Luxury never takes a vacation

The very wealthy are putting a new variation on time sharing. It's called the residence club.

Strategies

May 12, 2002|By Bruce Mohl | By Bruce Mohl,Boston Globe

On the continuum of vacationing, between time shares and second homes, a new way of getting away from it all may be emerging.

Some call them residence clubs. Others call them fractionals. You could also call them time shares on steroids.

They are basically shared vacation homes that cater to people earning more than $175,000 a year who would like to buy a luxurious second home but can't justify the purchase because they don't have the time to maintain it or even stay there more than a few weeks a year.

"I think it's really going to take off and be really big. I think it's going to be bigger than the second-home market because you get so much more value and you get so much more out of it," said Wally Hobson of Hobson Ferrarini Associates, a real estate advisory company in Portland, Ore., that has done consulting work for many of the companies building residence clubs.

Shared ownership is hardly a new concept, but what sets residence clubs apart is their combination of lengthy stays, luxurious accommodations, stellar resort settings and five-star service. Prices range from $100,000 to $500,000 for a four-week share, with annual fees running from $4,000 to $10,000 a year.

Companies like Four Seasons, Ritz-Carlton and Club Regent are moving aggressively into the market, with estimates of its eventual size ranging as high as $6 billion. In 2000, sales were estimated at $471 million.

Residence clubs have been concentrated so far in Western ski areas, but are beginning to expand into other resort areas like Florida, California, Hawaii, the Caribbean and Mexico.

Resort investment

Unlike time shares, which are sold as prepaid vacations and rarely retain their initial value, residence clubs are being marketed as real estate investments likely to appreciate in value. It's unclear whether that will happen, given the many similarities between the two products.

Hobson says time shares and residence clubs are entirely different, but one could look at residence clubs as gussied-up time shares geared to wealthier people. The overall concept is very similar, right down to the ability to exchange time at one resort for time at another. Four Seasons, for example, lets its residence club owners trade into other Four Seasons residence clubs or hotels.

Four Seasons is high on the residence club concept, but it backed its way into the business. In the late 1990s, it started building resort clubs, patterned after the high-end time shares marketed by Marriott Corp. But it discovered many would-be customers were turned off by the inflexibility of sharing a unit with 51 other owners and wanted more room and more luxury.

So Four Seasons shifted from resort clubs to residence clubs.

Instead of selling two-bedroom units in one-week blocks, it now pushes three- and four-bedroom units in four- to five-week blocks.

A club in Scottsdale, Ariz., represented the early Four Seasons approach. It opened in 2000, featuring two-bedroom units with a private pool and clubhouse and adjacent to a golf course designed by Tom Weiskopf. Weeklong stays were sold initially, but now two weeks is the minimum. The price for four weeks ranges from $100,000 to $160,000, with each week carrying a $1,000 maintenance fee.

Michael J. Batt, the president of a New Jersey-based consulting firm, initially bought a week at the Scottsdale club but now is thinking about buying three more. "It's like coming home to our second home," he said.

New residence clubs under construction in Sedona, Ariz., and Jackson Hole, Wyo., and others in the planning stages in the Bahamas, Mexico and Costa Rica will offer units that are bigger, require longer stays and cost more

Only the best

In Sedona, for example, Four Seasons is selling stand-alone, three-bedroom villas in four-week increments at a starting price of $275,000. Only 40 of the 52 weeks available will be sold, giving the 10 owners of each villa plenty of flexibility in deciding when they vacation.

While many owners of second homes furnish them with castoffs from their first home, residence club owners want only the best, according to Duffy Keys, senior vice president of Four Seasons residential properties.

They want housekeeping to do the dishes, clean the kitchen, and make the beds daily. They want access to top golf courses, spa services and fine restaurants on site. They even want to store personal items like photographs and CDs at the resort, so service staff can put them out before arrival to make the unit feel more like a second home.

Says Keys: "Their attitude is, I'm not going to skimp on anything because it's where I go to enjoy myself."

In brief

Lodge-fee schemes

Be wary of Internet reservation services that buy rooms in national park lodges and resell them with added 10 percent to 12 percent surcharges, warns Xanterra Parks and Resorts.

Xanterra, the nation's largest operator of national park lodges, charges no extra fees for booking rooms, according to spokeswoman Mona Mesereau. Sur-charges are avoidable by dealing directly with the lodging operator.

With a few exceptions, if the reservation service lists many different lodging choices both within and outside a national park, it's probably not an authorized park concessioner, Mesereau said.

Xanterra, formerly called Amfac Parks and Resorts, also cautions against false claims that parks, such as Grand Canyon or Yellowstone, are "crowded most of the year."

Visitation at many national parks has been dropping for several years, and it's too early to tell if there'll be an increase this year, said Judi Lages, Xanterra's vice president of sales and marketing. Rooms are available, she said. Check the National Park Service's Web site, www.nps.gov, or www.xanterra.com.

-- From wire reports

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