When a Whole Home is Too Much
If the mantra for traditional real estate is, “location, location, location,” then the mantra for vacation real estate seems to be, “flexibility, flexibility, flexibility.”
Fractional real estate and updated timeshare options offer vacation homes with more amenities, fewer hassles and more flexibility than was ever imagined, even 10 years ago. Park City has been at the forefront of this industry, offering some of the first and the best in each category.
“We do have the gamut right here in our backyard,” said Jenny Ochtera, chief operating officer and vice president of sales and marketing for Levitin Group, a company that trains and consults in the vacation ownership industry.
Second Home Alternative
When Steve Dering realized in the late 1980s that many of the second home condominiums in Deer Valley, especially the higher-end properties, sat empty at least 70 percent of the year, he saw an untapped potential. Dering, a principal of Destination Club Partners and Dering Elliot Agency, created an alternative to sole ownership of a vacation home through a private residence club.
The concept divides ownership of a vacation unit based on typical use of a second homeowner, commonly between one-sixth and one-tenth of a unit. Club owners have a deed to an interest in one of the units, although they share use among comparable units.
Through Dering, the Deer Valley Club, completed in 1994, became the world’s first private residence club. In addition to having a place to stay in Park City, owners have access to a wide range of luxury hotel-like amenities, another hallmark of a private residence club. Services include transportation to and from the airport, a full-time concierge, long-term equipment and clothing storage and pre-arrival grocery shopping. Private residence clubs also typically include a member’s clubhouse, health club and pool.
Because the units never enter a rental pool, they are always open for the owners’ use—as little or as much as they want.
“It’s really more like an equity country club,” said Dering. Over time, members get equal access to prime weeks, like the Christmas holiday week, with rotating priority. If a member wants to stay more weeks, she can apply for units left available by members who use fewer weeks.
“When I started this, I thought I was creating Deer Valley real estate for the average Deer Valley skiing household,” said Dering. “And if you look at the demographics, the average Deer Valley skier can’t afford the average Deer Valley vacation home.”
A different kind of buyer, however, became smitten with the concept.
“What happened was, almost all of our buyers could afford a Deer Valley condominium, but opted not to, because they did the math, or they already had a second home, or they had a second home before, and didn’t want the headaches,” Dering said. “This just makes more sense to them.”
Park City is seeing more private residence clubs enter the market, with The Residence at The Chateaux under construction right across the street from The Deer Valley Club. BelleHavens, an equity destination club, moves the private residence club concept from condominiums to stand-alone homes and allows its equity members to travel to different destinations.
When One Week Will Do
Timeshares, the most established of the partial, or fractional, real estate products, have undergone radical changes in the past decade, with more and more flexibility built in, according to the Levitin Group’s Ochtera. Timeshare owners can still travel the world in a large-scale exchange program, but many companies now translate ownership into “points” which can be redeemed for a wider range of properties and lengths of stays, widening the flexibility of the programs.
Westgate Resorts and The Miners Club are examples of timeshare units in and around Park City. Timeshares are an interest in a specific property that allows the owner typically one week of use, but can be exchanged through a program that allows the owner to stay in different locations. The price is usually under $20,000 with annual fees around $350 a year, according to Ochtera. Along with the Marriott’s SummitWatch and Mountainside projects, the above properties have helped to convert the image of owning a timeshare from questionable to respectable.
The results prove the changes are well received: timeshare property sales in Park City have done well, according to Marriott Vacation Club International’s Vice President Ed Kinney. Of the two Park City properties, SummitWatch, built in 1994, is sold out, and Mountainside, open since 2000, is 85 percent sold.
“We’re about 18 months ahead of schedule on the Mountainside property,” said Kinney. “We expect to be fully sold out 18 months to two years ahead of initial projections.”
Timeshare buyers in Park City are also purchasing more than the average one-week vacation. According to Kinney, the typical purchase here is a week and a half.
“Both winter and summer, our owners seem to spend more time in Park City than at other properties,” he said, adding that the mountain setting rivals the popularity of the company’s Aruba and Hawaii locations.
To Have and To Rent
The Grand Summit Resort and Conference Center at The Canyons is a perfect example of a quarter-share fractional property. Buyers purchase multiple weeks worth of a unit (a quarter share equals 13 weeks), which is split between their own use and a rental pool.
Condominium hotels, such as The Chateaux at Silver Lake and Park Station, also have the dual roles of generating income and providing a vacation home.
In addition to ownership in a partial vacation home, fractional real estate offers a list of high-end amenities and flexibility. The Grand Summit, for example, was recently awarded 4-Diamond status by AAA, and its owners can exchange their week in Park City for any other Grand Summit location, or through an RCI exchange program.
Fractional real estate purchases can have a range of price points, which is usually higher than ownership in a timeshare unit and lower than sole ownership of a comparable vacation home. Industry consulting and marketing research firm Ragatz Associates pegs high-end fractional ownerships at an average price of $207,300 for 1/7.5 ownership and the traditional fractional sale at $99,200 for one-eighth ownership. (In comparison, private residence clubs have an average price tag of $278,000 for an average one-eighth ownership.)
The rental component of traditional and high-end fractionals makes them more of an investment purchase. Some properties, such as the Grand Summit, allow as much use from the owner as desired, according to Jeff Lykes, principal brokers for The Canyons Resort Realty.
The penchant for fractional ownership in vacation properties seems solid.
“The market has been incredible for a decade,” said Steve Sherer, who came to Park City with American Skiing Company in 1996 to sell fractional ownership of the Grand Summit.
The trend has made fractional real estate—with the flexibility in price, locations and use—one of the hottest products of the real estate industry.
“It’s not just Park City, or even winter destinations,” Sherer pointed out. “But also lakes, mountain beaches; wherever people want to spend their leisure time.”
Monika Guendner and Joel Zuckerman are both regular contributors to Park City Magazine.
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