Private Residence Clubs Owning A Piece Of Paradise
The vacation lifestyle of Canadians of high net worth is changing rapidly. And, it’s getting very congested out there. Other than the traditional type of vacation home ownership, such as a ski-in/ski-out chalet in Whistler or cottage in Muskoka north of Toronto, today’s demanding vacationer has an array of investment choices to consider: condohotels, destination clubs, hotel residences, and private residence clubs.
This article will focus on private residence clubs, sometimes referred to as fractional ownership of a luxurious vacation property in exotic locations.
Many people with year-round vacation homes or cottages find they actually use them only for a portion of each year and have to worry about spending their vacation time repairing and maintaining what they own.
Paying $400,000 for a fractional share of a $2 million lakefront home that you can use for 28 days a year can be very appealing to those who want 100 per cent of their vacation to enjoy their time away, knowing that the management company will care for their property.
The total enjoyment of the vacation experience is often enhanced with luxury services like twice daily maid service; a concierge to book the spa, shows, and lift or golf times; and, perhaps a personal chef or butler.
Having the space for a family to ‘spread out’ and enjoy their home away from home with multiple bedrooms, full kitchen facilities, and more, furnished with the highest standards of design and construction, makes the vacation experience even more memorable. If the private residence club is associated with a five-star luxury hotel, being able to use their amenities is another welcomed benefit.
Because each home is sold to multiple buyers, each owns a fractional share and is allocated vacation time based on the size and season of your share.
As much as vacation club marketers attempt to avoid comparison with timeshares, and continually invent upscale names like private residence clubs and fractional residence ownership, comparisons to timeshares are inevitable for historic reasons. In addition, the 7 million owners of some 8,000 timeshares around the world might one day want to step up into this luxury class of vacation ownership.
The timeshare industry was probably the first concept of shared vacation ownership. Some dating back to the early 1960’s were converted motels or hotels, and sold in crowded meeting rooms to people on vacation in or around the area. Tainted for years by unethical developer sales methods, some of which are still out there, the arrival of the most respected hoteliers like Four Seasons, Fairmont, Marriott, Starwood, Disney, Hilton and others created a much higher level of industry stability and rapid growth.
While many people buy timeshares to take advantage of the opportunity to ‘trade’ their time into other resort destinations, the owners of private residence clubs usually focus on having a home away from home, where it’s more like having the use of the largest suite in a luxury class resort with up to four bedrooms and complete kitchen facilities as well.
Private residence club ownership usually involves a multi-week deeded interest in a wellbranded luxury property. Depending on the developer, they range from a one-sixteenth to a one-quarter share of ownership of a residence. Floor plans range from one to four bedroom residences from the low $200,000’s to the high $800,000’s per deeded interest based on location, view, and floor plan selected. Prices can appreciate 35 per cent from pre-construction phase to fi nal phase.
Often sold as a real estate investment, buyers would be better advised to look upon private residence clubs as an investment in the continuing benefi ts of a luxurious vacation lifestyle.
Traditionally, members have use of their residence club on a rotating calendar, assuring equal access to prime season versus owning the same week every year or an open reservation system working on a ‘first come, first serve’ basis.
The use and costs of fractional ownership is shared with other owners who annually pay a portion of the maintenance, taxes, management, refurbishments, etc. These rates are set by your resort’s Home Owners Association, which consists of elected owners, who should have the same interests as you.
A deeded ownership and title to a fractional share means the owner can leave the property in a will, transfer to another individual, and sell it.
TRADING WITHIN THE FAMILY
If your club is part of a luxury hotel chain that has other private residence club locations, members of that resort may be able to exchange a portion of their time on a reciprocal basis. However, because private residence clubs are somewhat new, some of the major brands only have a handful of locations at present, but that will change over time.
With most resorts, not all weeks are considered high season, which results in different purchase price levels. You may not be able to ‘trade’ your low season for a high season.
Because of the ever expanding, but currently limited, number of private residence clubs with any one brand, prospective buyers should visit the resort to be sure they will want to own and use it on a long-time basis.
It is advisable to look ahead at what your vacation needs might be many years from now if only because the vacation needs of a young family will be different when the children have grown and left the nest.
Owning a luxury private residence club should be one of the most rewarding lifestyle decisions you’ve made, but you must do your due diligence before signing up. Although the vacation ownership business is more regulated now, due in part to the work of the American Resort Development Association (www.arda.org), there are a great many things to know before buying, such as the rescind period, developer differences, and the other points in this article.
One of the most beneficial and objective reference sources is Timeshare User Group at http://www.tugbbs.com/forums/index.php.
Over the years, TUG has enlarged its coverage into destination clubs, condohotels, fractional ownership, and more. Their active bulletin board is an excellent place to freely ask your questions and read the resort reviews and advice sections.
Study all the alternatives, and know what you want in a vacation lifestyle and your piece of paradise. Buying any vacation home can be a much more complex purchase than most people realize. One thing for sure is that fractional vacation ownership is here to stay. It’s alive and healthy.
There are five Four Seasons Residence Club locations at present: Aviara, North San Diego, CA; Scottsdale at Troon North, Scottsdale, AZ; Jackson Hole, WY; Vail, CO; Costa Rica at Peninsula Papagayo; Unta Mita, Mexico.
There are four Ritz Carlton Club locations at this time: Aspen Highlands, CO; Bachelor Gulch, CO; Jupiter, FL; St. Thomas, US Virgin Islands. Future locations include: Kapalua Bay in Maui; HI; Kauai Lagoons, HI; North Lake Tahoe, CA; San Francisco, CA; South Beach, FL.
There are two Fairmont Heritage Place locations at this time: Acapulco Diamante, Mexico and Franz Klammer Lodge, CO. Under development are: Ghiradelli Square, San Francisco, CA; KwaZulu- Natal, South Africa; Palm Crescent, Dubai. Fairmont Residences will be opening five by 2009: Indian Wells, CA; Bar Harbor, ME; The Palm Jumeirah, Dubai; Tamarack, ID; Pacific Rim, Vancouver, BC.