In a recessionary economy where cash is said to be king, purchases of fractional and timeshare vacation homes are gaining traction. However, the two should not be confused with each other.
Through August, timeshare and fractional ownership transactions in Routt County had totaled $11.28 million, a little more than 5 percent of the total of $200 million in dollar volume through the first eight months of the year.
Consumers may regard the term fractional as a euphemism for timeshare. However, Dave Irish, of Steamboat Ski & Resort Realty, said the two products are distinctly different. Timeshare sales are based on vacation periods and the flexibility they offer for owners to vacation at many destinations within the company's network. They often involve purchasing points that can be spent throughout a network of resorts, Irish said.
"Fractional is an ownership product for people who want the security and comfort of real estate that doesn't require the same amount of capital investment" as whole ownership.
Often, fractional owners have the ability to swap their unit with another owner in another destination. But the system doesn't offer the same flexibility as a timeshare.
"In ski resorts like Steamboat, fractional buyers typically have formed a strong connection to the area and desire to return repeatedly," Irish said.
One timeshare project, the Steamboat Villas in the Morningside Tower at the Sheraton Steamboat Resort, was dominating dollar and transaction volume with 185 sales totaling $7.3 million.
The condominiums there enjoy some of the most direct ski-in, ski-out access in Steamboat, immediately adjacent to the Steamboat Gondola. They have been extensively remodeled in the past two years and represent the height of luxury finishes in a timeshare resort here.
A company spokesman for Starwood Vacation Ownership declined to discuss details of the resort's performance here but acknowledged that 2009 has been a successful year thus far.
A Sheraton Steamboat spokesperson said in December 2008 that the ability to remodel Morningside Tower and convert it to timeshares was a key factor in Starwood's decision to buy the hotel and its affiliated golf course for $57 million in 2007.
Starwood began refurbishing the condos in April 2008 and completed the first 21 two- and three-bedroom units of the eventual 45 within seven months. They began hosting vacationers last ski season.
One way to describe them is to compare the Steamboat Villas to some of Steamboat's best ski-in/ski-out condominiums with all of the luxuries of a full-service hotel, including room service and concierge service.
Sales at the Villas have been
steady throughout the fall on Oct. 8, the project closed four transactions including a pair at $55,900, another at $29,900 and one at $19,900, for an aggregate value of $161,600.
Also tracking consistent transactions this autumn are timeshare sales at the Village at Steamboat managed by Wyndham Vacation Ownership.
The Village, with brand-new product and lower price points, saw days in September when 14 unrelated buyers bought a large number of vacation periods in 38 condominiums with a combined value of $1.13 million. On another day, there were seven sales, again tying up a substantial number of vacation periods with transactions ranging from $42,500 to $176,000.
Company spokeswoman Liz Hutchinson said her company offers a point-based product that allows buyers to vacation at resorts throughout its portfolio. Wyndham resorts span Australia, the South Pacific, Hawaii (seven to choose from), California, Arizona and destinations on the East Coast. Steamboat is the company's most significant ski destination.
Wyndham/The Village at Steamboat had been quiet during August. The biggest expense of timeshare companies is their sales and marketing effort, and Hutchinson said her company spent part of the summer refocusing those efforts to fit the economy.
"We purposely retracted our revenue goals from $2 billion to $1.2 billion, and we looked at our marketing program and decided to target better customers. At the same time, we limited the development pipeline."
The result of the two strategies in concert was a 40 percent reduction in sales, but that was expected.
"We're very much on target to reach the $1.2 billion by Dec. 31," she said.
One quarter-share at a time
Irish said there are 50 to 100 fractional units on the market in Steamboat this month, spread among the Steamboat Grand Resort Hotel, Christie Club and the Porches of Steamboat.
Intrawest owns Steamboat Ski & Resort Realty, the Steamboat Grand and Steamboat Ski Area.
The Steamboat Grand had seen 22 transactions valued at $1.55 million through August, and Irish said he played a role in all of them. There have been just two transactions in the past six weeks with a typical sale of $120,000 for a quarter-share.
Fractional purchases are made on the basis of frequency of use," Irish said. "With the high cost of whole ownership, people often look at how often they plan to use a condominium. Many people can't justify the capital outlay. If they only expect to use it two or three times a year, fractionals look very attractive. You get very high quality and great locations for an amount that makes sense."
Irish has been involved in the Steamboat Grand since before it was built in 2000, and he saw it finally sell out in 2006. And although there were unexpected twists along the way, "it's turned out exactly as we originally intended," he said.
A burst of fractional sales can be expected late this year or early in 2010, when the portion of the condominiums at One Steamboat Place that offer fractional ownership begin to close.
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