Fractional ownership of vacation homes continues to demonstrate strong appeal for both consumers and developers, according to research findings…
Fractional ownership of vacation homes continues to demonstrate strong appeal for both consumers and developers, according to research findings presented at the Third Annual Ragatz Associates Fractional Interest Symposium held in Boca Raton, Fla., May 12-14, 2003.
The fractional market shows strong growth during the past several years, particularly in the high-end segments, said Richard Ragatz, Ph.D., president, Ragatz Associates. For consumers, fractional interests provide the opportunity to own the vacation home they always dreamed about, often with a higher level of services and amenities, in a package that is easier to afford and maintain than a whole ownership vacation home of comparable quality, he said.
As well, many developers find fractional interests an attractive niche product, for sites unsuitable for more conventional vacation home development, to serve markets not otherwise addressed in their area, or because it better meets their financing and marketing capabilities than other vacation home options, Ragatz said.
Fractionals, as they are often referred to in the resort development industry, are available at a variety of quality levels. At the upper end of the segment, private residence clubs provide owners with the benefits and amenities normally associated with five-star hotels combined with the space and accommodations typical of a luxury vacation home.
Key findings from the symposium
Industry size: As of April 2003 over 138 fractional interest resorts could be identified. An additional 31 resorts were identified in various stages of planning. Fractional interests typically are available in packages ranging from two weeks to 13 weeks of use per year, with four and five weeks of annual use the most widely offered package at present. Use plans provide flexibility, to accommodate the changing needs of owners.
Product characteristics: The majority of fractional resorts are located in ski destinations followed by beach locations, while golf and urban locations make up the remainder.
Satisfaction: A full 96 percent of those who own luxury fractionals, and 89 percent who own more moderately priced fractionals, report that they are satisfied with their purchases. Significant proportions of owners in each of these segments report interest in buying additional fractional interests, a strong endorsement of the concept.
Buyer profile: The primary distinguishing characteristic of fractional interest owners is their high household income, at a median of $241,000 in the luxury segment and $108,000 in the more moderately priced segment.
The 2003 Fractional Interest Symposium brought together over 260 participants representing the full spectrum of the luxury segment, said Sarah Rezak, research manager at Ragatz Associates, who leads the company`s fractional interest and private residence club business initiatives.
The sessions brought together developers, financiers, marketers and managers of fractional interest properties throughout the world, she said.
The 2004 conference is tentatively planned for Scottsdale, Ariz. in March.
Theodore is the Co-Founder and Managing Editor of TravelDailyNews Media Network; his responsibilities include business development and planning for TravelDailyNews long-term opportunities.
