FRACTIONAL SALES SOAR
Fractionals are hot. Sales of this high-end form of vacation ownership — as well as for the related concepts of private residence clubs and destination clubs — are soaring, even when compared to the robust revenue gains recorded by the traditional timeshare business.
According to a new report from NorthCourse Leisure, fractional sales in the U.S. jumped 20 percent last year to $1.98 billion. For the study, NorthCourse focused on true fractional developments, which it defines as projects that offer deeded ownership of between one-quarter and 1/13 shares.
“There are several ways to look at this sales volume data,” said Peter Giamalva during a briefing on the study at the American Resort Development Association convention last month in Las Vegas. “Compared to the previous year, when sales rose by 32 percent, there is a slowing rate of increase in fractional sales. On the other hand, sales of vacation homes, for which fractionals are a prime alternative, were down by 18 percent last year.”
Other findings from the study:
More than half of both fractional and PRC projects are part of larger mixed-use developments. Most common other land uses of developments with fractional resorts include whole ownership townhouses, villas or detached homes (in 70 percent of the developments), whole ownership condos (52 percent), hotel (43 percent) and condo hotel (22 percent).
Amenities and attractions tend to differ between fractional and PRC resorts. Spa, tennis and golf are the most popular amenities offered at fractionals, while due to the high cost of real estate at ski areas, PRCs are more often located at or near ski mountains.
PRCs and fractionals also vary in types of units they offer. PRCs generally feature more multi-bedroom units while fractionals typically offer studio and one-bedroom floor plans.
Purchase prices for PRCs are significantly higher than for fractionals, which is attributable to higher real estate costs and higher quality ff&e. Average per-square-foot cost of a three-bedroom PRC is $1,427 versus $664 for a fractional with the same number of bedrooms.
Developers are bullish about growth opportunities. Nearly half of fractional developers have plans for an average of three additional projects. Among PRC developers, 41 percent plan to build an average of five more resorts.
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