The High Life

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Information about The High Life

Published on July 16, 2009

Author: sarahglasgow



Five tips for developing a high-end fractional ownership resort offering.

segmentof of room newentrants thefractionals for in vision Have clear a backed up theindustry. to start? How research with lotsof market andpayattention these to Dre a m i n g f d e v e l o P i ng u r o Yo fivecriticalelements' own high-end resort? Fractionals A SPECTACULAR SITE. expertSarahRezak shares five tips 1. PICK typeof location need a successful the Here's you'll for developable is land to helPmakeYourvisiona realitY' fractional: spectacular a sitewhere thrives prices exorbitant, tourism are and scarce, home eightmonths theyear' of Those three.of are the ut t.utt project director for attribuhslhatsold Fiveash, Bill EasVWest Partners, Tluckee, on Calif''nearLake Tahoe, theperfect as location OldGreenwood' for a newfractional project generated than that more $30 million in sales between AprilandDecember of 2004. "lfyou're considering developing a frac- tionalproject, look first at thepriceof private iromes the area," in Fiveash advises' high- "lf The endwhole-ownership neither a fraction high-end estate'" wili of realestate real won'tsell' views proximity thearea's and to popular Five-star attractions "need-to-have5"-1sf are "nice-to- tourist IE selecting development Locate a site' in haves"-when tourist a gorgeous asclose possible themajor site as to drawand provide access it, whether a ski easy to it's L1 slope, beach, a or a golfcourse' CIub in ihe location theSanctuary Snowmass of at Snowmass Village, Colo., example, for doesn't accommo- dateski-in/ski-out access, butwith theclub's shuttle free sewice, skiers just a short are ridefromtheslopes' TYpically, extrastep this in getting owners the ski to trendcan ameniry enough require is to a pricedifferentia'lfrom ettingin ontheground floorof a popular speaking' a a property is ski-in/ski-out' ihat Generally I I u. a iulfillingandprofitable venture a resort for high- ,.rori tttutshuttles guests the t0 slopes charge will - devetoper, especially thedemand when exceeds [I prices opposed private-residence- as to with fractionals'-which are endfractional the supply. T-hat's story the resort clubprices (see sidebar page on 24)' .*.futlu., upscale, constructed world-class and in destinations where well-to-do to play' the go Fractionals CUSTOMERS' home anin 2. DESIGN FOR YOUR appeal buyers canafford to who a second ofyour out Once you've researched needs desires the and .*.tusiu. location can'tsee sense shelling but the in base, you'llneed "value-engineer" prod- to your they'll onlya fewweeks use each customer Sg *iffion for a condo make mostcommon the luxury-product-devel- allows buyers enjoy to two uct.Don't year. Purchasingfractional a of providing services amenities and that privileges yearat a per opment mistake io 12weeks homeof ownership value the customer to to Service levels dtn't offerenough additional iru.tionof thecostofwhole ownership' desire timeshare :utrift tit. .*prnr.. Upscale customers indeed may ani amenities range fiomthemore traditional need a valetandconcierge sewices, but dotheyreally experience over-the-top to concierge services-guests' full{imepersonal to chef prepare meals? favolite champagne thefridge, in Iuxury spas' per- and Partners These thekindsof questions are Millennium sonal chefs. researching needs the of cityvacationers fractionals and asked when From1999 2003' to sales high-end of Club, firsturban the @ more than before launching Phillips The membershipsprivate in residence have clubs States' New in York been failures as pti"rt. residence in theUnited club q tripled, $f tg'gmittion' therehave to Yes, customers to learn bity in 1OOO. learned theirtarget They that *.ll ur'ru...rses, theindustry beginning but is placed less importance large0n residences on-site and developers are fromthepioneers'mistakes' many and than on a convenient Manhattan location' profitmargins' There's plenty amenities not ."p.ri.ncinghealthy March / A pri l 2005 22


Provide services luxuries the and yourtalgetcusto- prices," Silr,erfine "lt's says. all aboutmaintaining sales mer expects, but reniember this:The rnore servicesand momentunandavoiding plateau." a anenities youprovide, higherthe mhintenance the fee Before launching get sales, some priceandvalue mustbe to naintainthem.That's big issue a rvithbuyers, benchmarks. Determine lvhatyourcompetitors are according research Ragatz to by whichdocu- Associates, charging membership private for in residence clubsor mented that maintenance arethe tnostcommon fees stays luxuryhotels, at lvholly or'vnedcondos hones, or cause hesitation buying high-end for in a fiactional. anclhigh-end timeshares, setyourpriceaccordingly. and Never promise buyers morethanyou candelirter, advises Keepin mindthat savrlr buyers aren'tlikelyto be attract- Ann Barker, qualityassurance expertanclvicepresiclent eclto a fiactional that sellsfor uore thantwicethe price of Ragatz Associates."Even it becomes if llloreexpenslve of comparable lvhole-ott'nershipproperties. than originalLy budgeted, canceling pronisedservices lvill destroyyourcreclibility," says. she 4. SELL IT SOFTLY. Choose marketrvitha built-intouristbase, a andyou INVENTORY. lvon'thaveto put yourownfesources selling into the 3. REGULATE community. the visitors' Let bureau that.Focus do your "Startrvitha r,isionandsellthe dream, carefully but inventory create sense to a of ur$ency," says rnarketing efforts those on lvhodetnonstrate interest in release consultant years ll'ith several the areaby beingthere. Access keyto capturing is these Len Silverfine, industry an Volkslagen, and high-incorne Create upscale prospects. an previelvcenter of experience lntralest, Slviss6tel, at o t herc om panie s . in an areau'ith highfoottrafficandmakeit so alluring muchinventory enough? is Justenough urin- to that passing hotclguests,golfers, skiers,shoppers, ancl Horv tain pent-up denand."Thatlvill ensuLeappreciating clinelsclioose comein. The lesults to lvill be rvorthit. A piece theaction of The fractional concept was successfully introduced Four Seasons, and Ritz'Carlton are getting in the in upscaleU.S. ski destinations,leadingto devel- game, but there still dfe only about 150 fiactional opments in beach,golf, and urban locations'The resorts around the world. Fractionals tend to fall niche is growing, and brands such as lntrawest, into one of three segments. T ra d i ti o n afra c ti o n a l s e l l fo r l essthan $500 per squarefoot. General l yl ocatedi n regi on al l s Traditional d ri v e -tod e s ti n a ti o n sth e tra di ti onal , fracti onalresembl es conventi onal meshareresort . a ti d i ffe ri n go n l y i n th e a m o u n t of ti me sol d to the buyer.B uyersare rel ati vel y uent,earn- affl a i n g a m e d i a n h o u s e h o l di n c o me of $110,000 Y ear, and can expectto pay an averageof S1 2 0 .0 0 0 r a 1 O-w e e fra c tional -roughl y $12,000 fo k per w eek' H i g h -e n dfra c ti o n a l s o s t b u y ersfrom $500to $1,000per squarefoot. P roperti esn thi s c i High- end s e g m e n ta re mo s t o fte n l o c a tedi n desti nati ons that attractvi si torsfrom outsi dethe region a n d o ffe r s e rv i c el e v e l sa n d uni t qual i tytypi cal of four-starhotel s.Ow nersof hi gh-endfrac- ti o n a l s h a v e a m e d i a n i n c o me of $240,000 year and can expectto pay$165,000for a approximately five weeks per year, or about $33,000per week' p ri v a tere s i d e n c e l u b p ri c e sexceed$1,000per squarefoot, and an ow nershi pi nterestc an c Private c o s t u p w a rd so f a mi l l i o n d o l l ars.P R C s, ocatedi n areasw here real estatei s scarceand l Residence e x tre m e l ye x p e n s i v e a re th e most excl usi ve. ve-star , Fi hotel servi cesare standard, are as e l i te m e m b e rs h i pp e rk ss u c h as pri ori tytee ti mes at l ocalgol f courses'Most devel opersin Club th i s p ro d u c tti e r ta rg e t c o n s umersbasedon net w orth of at l east$1 mi l l i on. March/ A pri l 2005 24

Themore prospects sales your center pullsin, theless Association,believes original the developer sales or you'llneed usetraditional tq marketing techniques, such agent should also handleresales. provides seamless "lt a asdirectmail,whichtypically inv-ohj6,muEh costs higher approach theowners, support for and that'sconsistent andlowerreturns. important keep It's to yourmarketing with the overall offering," says. she andsales costsbelow percent sales, Tom 20 of says Bennison, president chieffinancial and officer The of Fractionalresortdevelopmentnotaneasy is business 0wners Club, whichis based Dallas, resorts in with in to enter. American The Resort Development Association, HiltonHead, S.C.; Austin, Texas; Puerta Vallarta,Mexico; consultants asthose Ragatz such at Associates, and andHotSprings, Va. exchange companies make can recommendations and -Our compan/s marketing sales and costsreached referrals every for phase development. of O 37percent duringourfiveyears activesales," says. of he "lfwe hadbeen ableto keep those costsbelow per- 20 SarahRezak will be speaking the at cent,TheOvmers wouldhave CIub realizednearly RagatzAssociatesFractional Interest $12 millionmore profits.' in Symposium March 14-1 at the Fair- 6 mont Hotel in San Francisco. 5. BE READY FORRESALES. Thetimewhenyou're envisioning product your alsois thetimeto develop resale a strategy. owners If decide you to sellandknow canfacilitate process, the they Fora reporton the Ragatr Associates Fractional will feelmorecomfortable thepurchase. with Gloria Interest Symposium, f c iventufes.COm visit Collinson,president theCanadian of Resort Development Resorts Built Units SalesVolume Destination Type ski Beach Golf Urban Multiplesite AveragePrice PerWeek Average Maintenance Fee Per Week RCIVentures 25

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