A Bridge to the Fractional World of Ownership
June 10, 2009
Today I participated in a webinar, “A Bridge to the Fractional World for Real Estate Professionals and Developers” taught by CIPS Instructor Aida Turbow on the topic of fractional ownership. I learned fractional ownership was inspired by fractional ownership achieved in the aviation industry. An article in National Real Estate Investor, traces the concept of fractional ownership, as a way to hold title to real estate, to the 1800’s. In the early 1990’s, developers in Colorado, started to offer fractional ownership of ski resorts to unrelated individuals.
Today fractional ownership may apply to aircrafts, boat racing, yachts, art collections and equestrian. Commercial property, second homes and even vineyards are also active niches. Growth in the shared ownership has grown to a billion dollar business with projects in numerous continents including:
- Africa: South Africa
- Americas: Argentina, Belize, Bermuda, Canada, Costa Rica, Dominican Republic, Jamaica, Mexico
- Asia: New Zealand and Thailand
- Europe: Cypres, France, Italy, Spain and the UK
Fractional ownership is one of the fastest growing segments in the Second Home/Luxury Vacation industry. Benefits include affordability, diversification and sharing of benefits, risks and responsibilities. A new pricing structure is required for the fractional home ownership products. With these new products come new marketing strategies. 99% of the marketing must be executed online with sustainable and scalable prospect generation. Prospects in this market need to experience the product. Fractional owners can access worldwide exchange benefits with owners of other fractional product. Furthermore, fractional prospects increase heads in beds & revenue generated by incremental amenity use, such as hotel, dining, spa and golf activities.
Key elements include the new scalable sales approach including:
- Scalable technology platform
- Concierge service based
- Consultative sales approach
- Thorough training process
- Performance management
The new philosophy includes:
- Escape from the Planet of the Apes film
- Turn key solution (… from A to Z)
- A long term partnership
- Experienced management team
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Technology is a key component with the fractional ownership market. The Internet has exploded the International market place to more than 1.5 billion Internet users around the world. Internet usage has exploded in the Middle East, Africa and Latin America/Caribbean between the years of 2000-2008 with rates such as 1,296.2%, 1,100% and 860.9% as referenced in charts by InternetWorldStats.com.
Comparisons of Timeshares to Fractional Ownership are as follows:
Timeshares:
- Holders only have the right to use the facilities.
- Apportioned in units of time, weeks and for a specified week of the year.
- Option to exchange vacation weeks, within the home resorts’ portfolio or through an independent exchange company.
Fractional Ownership:
- Owners receive a fractional deed or shares in the corporation that owns the property.
- Annualized as a period of time, i.e. ¼ fraction = ¼*52 weeks=13 weeks.
- Limited but available.
There are various exchange programs for fractional ownership and destination clubs including websites such as TheRegistryCollection.com The Thirteenth Floor release . For more information and news visit Fractionallife.com. A couple places you may want to visit are Castello di Casole, in Italy. I invite you to view the video about the experience. Another resort is the Bahia Principe located on the Mayan Riveria.Cougar Club dvd
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