Resales are not just for Timeshare anymore – Fractional resales are heating up March 31, 2011
Posted by John Stephens in : News & Events, Ritz Carlton , add a commentThe fractional industry has been feeling the pinch – actually, it’s more like a big kick in the backside – since the recession began in 2008. If you’re not quite up to speed on fractionals, don’t worry. Most people are still getting them confused with timeshare, and with good reason because of their similarities. But there are some differences.
Fractionals are basically upscale timeshares – larger rooms, more amenities, personal concierges, shelves stocked with groceries when you arrive, that type of thing. Fractional developers may like to distance themselves from the thought of being a timeshare, but essentially they are. If you buy an interest in a resort that you can only use for a portion of the year, then it’s timeshare no matter how you slice up the property.
Some fractionals, such as a winery in Tuscany in Italy, are different because of the unique nature of their location and property. And true fractionals began as a way to enjoy vacations in exclusive areas by dividing up the high cost of deeded vacation properties among various owners. This is one reason why fractionals have long been associated with upscale destinations such as ski locations. But, as with most vacation ownership products, the variety of fractionals grew to the point that even the industry itself has a hard time defining exactly what it is.
What caught my eye recently was that the same problems that caused the emergence of the resale industry in timeshare now seem to have caught up with the fractional industry.
Well, what do you know?
While reporting from the Ragatz Fractional conference in San Francisco, Perspective Magazine reported that resales was the only area of growth for fractionals in 2010. All other sales areas were in decline.
“Fractional resales activity was up 22% compared to 2009 levels, even though new closed sales were down 37%” according to the Perspective report.
Adding to the culture shock was that the per week price point for fractionals is $17,600 according to the report. This price point is about $3,000 less than the average per-week price for a new timeshare interval. The difference is that you can’t just buy one week at a fractional resort like you can at a timeshare, as fractionals are usually sold in minimum four-week increments.
Dr. Richard Ragatz was the host of the conference and is a leading analyst for the fractional industry. He added that 71% of resorts said sales were better or the same during the last half of 2010 compared to the first half of the year, showing a trend towards improvement heading into 2011. 66% of resorts said 2011 will be positive compared to last year.
This optimism from the fractional industry is nice, since developers presumably don’t want prices and sales to continue to fall. However, has anyone considered that maybe these prices and sales had to come down because they were artificially overpriced to begin with? There is a reason why fractional resales was up when other sales activity remained low – price.
Timeshare owners have known this for years, which is why the timeshare resale industry does so well for buyers looking for deals. We at BuyaTimeshare.com have some fractional inventory available on our website, such as the Ritz Carlton Club Aspen. And, as always, we have the best value of timeshare inventory anywhere on the internet, which you can see by clicking onto BuyaTimeshare.com.