Steamboat Grand divvies up eighth shares

American Skiing Company executive says new condominium program will be better match for

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— A top American Skiing Company real estate executive said this week she believes condominiums at the Steamboat Grand Hotel are a better match for the Steamboat market, now that her company's sales program has switched from marketing quartershares in the vacation condos, to one-eighth shares.

"We've carefully analyzed the Steamboat marketplace and believe this new entry point will be highly appealing to the demographic of the Steamboat Ski Area," Jenny Ochtera said. "Our sales pace has been unfavorable in the past. We are looking at just a little over a three year sell-out."

To date, 51 percent of the quartershares represented by the 183 condominiums at the Steamboat Grand have been sold, Ochtera said, for a combined $45 million in sales.

American Skiing Company is the parent company of the Steamboat Ski Area.

Although the ski area staff works closely with the hotel staff, they are in two separate divisions of ASC. The ski area is on the resort side and the hotel is on the real estate side. Ochtera, who has been with the company for 12 years, is vice president of sales for American Skiing Company Real Estate Properties.

Ochtera said the company's analysis of the current real estate market here revealed that quartershare prices forced the Grand to compete with whole ownership properties in the elite ski-in/ski-out category. Although the hotel is directly across Mount Werner Circle from Gondola Square, it cannot claim ski-in/ski-out convenience.

Ochtera maintains the company's decision to drop the ownership fraction isn't as "reactive" to market conditions as it might appear on the surface.

"From the beginning, we had always prepared the documents to allow us to transition to one-eighth share," Ochtera said. "Now we've decided to exercise that right."

One-eighth ownership in the Steamboat Grand entitles buyers to occupy a unit matching the one they purchased for seven weeks of the year. They also have the option of turning some of their weeks in to generate cash flow.

The decision wasn't made without consulting the existing 350-plus owners at the Grand, Ochtera said. The occupancy habits of existing quartershare owners contributed to ASC's decision. They found that owners were spending, on average, 10 to 14 days here each year. They interpreted that trend as a clear sign that owners really didn't get the most out of a quartershare in terms of personal use.

The remaining inventory was carefully re-priced floor by floor and unit type by unit type.

One of the considerations was avoidance of undercutting the equity of the existing owners.

"There has not been a dramatic reduction in pricing. In the case of 99 percent of the existing owners, their quartershares' values are equal to or more than" the new one-eighth share prices on a prorated basis, Ochtera said.

Just three owners saw a downward adjustment in the sales price of units equivalent to their own, Ochtera said. Those three owners were consulted and bought into the program.

Halving the ownership fraction isn't the only way in which week's change that will serve to bring sales at the grand closer to the current market, Ochtera said.

Along with a lower entry price point, the amount of the carrying costs owners must pay in the form of management fees has been reduced. Those costs can be substantial at a full-service hotel when compared to a typical resort condominium project, Ochtera said.

ASC is offering further enticement by suspending management fees for 24 months after the time of purchase.

"We are actually escrowing association dues," Ochtera said. "There will be no association ownership cost for 24 months."

Another response to the prevailing fractional ownership market is to offer Steamboat Grand buyers more flexibility in how they use their investment. Ochtera said for the first time, Steamboat Grand purchasers would be able to convert their weeks in Steamboat into vacation points redeemable through Resort Condominiums International for vacations all over the world.

Steamboat Grand weeks can also purchase other vacation commodities such as airline tickets and rental cars, Ochtera said.

The Steamboat Grand has a brand new 15-person sales staff, and Ochtera said the new sales and marketing push is being funded to Textron Corp.

Textron loaned the money to build the hotel. ASC's terms with Textron were renegotiated last spring and the money for marketing was a result of that process.

Ochtera declined to name the amount of her marketing budget, but said it is double the amount the sales staff operated under in the past. She consults frequently with a senior Textron executive, Bob Bellacosa of Hartford, Ct., and said the relationship with Textron is very supportive.

Ochtera's staff will focus on internal marketing to Steamboat's captive list of vacation customers, but they won't be subjected to an overly aggressive sales approach, Ochtera said.

Ochtera's program allows her to reward Steamboat Grand purchasers with spiffs in the form of ski equipment and vacation stays. But unlike timeshare marketers working in a lower price range, the enticements are not offered up front in an effort to "buy" guests' time, but at the back end of the deal.

"That's the dynamic we're working in," Ochtera said.

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