in European history – 110 Learjet 60 XRs valued at $1.5 billion. The Learjet60XR is the best in its class flying higher, faster and further.

Chris Allen of Citadel Trustees spoke about the importance of getting the right structure to support the right product, right from the start. He explained the importance of getting it right from the start with a structure which supports the product from a legal, operational, sales and marketing perspective. A structure that combines flexibility for future product development with complete security for added product credibility. Doing this is both cost effective and financially logical for buyer and seller and offers each an exit route. Linked to this was a presentation from Andrew Warren, Partner, Anne Taylor, Partner from Irwin Mitchell
law firm which is based in London. They spoke about the important and controversial issue that the fractional industry is currently governed by the Timeshare Directive which is part of the Consumer legislation under review at the moment in the ECC. The timeshare (Fractional) contract is a contract of
accommodation use for the duration of more than one year by which a consumer acquires the right to use one or more overnight accommodation for more than one period of occupation.

The current directive states that Fractional Ownership cannot be sold as an investment. Further stipulations are that pre-contractual information should be provided in good time before the consumer is bound by any
contract or offer and specific information to be contained in timeshare, long term holiday product, resale & exchange contracts. The contract should be in writing in the language of the Member State in which the client is a national. Cooling off period is extended to 14 days from the day of conclusion of the contract. If the withdrawal form is not provided, the period of withdrawal expires after one year and fourteen days. There is a total ban on advance payments, provision of guarantee, reservation of money on account and acknowledgment of debt during withdrawal period for all contracts.

Greig Holbrook from Oban Multilingual gave us a fascinating insight into the multilingual Search engine optimisation. He explained how SEO works and gave us examples of what we needed to do to increase our rankings on Google but given that not everyone searches in English or even uses Google there were other things you could do to increase your rankings. Things such as Keyphrases: Cultural variants, Search Engines, content, Domain names/localisation, Global Social Media, Growth in penetration per country.

Claude Attala – Global Managing Director of Northcourse released the findings of the first ever research paper dedicated to the fractional property market in Europe. The study, titled “Europe: Trends In Fractional Real Estate 2009” identified the following: there are 90 fractional products in Europe in the form of private residence clubs and fractional properties. Over 70% of fractional properties are located within a mixed use environment. More than 60% of these are located near the beach or a golf course, although there has
been a recent growth in urban properties. Italy was chosen by those interviewed as the most desirable location followed closely by France. Portugal is also popular, followed closely by the UK, Turkey and Spain.

Of those interviewed, 33% said they were likely and 13% very likely to purchase a fractional property in the future. The remaining 54% said they were not likely to purchase a fractional at present, which highlights
the need for increasing awareness of the fractional product.

We then heard some very interactive panel discussions, ‘Live’ Fractional Practical Exercises, Capturing the high net worth fractional Consumer and connecting with different cultures.

Speakers and panellists were upbeat about the future of the fractional industry despite the economic downturn, pointing at a sustained growth curve in the European fractional property market over the next few years.

The newly-launched Fractional Life Summit Awards were also presented, amongst them was Avenio Prieuré, a luxury resort development company in Provence and member of The Registry Collection, scooping the Fractional Life Award for Innovation and Excellence, the top accolade in the fractional industry.

Delegate Quotes:

“In sharp contrast to the general economic news, there was an excited buzz as new projects and current fractional successes were discussed and planned” – Eric Gummers, Howard Kennedy

“You’ll have over 300 delegates at the next one – I hope you have the space” – Peter Matthews, Cave Creative

“I really enjoyed the fractional ownership conference, expected less, very impressed, will do a lot of business from it” – Vincent Barbera, Destination Sicily.

“Great fractional property conference – it served its purpose and I enjoyed all the speakers. I’ll definitely attend next year” – Chris Bannister, GRM Solicitors.

“I think it’s been one of the best conferences and feel very positive. I would have liked to have more representatives there, will bring more next year” – Richard Thomas, Jet Republic.

“I enjoyed the conference very much, very positive feedback, panel discussions were great. I got to meet everyone I wanted to” – Maurizio Bisicky, Marriott Vacation Club International.

“It’s the first event I’ve been to in a while that has exceeded my expectations. I noticed many new faces, both developers and suppliers coming into the industry. In a time when most markets are looking inwards, it was great to see people actually making plans to enter or expand their operations in the fractional market” -
Ioannis Verdelis, Select Ownership.

Fractionalizing Luxury Vacation Residences: A Profit Opportunity for Developers and Investors

By David M. Disick, Esq.

The Overall Opportunity
The current market provides a rare combination of circumstances that create a potential profit opportunity for developers and astute investors in today’s vacation home market.

By reason of the current economic climate, developers are able to purchase singlefamily residences at favorable prices and on favorable terms. They then can fractionalize and sell these residences, thus realizing increased sales revenues.

Opportunities to Acquire Luxury Properties Favorably
Developers and vacation home owners who wish to sell currently face significant challenges. These sellers have endured months and sometimes years of low offers or no offers at all. Understandably, prices have declined.

This creates an opportunity to buy properties at favorable prices and terms from homeowners and developers and from homeowners willing to sell a portion of their property and retain one or more fractional
interests for their own personal use.

Favorable terms to be negotiated may include: seller financing; extended escrow periods; obtaining marketing and sales control prior to closing; and, in some cases, obviating down payment requirements.

Opportunities to Generate Higher Revenues Through Fractional Sales
Fractionals offer potential for greater profit from a particular property than would otherwise be realized if it were sold as whole ownership. This is due to the growing public acceptance of fractional vacation home
ownership. This is reflected by the rapid growth of the industry segment and the fact that fractionals have outperformed other segments of the vacation real estate market, even in times of economic downturn

Growth of Fractionals and Private Residence Clubs
Since the inception of fractionals and the more luxurious Private Residence Club (PRC) offerings in the early and mid-nineties, the industry has grown to $2 billion in 2007 sales and to $1.5 billion in 2008 sales.

According to Ragatz Associates (Ragatz), a leading industry feasibility analyst, existing fractional and PRC owners represent only about one and a half percent of incomequalified households. Significant further
expansion of the industry can therefore be anticipated.

Vacationers respond favorably to fractional vacation home ownership because they believe there is little reason to pay one hundred percent of the cost of a vacation home used only a fraction of the year.

Increased Revenues to Developers and Investors
Vacation home industry experience is that revenues from vacation homes sold as fractionals generate one and a half to two times the proceeds of the home were it sold as whole ownership. The following examples
illustrate why fractional sales can generate additional revenues.

Example 1
• Whole ownership price $5,000,000
• Fractional revenues at a 1.5 fractional multiplier $7,500,000
• Average price of a 1/10 fractional $750,000 or 15% of whole ownership cost

Example 2
• Whole ownership price $5,000,000
• Fractional revenues at a 1.75 fractional multiplier $8,750,000
• Average price of a 1/10 fractional $875,000 or 17.5% of whole ownership cost

Example 3
• Whole ownership price $5,000,000
• Fractional revenues at a 2.0 fractional multiplier $10,000,000
• Average price of a 1/10 fractional $1,000,000 or 20% of whole ownership cost

The lower price point of fractionals widens the pool of potential owners. Stated simply, there are far more potential purchasers willing and able to invest $750,000 in their vacation property than there are potential purchasers willing and able to invest $5 million in their vacation property.

Fractionals and PRCs in the Current Economic Climate
Many industry professionals believe that fractionals are the strongest segment of the vacation home ownership industry and will be the first to recover when the economy inevitably turns around. Today’s buyers realize that actual vacation home use is rarely more than a few weeks a year. For these buyers, fractional ownership makes good sense. This recognition is borne out by fractional sales statistics in 2007
and 2008.

Sales Performance of Fractionals in 2007
Ragatz has reported that 2007 Fractional and PRC sales increased 12.4% in sales volume and 8% in the average price per fraction over 2006. Another industry analyst, NorthCourse Leisure Real Estate Solutions, reported that 2007 fractional sales in the U.S., Canada and the Caribbean increased 20% over sales
in 2006.

This is notably better than the performance of whole ownership real estate in 2007. The National Association of Realtors reported that sales of vacation homes in 2007 fell approximately 31% from 2006.

Sales Performance of Fractionals in 2008
Fractional sales did experience some decline in 2008. However, Ragatz reports that:

• North American fractional and PRC industry sales reached $1.52 billion in 2008.
• While this represented a drop of approximately 30% from 2007 sales, in contrast, sales of wholly owned second or vacation homes dropped by about 40%
• Moreover, the luxury fractional segment, PRCs, dropped only 24%

Another industry professional, Sherman D. Potvin, founder of the recognized website, Luxury Fractional Guide, has commented :

“Even in the economic downturn of 2008, the fractional market was still the fastest growing
real estate product.”

“Despite the economy, fractional real estate is steadily selling, and… [though it] might not be
selling as quickly…people are still buying.”

“Over the next year, we are going to see a substantial growth in the fractional industry. The good news is that people are not going to give up their lifestyle. They are still going to vacation in nice places. Because of the current economy, many of those people who would have otherwise purchased a wholly owned vacation home will turn to the alternative vacation home market and fractional real estate will be there waiting.”

Some Caveats
Though relatively simple in concept and potentially very profitable, implementing an offering of fractionalized vacation real estate is not for the uninitiated. A wide variety of skill sets is required for a
successful development.

Prior to embarking on this endeavor, one needs to consult, as needed, with legal and financial advisers. Potential acquisition properties need to be identified. These properties must have prime locations in prime
resorts. Zoning ordinances must be checked to see if fractional ownership is permitted. Financing sources need to be found and sometimes educated in fractionals.

The developer’s business plan needs to set forth the rate or return of, as well as return on, the investment. It should also include cash flow pro formas for best, worst and likely cases. Favorable acquisition price and
terms must be negotiated. Backup properties should be identified, if needed.

Properties need to be carefully inspected and any necessary repairs or improvements made. Furniture, furnishings and technology need to be complete and up to date.

Purchaser mortgage financing is currently very limited and may pose a challenge. A highly effective and experienced marketing and sales team needs to be assembled. Property management and concierge or
reception services must be in place. A fair, computerized reservation system needs to be installed. Automated bookkeeping and auditing procedures need to be instituted. Ownership and other legal
documents have to be drawn up.

In other words, do not attempt this alone.

Conclusions
Now is a good time for commencing the process of offering fractionalized vacation homes. As the economy recovers, it can be anticipated that this increasingly popular form of vacation home ownership will once again experience significant growth and will be the first market segment to rebound.

As the market turns around, there will be pent up demand from people who have delayed their vacation purchases due to economic uncertainties. Developers who are prepared to offer what vacation home owners want will be in an excellent position to profit from the resurging demand for fractional vacation home ownership.

David M. Disick is President of David M. Disick & Associates. He is among the pioneers of the fractional vacation home industry with his development of the luxury Private Residence Club, Franz Klammer Lodge in Telluride, Colorado. He is currently developing Club ElyséeSM. He may be reached at 435 659 9738 or at ddisick@msn.com.

Group RCI Christel House Open 2009

Nearly 2,000 golfers and hundreds of volunteers gathered for the seventh annual Group RCI Christel House Open international charity golf tournament the week of June 8. The Open is actually a series of individual tournaments spanning the world. This year, golfers at 19 individual tournament sites on five continents
participated in the event. The majority of tournaments take place in June with a few events taking place later in the year due to weather and other considerations.

World-wide proceeds are expected to be announced by year-end, once all tournaments have taken place. One hundred percent of cash proceeds will be utilized for programs and services benefiting more than 3,000 children who attend Christel House learning centres.

The tournament is largely supported by developers, resorts and vendors in the timeshare industry because of strong ties to Christel House founder Christel DeHaan, a recognized pioneer in the industry and co-founder of Group RCI, the worldwide leader in vacation exchange. Timeshare industry companies sponsor and
host individual tournament sites on behalf of the charity.

“We are deeply grateful to our sponsors, including our Title Sponsor Group RCI, for their generous support of this year’s tournament. Likewise, our tournament site hosts are the event’s heart and soul. Their collective efforts have built the tournament into an annual tradition that spans the globe,” said DeHaan.

“We are absolutely thrilled to once again have the opportunity to sponsor the Group RCI Christel House Open and are humbled to help this world class organization’s efforts to break the cycle of poverty around the world,” said Geoff Ballotti, president and CEO, Group RCI.

“Our associates’ and affiliates’ passionate support of Christel House from Bundall, Australia, to Bangalore, India, improves the lives of countless children, families and communities that make up the Christel House community, and we are very proud of that.”

The UK tournament of the Group RCI Christel House Open charity golf day was held at Ealing Golf Club, Perivale, Middlesex on Monday 15th June 2009.

Ealing Golf Course was originally laid out by James Braid and later re-designed by Harryding. Colt, one of the greatest of all golf course architects who would go on to design Sunningdale, the East and West courses at Wentworth and Stoke Park.

The course is renowned for the condition of our course and the greens are some of the best in England. Golfing legends such as Peter Allis, Greg Norman, Bernhard Langer and Paul McGinley have played the course as well as celebrities like Sir Henry Cooper, football legends Ruud Gullit and Denis Wise and entertainer Matt Monro.

It is a challenging Par 70, 6,191 yards course that, over the years has produced players of the highest calibre in amateur golf. It is not a physically demanding course though so players of all levels and ages can enjoy a relaxing but challenging round.

The weather held out right to the end of play allowing all players to enjoy a dry round as teams of four battled it out for first place and a number of individual prizes.

The evening started with a drinks reception sponsored by Perspective International Ltd and followed with a
beautiful dinner, speeches from key sponsors and Christel House supporters, a charity auction and awards ceremony.

First Prize Winners were Team Vision, comprising of Stephen Price, Tony Dangerfield, Bertie Edwards and
Jimmy Kane.

The UK event raised over £20,000 for the children of Christel House.

Developing A Hotel More Efficiently Is Now Possible

Develhotel.com which is the first online marketplace for hoteliers and real Estate developers went live on July 6th 2009.

Under the current economic climate, it has becoming increasingly important to become more efficient in the way hotel chains, investors and real estate developers plan, design and deliver hotel and resort projects worldwide. The sudden decrease in hotel occupancy, together with the difficulties in financing ongoing hotel construction projects has lead to the re-evaluation of how the different players in the hotel industry
develop hotel assets today.

In addition, the hospitality and real estate industries have traditionally relied on extensive face to face interaction between developers, investors and hotel companies and an intimate local knowledge of each geographical market. As a result, the development process of leisure real estate projects and city hotels has
historically been expensive and time intensive.

The launch of the first online marketplace geared towards hotel development has meant in the first instance to bring efficiencies to the hospitality industry by eliminating its geographical barriers. Shareholders of
hotel companies and real estate groups are looking for ways of dramatically reducing the cost of hotel development. Real estate investors, hoteliers and developers need to achieve reductions in the OPEX of their asset transactions. Develhotel is the answer to this more efficiency-conscious approach.

Develhotel’s Chief Executive Officer, Ivar Yuste, a seasoned veteran of the hospitality and tourism sectors, is convinced that this new online marketplace will significantly benefit the interaction of all the players involved in the development of a hotel or a mixed use project: ‘Develhotel’s users are consulting firms representing hotel owners, hotel chains, private investors, banks, real estate and hotel brokers, construction companies, asset management firms, investment funds, REITs, headhunting firms, consultants, golf course
designers, beach club operators, trade fairs organisers, Spa operators and absolutely any company contributing to the development of hotels and resorts in any shape or form.”

Above all, Develhotel is a community that serves every single company working in the hotel development sector wishing to do business efficiently and cost effectively. Their clients pay an annual flat fee to showcase their assets or projects or to search for projects or properties in any geographic region of the
world. Having thoroughly researched the market Develhotel found out that their clients prefer a closed environment that they can trust and can maintain a certain degree of confidentiality.

Simply by joining this platform, users can elevate the visibility of their development plans to a global scale. Develhotel’s role is to put all the parties in contact around specific hotel projects and properties. They do not provide consulting services, nor take commissions on transactions (they are not brokers), and do
not organise trade fairs or publish magazines; they want to stick to their core business which is being a platform for hotel companies to do business around specific projects or assets.

The projected number of members in the next 12 months would be several hundred and they have segmented the market into categories – real estate groups, service providers, consulting firms, investors, hotel chains, etc. The key to successful for the platform is to reach the right mix and balance of these companies within these categories so as to try to match supply and demand as much as possible. This mix of users will be monitored closely to make sure the balance is always right.

Develhotel have chosen now to launch their new product despite the economic climate, firstly because currently this service does not exist in the hospitality sector but there has been a demand for it for a long time now and secondly, because due to the current economic climate, there is a pressing need for the two groups of companies in the market to do business together as quickly as possible and now is a time when many companies are looking to save money and become as efficient as possible.

There are two types of companies who will be using the service – Companies that are divesting as they were not prepared for change. They need to sell quickly and need to contact credible buyers in a trustworthy environment.

You also have the companies that have kept some ‘fat’ and are taking advantage of the cycle to grow with opportunistic moves. They have equity and are investing to acquire assets quite aggressively. For these investors, prospecting the market is becoming a nightmare as there are so many simultaneous parties involved with the same individual assets.

The initial feedback received from investment banks and from funds is that Develhotel is a good answer for their research departments to reach out to the right assets and projects.

“We are a global company and are expecting to find our growth in all the main regions of the world. We see great opportunities in many regions, one of them being the Middle East because of the enormous amount of
growth and activity in the region.” Says Mr. Yuste.

Many analysts are saying that there is an oversupply in some markets but there are equally several large economies that haven’t reached the required level of hotel infrastructure to make tourism a seriously viable alternative to oil production. There are a number of players in the investment fund arena, that have large
requirements for funding allocation in hotel or leisure real estate assets. Develhotels will provide a tool that allows them to select the right projects for investment more efficiently and without devoting so many resources and time in the process.

Develhotel’s CEO is adamant to stress the efficiency aspects that this new tool will bring: “With Develhotel, hospitality and development companies will be able to interact online, first by logging in to the platform from any PC connected to the Internet, showcasing specific projects and discussing specific demands for these projects on a globalbasis. And secondly, once the business opportunities have been identified, by
matching the different needs of all the actors involved in a tangible hotel deal. The various executives involved in a transaction will be able to agree on meetings and discussions much more productive and conducive to closing a successful deal for all the parties. Face to face meetings are absolutely mandatory, as they are in any other industry.

Where Develhotel brings an innovative approach to the way we do business today in the hospitality sector is in allowing the reduction of OPEX for all the parties involved in hotel projects.

At a basic level we are talking about optimizing travel expenses, accommodation costs, and T&E expenses for hospitality and real estate executives. However, at a more complex level, Develhotel will have a significant impact in the form of a drastic reduction of the cost of opportunity for hotel development executives. The time that these executives devote to managing existing assets or evaluating new ones is very valuable for their respective companies and shareholders. Develhotel can make the most out of it”, Mr Yuste said.

“From a technology perspective, the website design of Develhotel allows hotels and developers to use this B2B tool across the entire lifespan of hotel assets in a closed environment, from project design to financial
sourcing, throughout the search of investors, the operator selection, the construction phase, a possible hotel conversion, the addition of residential units, a contract change or any transaction type (selling, buying, sale & lease-back, bullet, etc.). We have leveraged technology to take all possible parameters into consideration for version 1.0”, stated Omran Boaira, Chief Technology Officer of Develhotel.

“Develhotel goes beyond the simple concept of an online professional network based on listing people’s profiles. Develhotel is rather a database of professionals who want to close deals around specific assets. Hoteliers and investors can search for projects or properties and developers can showcase their hotels
and resorts in order to find the appropriate business partners. Our development team is already testing version 2.0 with new functionality and tools that we will be unveiling in the coming months”.

Venice On Water Has Arrived

The industry has just seen the launch of one of the most unusual timeshare properties yet – Venice on Water. This operation is based around a small fleet of custom-built luxury Houseboats that will be moored in a strategic and central location within very close proximity of the iconic city of Venice. The first of 10 Houseboats, the MDINA VENEZIA, was inaugurated in Malta on June 23rd and several stakeholders in the hospitality and holiday ownership sectors were invited to pre-view the Houseboat before it reached its base in the Venice lagoon.

This floating residence concept was borne out of the co-operation between Malta based Marketing And Promotion Ltd, headed by Managing Director Mary Anne Pulé and its Italian partner Floating House, which has secured licences for 10 Houseboats. The project is being financed by Marketing And Promotion Ltd’s development arm – MAP Destinations Investments Ltd. The initial plan was to start with one Houseboat, however since there are 10 licences available, the long-term aim is to build up to this number, giving MAP 500 weeks to sell. The latter initially started promoting this venture in its home territory of Malta, a market it knew well, however it is now turning its attention to the UK and US markets.

The marina Darsena DEC was chosen as the base mooring place for the MDINA VENEZIA. It is an ideal location given that it is only 5km away from the Venice city centre and it offers guests various services and facilities including water and electricity supply and protection from winds and tides. The houseboat, measuring ten by four and a half metres, can accommodate up to six guests and is easy to manoeuvre and handle with no licence or experience required. Anyone wanting to jump aboard can hire their own skipper for an extra fee or can opt to learn the ropes in a couple of hours.

According to Mary Anne Pulé “if a member can clearly pilot the boat and establish themselves as a good skipper, there is no reason why they can’t go further afield to explore the rivers of Italy. But for those wanting to stay in Venice, there’s lots to do. There’s the Lido and plenty of islands. We’re also planning to provide several itineraries to make it easier for members to plan their routes”.

The construction of the MDINA VENEZIA was entrusted to Malta-based General Maintenance Ltd, however it was also entirely designed, furnished and finished in Malta. No compromise was made on the choice of finishing required to make this Houseboat a marvel in luxury. The hull has also been fabricated from light aluminium which is more durable than other materials and is less expensive to maintain although the initial production costs are higher. It has also been specifically designed for the shallow waters of the Venetian Lagoon and has been planned with safety in mind so guests may cruise in confidence. The vessel is equipped with fenders to protect it whilst it is moored and lifejackets, fire blankets and extinguishers are also available on board. The inside layout of the houseboat consists of two bedrooms, one with ensuite facilities, a separate shower room, a full kitchen and living area, a rooftop sundeck and lounge area, a cockpit and private sleeping area for the skipper.

Apart from offering luxury 5 star accommodation on board, membership of Venice on Water also offers flexibility through its affiliation with RCI and ICE Gallery. Given that the Houseboats enjoy a red seasonal time band across the year and have been awarded the Gold Crown status by RCI, members will also benefit from excellent exchange power. If this was not enough, the Management Company also offers members the option of splitting their week and enjoy one week-end and one mid-week break at different times during the year.

Ultimately, the beauty of Venice on Water is that it allows members to create a holiday tailor-made to
suit their preferences and each holiday can be a different one with new routes explored year after year. Although the Management Company will offer a number of suggested cruise itineraries, it will be up
to the members to organise the holiday to their liking and at their pace.

Life onboard a Venice on Water houseboat is a truly magical experience and is ideal for everyone. Children
revel in the sense of adventure that a boating holiday gives them whilst adults will not fail to appreciate the
freedom and flexibility of having all the comforts at arms length wherever they decide to go.

Venice Highlights
The Venice lagoon has a lot to offer visitors, starting with the magical beauty of the historic island of
Venice. The heart of Venice is the area around St. Mark’s square and its famous five domed Basilica. Of note is also the spectacular Doge’s Palace ‘Palazzo Ducale’ which together with the Basilica represents the core of the Serene Republic’s spiritual and political power plays. A visit to Venice is not complete without a stop to admire the famous ‘Ponte di Rialto’ and ‘Canal Grande’ where visitors may discover the incredible Venetian style Palaces and soak up the unique atmosphere whilst enjoying a strong espresso or a rich cappuccino at one of the many café’s.

Moving on from Venice, visitors may discover the lagoon by cruising around the three main northern islands of Murano, Burano and Torcello which are characterised by their unique architecture and picturesque fishing villages. These islands give visitors an idea of the authentic Venetian way of life. There are more than 80 islands in the lagoon, most of which can be visited, for example S. Francesco, S. Erasmo, S. Lazzaro, Pellestrina and Giudecca. The latter lies immediately south of the central island of Venice and is one of the contracted mooring places available to Venice on Water members for day visits.

Another important location in the lagoon with mooring arrangements for Venice on Water houseboats is the famous Lido. This is an 11km long sandbar which hosts the renowned Venice Film Festival every September. At least half the Adriatic side of the island is constituted by a sandy beach, much of which belongs to the various hotels that house the summer tourists, however towards the northern and southern ends of the island there are two enormous public beaches. The Adriatic Sea is fairly clean and warm, ideal for children.

For those members who wish to navigate further afield the ‘Naviglio del Brenta’ is not to be missed. This waterway links the Venice lagoon to the historic city of Padova and was a vital thoroughfare for commerce and for travel. Along the canal visitors may admire various important monuments which host works of art by Giotto and Galileo Galilei and magnificent 15th century villas, amongst which Villa Pisani and Villa Foscari.

About Marketing And Promotion ltd.
Marketing And Promotion Ltd traces back its origins to 1985, when Managing Director – Mary Anne Pulé ventured into the Holiday Ownership Industry with her involvement in The Sunny Coast Resort Club in Qawra, Malta. Since then, the company went on to market with remarkable success a number of other resorts both in Malta and in other European destinations.

The company’s headquarters are situated in Ta’ Xbiex, Malta, however it has offices at each of the resorts, which are linked up with a multi-level software package, thus facilitating communication. The company employs close to 100 people, which number rises during the summer peak season.

Recruitment is ongoing and several senior employees have brought to the organisation experience in hospitality-related fields, both at home and abroad. The company has its own internal training scheme and its key people attend most of the industry conferences overseas.

Over the years Marketing And Promotion Ltd has reached a level of professionalism that is essential in the hospitality industry, by investing in its human resources and adhering to strict standards and procedures. This has enabled it to keep excellent relations with its associated resorts, protect the reputation of the developers and brands and also to guarantee customer satisfaction, which is at the top of its agenda.

With this new venture, Mary Anne Pulé hopes to bring her learnings and experience as a developer to the marketing arm of her business, as she explained “this can only deepen my understanding of my developer clients and strengthen our relationship. We value our developer partners. Infact, our developers are very excited about adding Venice on Water to the overall industry portfolio of exchange options. They believe the
more holiday options our owners have, then the more value they will get out of their timeshare ownership”.

Marketing And Promotion Ltd has over the years introduced over 15,000 members to Holiday Ownership resorts in Malta, thus significantly contributing to the local tourism industry. The company is also recognised by RCI (Resort Condominiums International) as one of the 25 leading Holiday Ownership companies in Europe.

The Zorgvliet Group – An Exclusive Interview With Mac Van Der Merwe

By Fiona Klonarides

You have a fascinating background, could you tell us how you got into the industry?

I have always been interested in new ideas and challenges. The greatest satisfaction is to break ground and pursue out of the ordinary business strategies. We have been developing the Zorgvliet Portfolio over the past seven years. Zorgvliet Collection of properties is a selection of unique South African destinations; Zorgvliet wine estate in the beautiful Banhoek valley outside Stellenbosch, Protea King George Hotel on the George golf course, Riviera on Vaal Hotel and Country Club in Vereeniging, Ka’Ingo Private Game Reserve and Dinkweng safari camp in the Waterberg in the Malaria free Limpopo Highveld all add to the value of the experiences that we offer. Being a private company we can have personal interaction with our patrons and share the individual experiences with them.

I have researched the idea of a Private Residence Club for two years and have looked at the models used by the big market leaders in this regard. Zorgvliet Private Residence Club has been created as a unique platform of shared vacation ownership for our own properties but also as a model that can be introduced by other small hospitality entities.

The Zorgvliet Group is a family-run business, I know your son Stephan and two daughters,
Melanie and Sandie, oversee various aspects of the business – how does this work, in effect?

They are not involved in the Zorgvliet business as such. The children are by default running similar types of businesses but are very serious about their own Brand positioning and do not want to be seen as an extension of the Zorgvliet Group, they have their own strategies and balance sheets.

Wine plays a leading role within the Zorgvliet Group and portfolio. To what do you attribute your success, bearing in mind South Africa is such a competitive wine-producer?

Zorgvliet wines are of the best quality in South Africa, the unique Banhoek terroir, clearly defined wine making philosophy, our state of the art cellar and viticulture methodology are all contributing factors to our success as wine producer. The Zorgvliet Brand is a vehicle stating our Brand promise of ‘special experiences for special people’ and Brand drivers of ‘authentic, classic and luxurious’ products and offerings. We see the wine as our silver bullet.

Do you think top end fractional ownership will become “the norm” in the next decade?
Particularly as more people are discovering that part-ownership of a yacht, vineyard, or  chateau is the door to the millionaire lifestyle at a fraction of the cost?

I believe fractional ownership will grow and will become the paramount way that people acquire aspirational
experiences. The ‘Baby Boomer’ generation is leading the way in wanting more flexibility and have access
to desirable assets. I also believe that fractional ownership will become more ‘experience’ driven and
fewer facilities driven. We can see how the interest of becoming evolved in wine making or conservation is
driving interest in our own destinations.

Would you consider Zorgvliet to be a “boutique” private residence club, i.e. do you intend to keep the resorts low density and very exclusive, or diversify and expand them?

I think that ZPRC is an ideal vehicle for expansion by association and alliances with other small unique
hospitality and experience driven entities anywhere in the World. Our relationships with various value adding partners such as Interval International and the Intellectual Property that we have acquired over the past two years can form the basis of this type of relationships. The challenges faced by smaller niche role players are somewhat different than the main stream groups.

What are the chances we’ll we see Zorgvliet resorts in California, Italy or France? (All good wine-growing regions!)

I think that there are opportunities as described for us to play an active role in other countries; I believe that because we have first developed our different destinations and experiences we are in a sound position to use ZPRC as a springboard for synergies and positive value added relationships. South Africa is at present due to the Football (Soccer) World Cup a desirable place to do business and we intend leveraging of the high ground over the next 15 months.

Why do you think South Africa is such an attractive destination, particularly for UK-based owners? (A few hours’ time difference, no language problems, unique experience..)

There are various specific reasons for Brits to be attracted to South Africa; the obvious are language, culture, time zone and historic relationships. Maybe even more importantly is the arbitrage position whereby for an example ZPRC products are sold at a discount to International prices of similar products due to the exchange rate benefits and low benchmark pricing in South Africa. This is furthermore apparent when the
global exchange benefits are taken into account.

The Zorgvliet properties are well known for their amazing locations, but what other factors do you feel are essential for a resort’s success?

Locations are not only of geographic importance but relates to experiences of that specific region. For an
example Ka’Ingo private game reserve is in the Malaria free Waterberg mountain region only 3 hours from
the Johannesburg metropolis. This is the paramount Bushveld region with almost no crime and central
to untouched big five game country. Here conservation of animals such as the African cheetah is of
utmost importance.

What would you be doing if you weren’t busy overseeing the Zorgvliet Group?

The Zorgvliet Group and the Zorgvliet Private Residence Club is at present taking all my time and the diversity of the offerings are really of such nature that we are totally indulge in the task at hand whilst enjoying the unique aspects such as wine, conservation and the related business development.

If you could take an unlimited amount of time off, what would be your ideal vacation, and where would you go?

I am a big fan of the Marriott Group and I really enjoy spending time at their resorts wherever it may be. I
would like to play golf at exotic places, go diving or skiing; this is such a great industry I cannot see the end
of the vacation opportunities.

For more information on Zorgvliet Private Residence Club visit www.zorgvlietprop.co.za
or call +27 16 430 1380

Perspective Magazine – June 2009

EDITION HIGHLIGHTS Front Cover Sponsorship: Karma Resorts Interview: Sherman Potvin, Fractional Homes International Developer Review: Tianlun Vacation Club Fractional Ownership: Resort Equities Feature: Your Very Own Piece Of Provence Feature: Fractional Finance Finders Feature: Wyndham Vacation Ownership Leading The Way In Urban Resort Development Feature: Successful Luxury Fractional Marketing & Sales In The Current Economic Climate Feature: Fractional Ownership Paradigm Shift Feature: Introducing The Villa Las Palmas Collection Feature: C.A.R.E. Launches Inventory Matching System At Conference View Digital Page-Turn Edition Online Download PDF Version To Hard Drive

This month leans towards the growth of the Fractional Ownership Industry – at our place it seems like the number of press releases we receive about fractionals is incredibly overshadowing those of the timeshare industry at the moment, as numerous fractional portals emerge and property developers turn to fractional ownership to help shift inventory. Although inevitably, not all of these entrepreneurial projects and developments will succeed as the still small marketplace is diluted by this influx, the exposure in the media is a significantly good thing for the industry as a whole.

David Disick returns to tell us about successful luxury fractional marketing and sales in the current economic climate and Nico March talks about his work with developers by helping prospective owners locate purchasing power within their existing assets and Sherman Potvin talks about his new company Fractional Homes International which specialises in the fractionalizing of single homes.

We also bring you our own account of the newly launched Provence Vacation Club after being invited out to view their development sites in the heart of Provence, France. Resort Equities showcase their portfolio of properties and Cover Story Karma Resorts announce The Belvedere at Karma Kandara in Bali.

Wyndham Vacation Ownership show how they are leading the way in Urban Resort Development and Tianlun Vacation Club talks of the potential within the Chinese timeshare marketplace.

Selling To The Affluent & Wealthy: Proven Strategies For Good Times And Bad

By Dr. Stephen Kraus and Dr. Jim Taylor

Turbulent markets are rarely as bad as the media portrays. And, as we have all learned the hard way, market upswings are often built on the weakest of foundations, another fact that the media is inclined to overlook (at least while the money is flowing).

We have spent much of the past decade studying top performing salespeople in a variety of high-end
categories, and have found that one trait they share is the tendency to see opportunity in good times and in
bad. Indeed, it turns out that this is one characteristic they share with their upscale prospects. Throughout
the last year, the affluent and wealthy who considered real estate “a real opportunity” outnumbered those who considered it “a real risk” by two-to-one. Among those with at least $10 million in assets, the figure rises to three-to-one.

Today’s economic turmoil has certainly removed the “aspirational” customer from most timeshare and
fractional markets. But among the truly upscale customers who do the bulk of the buying and traveling, there has not been the whole exodus from the market one might expect. Among those with at least $100,000 in discretionary income (roughly the top 10% of economic spectrum, encompassing just over ten million households), approximately 15% own a timeshare, and 2% own a fractional property – figures
essentially unchanged by the economic gyrations of the past few months. That is not to say, however, that
the market hasn’t changed. Expectations, goals, hot buttons – all are significantly different from just a few
months ago.

Sales strategies must evolve with the times, and to that end, we offer five keys for selling to the affluent
and wealthy, in good times and bad. These insights come in part from an extensive series of studies about
wealth in America which culminated in our book, The New Elite: Inside the Minds of the Truly Wealthy
(AMACOM, 2008). The cornerstone of this research effort has been the Annual Survey of Affluence and
Wealth in America, a continuous tracking study that is psychographically- and demographically-representative of America’s financial elite. We produce this research in conjunction with American Express Publishing, an organization that truly has its finger on the pulse of the wealthy population by publishing titles such as Travel + Leisure, Departures and Food and Wine.

Understand the myths and realities of wealth today
Over 80% of the general U.S. population believes that most wealthy people inherited their wealth. In reality, less than 10% inherited their wealth, as the vast majority created their own wealth through entrepreneurship and corporate leadership. And that’s not the only prevalent misconception about the wealthy. Our research has found that they are widely viewed as lazy, self-centered, insensitive to the concerns of others, and focused on conspicuous consumption. Instead they tend to be hard-working, modest, and more prone to a philosophy we call “stealth wealth” rather than conspicuous consumption.

These common misperceptions are not limited to the average person on the street. In a survey we conducted with AgencySacks, an advertising agency specializing in the luxury market, we discovered that even CEOs and CMOs of luxury companies profoundly misread the market. These senior executives also vastly overestimated the appeal and prevalence of conspicuous consumption. They believed, for
example, that a majority of wealthy people want others to know they are wealthy; in fact, less than one-in-five feel that way. Similarly, nearly half of the wealthy agree “luxury items like expensive watches, jewelry and cars are a waste of money,” while the senior executives predicted that less than one-in-five would agree with that statement. They also misread other elements of their target’s profile as well, underestimating how happy the wealthy are (it turns out that money can buy an extra bit of happiness), and overestimated how many are divorced (despite stereotypes of “trophy wives,” most are still married to their first spouse).

Sell value
Another misconception about the wealthy, among laypeople and marketers alike, is that they spend freely and are insensitive to price. In fact, a profound value-orientation runs deep in consumer psyche of the affluent and wealthy. This mindset has its roots in their middle-class upbringings, played a key role in their business and financial success, and has intensified in today’s economic uncertainty. Even among consumers averaging $10 million in assets, eight-in-ten describe their sense of financial security as shaken, and nearly half are worried about running out of money.

A strong value proposition is certainly a must for selling in today’s market. But it is important to remember
that selling value does not necessarily mean offering the lowest price. In fact, price is an important cue that
sophisticated buyers use as one indicator of quality, and price drops can raise questions about value
among prospects. Moreover, it potentially frustrates a salesperson’s most valuable resource – relationships
with past clients – by making them feel less-than-smart for having purchased at higher prices in the past.

One obvious effect of today’s economic slowdown is heightened price sensitivity among buyers; but
paradoxically, it has also created something of a flight to quality. When it comes to vacation and real estate
spending in particular, today’s upscale consumer is very hesitant to trade down in terms of quality. When we
asked how the economy was shaping their personal travel spending, the most common answer was
expecting to stay in the same quality of accommodations, but expecting to get a better deal. Value expectations are high, but so are expectations about quality and service. In this environment, the most successful salespeople will be those who are able to hold the line on pricing, while building perceptions of value. This might take the form of building an economic case for the likely future value of the property, as well as enhancing their portfolio of value-added services (such as rental management, exchange programs, concierge services, etc.).

Remember that the angel is in the details
Indeed, when we ask the wealthy what they like about particular brands, the list is typically topped by quality, craftsmanship and service. The social and emotional benefits of brands – feeling or looking successful, for example – have dropped in dramatically in importance as the economic slowdown has taken hold. At the intersection of quality and craftsmanship are details – the subtleties of design and experience that are proof of extraordinary quality.

It is subtle, even sublime, details that define the world’s most exceptional brands, and most impressive
properties. A salesperson should be armed with the detail-rich stories that engage the imagination about
the property, the destination, the amenities, the design, the architecture, the local culture, and more. Travel and vacation-home ownership are about value, but they are still fundamentally about allure of far-off places, and the wanderlust that lives deep in the human species. It is details, not adjectives, that stir these emotions.

Sell to the team, and the new team leader
Regardless of who the primary breadwinner is, it is the female head of household who ultimately makes most major decisions in today’s affluent and wealth families. Yes, when asked about travel spending and real estate purchases, over 80% of both genders describe the decisions as shared. But make no mistake about who is really in charge; the vast majority of women today – across all income levels – agree “In the end, my opinion determines the family financial decisions.” We’ve called it The New American Matriarchy, or more colloquially, the rise of the Mom-ocracy.

Women are in charge, and they have a decidedly different approach to purchasing, and to family leadership, which must be acknowledged. Her decision making is collaborative and consensus-building; every family member’s opinion matters, and everyone’s input is respected, including that of the kids. A salesperson who strives to impress the male will implicitly patronize the female and fundamentally misread the best opportunities for closing the sale. Women lead the trend toward a stronger emphasis on value, and although it may be an unfair generalization to label half the population “risk-averse,” it is fair to point out that they generally weigh risk and reward differently from men. As one of our colleagues put it: “Lehman Brothers went bankrupt. If they had been Lehman Sisters, they’d still be here.”

Love your job
Most wealthy people didn’t set out to be wealthy. They set out to pursue a passion, did it well, and found that wealth was a largely unexpected outcome of their efforts. Acknowledging your love for your work can
be a powerful way of connecting, and for easing the unspoken class distinctions that can make both the
prospect and the salesperson uncomfortable. Keep in mind that wealthy prospects have finely-tuned BS
detectors, honed by years of successful business experience. Expressing your love for your job only
works if it is authentic, and it will likely be detected if it is not.

About the Authors

Jim Taylor and Stephen Kraus (along with Doug Harrison) are co-authors of The New Elite: Inside the
Minds of the Truly Wealthy, hailed by Publisher’s Weekly as “indispensable to marketers.”

Dr. Taylor is Vice-Chairman of Harrison Group, a marketing research and strategy firm. A widely-recognized authority on marketing to the affluent, he was once named Marketer of the Year by BrandWeek, and is honored as a
Distinguished Alumni at his alma mater, Michigan State University.
Dr. Kraus is a Vice-President with Harrison Group, and holds a Ph.D. in social psychology from Harvard University.

The data cited in the article are from The Annual Survey of Affluence and Wealth in America, which Harrison Group produces in conjunction with American Express Publishing. The authors’ next book, on selling to the wealthy, is slated for publication in 2010. The authors can be reached at www.HarrisonGroupInc.com.