Date:
June 17th 2010 -
Publication:"City
Insider" - Title:
"Is
Fractional Ownership the new Timeshare?"
Author:David
Stevenson
Soaring accommodation prices could be good news for 'destination
club' models - and that could spell an opportunity for travel
firms
Your humble columnist and Panmure Gordon's top travel analyst
Gert Zonneveld have at least one thing in common.
I can't boast a Dutch background or the same level of knowledge
about the travel industry's business structure but both of us
have young families and both of us find the cost of leisure
accommodation absolutely prohibitive.
Many moons ago after interviewing Gert about Ryanair's business
model (and its plans to hand money back to its shareholders) we
joked that if nothing else the Irish operator was largely true
to its brand in providing cheap air travel (most of the time) to
its less than adoring fan base.
Cheap is not a word I'd use to describe the other main cost
element of most family holidays - the accommodation. Air travel
costs have collapsed but accommodation costs appear to be
rocketing.
Of course mass market hotel chain operators such as Travelodge
and Premier Inn lull us into the idea that £19.99 bargains
abound, but in my experience these prices have very little
relevance except for business travellers in the middle of the
week in motorway locations.
Book at a family orientated hotel in the UK or Europe and the
costs shoot past £200 per room per night, sometimes per person,
for anything half decent.
In my experience well-serviced family accommodation now
comprises well over 80% of the total cost of a decent family
summer holiday.
We all know where this cost inflation is coming from, yet no-one
seems to be offering an alternative, outside of the big travel
groups and their bulk buy deals.
One traditional alternative is suffering a slow and very painful
death. The second home abroad was, for many middle class
families, the only sensible way out. You didn't "waste"
countless thousands every year on an expensive hotel over which
you have no control - instead you ploughed that money back into
paying for a nice little French farmhouse.
That was the theory I certainly signed up to, but I can say now,
without the slightest hesitation, that it doesn't work. The kids
get bored of going to the same place every year - "Daddy,
Samantha's friends have been to Spain last year and Florida this
year - why can't we!" - and the real costs in terms of time and
bother are huge.
House maintenance is, trust me, a veritable pain in the ass.
We've just sold our house - at a small profit thank god - and I
know of many others desperate to do the same thing.
Which leaves us in a pickle - go shopping in the online
accommodation market, or trust in the mass market packagers?
Another alternative might start taking shape over the next few
years, one which both tour operators and agents might want to
think about engaging with.
Last week in this column on I mentioned Geoffrey Kent of
Abercrombie and Kent's successful
Residence Club model. In
passing I mentioned that business was brisk but I probably
understated its importance - for Mr Kent this is a big part of
his future.
According to the Abercrombie and Kent founder, as people come
out of this recession they are "analysing seriously their second
homes" and opting for a pooled or fractional ownership model a
la his destination Club.
It is by far his "hottest and biggest" product, and apparently
uptake of the $300,000-plus service in the first few months of
2010 has already exceeded the total for 2009.
This buzz is echoed by one of Mr Kent's former business
partners, David Rogers at a company called
Rocksure.
The travel industry veteran is now pioneering a fascinating
model which involves wealthy types such as accountants, lawyers
and CFOs investing between £50,000 and £200,000 in a range of
property syndicates that then buy into a pool of luxury,
serviced villas around the world.
This equity based model is similar to
The Hideaways Club but
marketed at a slightly more humble crowd, and with a clearer
syndicate ownership structure.
Middle class consumers want some choice in the range of
properties they can access, as well as proper service when they
get there, plus some sense that this is an investment in an
expensive product which isn't entirely being flushed down the
drain.
The fractional ownership sector is certainly limbering up to
supply this demand, in part because the fears surrounding the
old timeshare model are fast fading away but also because the
real estate industry now has a glut of properties it is looking
to shift using innovative new financial models.
The pitch is also increasingly simple - give us between £20,000
and £50,000 and we'll give you access to a range of serviced,
well maintained properties in which you also have some
investment potential.
The actual model might be a hotel club or the Rocksure full
equity ownership model - both have a place but the missing
ingredient is the channel. Who's going to sell this product?
Step forward the existing travel industry chains and operators.
Many were undoubtedly burnt by the time-share disasters of old
but a huge opportunity awaits for those with the right brand,
and the right product set.
Provide me with a model where my accommodation money is not seen
as a wasted expenditure but a potential investment for the
future, and give me excellent service and I'd suggest there are
hundreds of thousands of potential customers out there, many
flushed with cash from having sold their second homes.
Anyone up for the challenge?
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Date:
May 10th 2010 -
Publication:"Country
Life International." - Title:
"Fractional
Ownership - A Fraction of the Cost"
Author:
Holly Kirkwood
NICK VAN GRUISEN, managing director of the Ultimate Travel
Company, knows an awful lot about holidays, and swore blind he
wouldn’t buy overseas. ‘I always said I’d never buy a property
abroad. You constantly feel you have to go there - it’s less
about the financial strain and more about the mental strain.
You’re emotionally tied to it - I’d always rented and walked
away afterwards.’
However, hearing about a new fractional-ownership scheme turned
his head. Rocksure has fixed-term plans where members invest in
a portfolio of properties all over the world - in this case, six
houses, in the Rocky Mountains, Brazil, Thailand, Morocco, the
Algarve and Croatia - with the advantage that the investment is
spread across many different currencies, a form of spread
betting, if you like. The scheme lasts seven years, during which
each member has an average of four weeks’ holiday in the
properties of their choice, and, at the end of a fixed term, the
capital appreciation of the portfolio is shared out. ‘I didn’t
want a time share and I didn’t want to get stuck in a property
club I wasn’t sure I could get out of easily,’ explains Mr. Van
Gruisen. ‘A lot of these clubs are one-in, one-out.’
What Rocksure was offering had a fixed term of seven years,
after which we sell the properties and split the profits between
us. We used our weeks, as well as donating them to charity
auctions and giving them away - whatever suited us at the time.
You also don’t have the responsibility of looking after your own
house - properties are managed and staffed all year round and
fees are low - currently less than £2,000 per annum.
Members of such clubs enjoy the minimal outlay for the maximum
enjoyment of their holidays, plus what they hope will be a
capital gain at the end. With others doing the work, it’s a
stress-free - if short-term - way to be a property owner abroad.
Fractional ownership
Pros
• Minimum financial risk spread across several different
currencies as you save money on holidays
• You can spend time in diverse locations living in glamorous
properties that are worth considerably more than your own
investment
• Fixed term arrangements mean you can plan your investments
accordingly
Cons
• You only have a certain amount of time in each property every
year
• You have to plan holidays well in advance
• You can’t choose where you buy - the club picks the properties
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Date: February 12th 2010 -
Publication:"City
a.m." - Title:
"Get
into the foreign property game at a fraction
of the cost."
Author:Tomothy
Barber
Get
into the foreign property game at a fraction of the cost.
By
Timothy Barber
Published:
Friday February 12th 2010
FOR many people, owning a foreign property would be the ultimate
luxury. However, dealing with local authorities, maintaining the
place, or renting it out can turn a luxury into a
time-consuming, costly hassle. And that assumes you can really
afford the place of your dreams, rather than a flat in a
high-rise overlooking a crowded beach.
That is where the growing market for fractional – or shared
ownership – properties has come in. Originally an idea popular
in America, fractional buying allows you to purchase a portion
of a property (usually between a quarter and an eighth) in a
luxury resort, for which you can stay for a set period per year
– between three and six weeks is normal. Allocations for owners
will be spread across the year with, say, each allowed two weeks
in high season, two in mid season and two in low season.
Fractional buying is often compared to timeshare ownership, but
differs in that you buy a freehold share of the property, rather
than units of time. As the property value rises, so does your
share. Tax and legal fees will usually be included in the price,
with everything handled by the fractional company – but it’s
worth checking to avoid being surprised by extra costs.
It’s a nifty way of enjoying a luxurious foreign pad without
having to stump up millions, and there are other perks. Resorts
offering fractional properties will also manage them, meaning
you just have to turn up on your agreed dates.
Some companies, like Rocksure Property, have taken the model
further. They offer investment in funds that buy up luxury homes
around the world, which shareholders can arrange to stay in.
Having launched two funds for ultra-high-end villas in places
such as Thailand, Colorado, Morocco and Brazil, Rocksure has
just launched a Capital Fund for deluxe properties in major
European cities (see above), appealing to those who prefer
cultural trips and weekend breaks to lounging on white sands.
Following the devastation of the holiday homes market in the
recession, the fledgling fractional market is now particularly
affordable. While fractional ownership won’t guarantee huge
returns, it nevertheless has the potential for capital
appreciation with minimal risk. Buyers do have to pay local tax
on capital gains made, though unless you get very lucky, this
won’t be a very substantial sum.
“The recession has created an opportunity for the fractional
market,” says Paul Owen, chief executive of the Association of
International Property Professionals. “It’s in its infancy for
British buyers, but in five years time it might be seen to have
been introduced at the right time.”
ROCKSURE PROPERTY
Bravo fund from £189,000, Capital Fund from £100,000
Rocksure Property’s Bravo Fund owns six properties around the
globe that shareholders can stay in for four weeks each year.
Destinations include Thailand, Morocco, Portugal (pictured),
Croatia, Colorado and Brazil, with four and five bedroom homes
averaging over £1m in value each. The life of the fund is seven
years, at which point the properties are sold on and investors
paid. Rocksure’s newly-launched Capital Fund is offering 14
nights a year in townhouses in European cities such as Paris,
Cannes, Venice, Florence, Vienna and Barcelona. The life of this
fund is 10 years.
For more information visit
www.rocksureproperty.com
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