| Not all second homes are created equal. With the | | | | These economics have created an alternative |
| baby boomer generation approaching retirement | | | | vacation ownership model. Why own all these |
| there will be an increased demand for homes | | | | properties if you are using them only a fraction of |
| away from home. The low use of second homes | | | | the year? |
| and the costs associated with owning and | | | | Fractional ownership was created out of a need |
| maintaining vacation homes has given rise to a | | | | to reduce costs for the owners. Over time it has |
| new breed of property types over the last few | | | | become apparent though that the inflexible |
| years. | | | | fractional schemes do not serve the owners well. |
| Worry free vacation home ownership is at the | | | | Flexibility is king when you do not own 100% and |
| top of the agenda for most second homeowners. | | | | cannot come and go, as you like. |
| The affluent demand top-notch services and | | | | The next evolution of this concept is club vacation |
| amenities. With time an ever-rare commodity it is | | | | property ownership. This in turn has now lead to |
| crucial to accommodate the travel patterns and | | | | the creation of super luxury clubs with owners |
| flexibility demanded. Many short trips rather than | | | | having exclusive access to a multitude of |
| long extended stays have become the norm. | | | | properties at various locations. Membership is |
| A simple look at costs involved in owning multiple | | | | often limited to a few hundred families with |
| vacation homes makes the substantial financial | | | | properties offered for use worth several hundred |
| commitment obvious that comes with the | | | | million Dollars. The biggest benefit is the complete |
| traveling lifestyle. Homes want to be serviced and | | | | usage flexibility with no set schedules. Owners |
| maintained, services are to be provided and taxes | | | | have a certain time allocated to them but can use |
| are due to be paid. | | | | it at their discretion. |
| Owning a slope side condo in Aspen ($4 million) a | | | | The clubs offer a worry free lifestyle. Full |
| cottage in the California wine country ($3 million) | | | | maintenance of all aspects of the facilities, all |
| and a beachfront property in Cabo San Lucas ($5 | | | | taxes included, luxury services and a fun group of |
| million) is used as an example to highlight the | | | | people to hang out with if desired. |
| costs involved. A total investment of $12 million at | | | | Club memberships like this can be acquired for as |
| 7% represents an interest cost of $840,000 per | | | | little as $1.5 million. That represents an opportunity |
| annum with maintenance, utilities and taxes adding | | | | cost of only $84.000 with annual dues adding |
| at least another 3% ($360,000) to the yearly | | | | another $50,000. A total expenditure of $134,000 |
| tally. The total annual cost of this vacation | | | | can offer the same privileges and better services |
| property lifestyle is at least $1.2 million. | | | | with less hassle than full ownership. |
| With the average second homeowner spending | | | | It will become apparent to the seekers of full |
| less than 30 days at his vacation property the | | | | service luxury vacation properties that financially |
| properties are not utilized to their true potential. In | | | | as well as practically the top end of the luxury |
| addition that usage number decreases with the | | | | vacation resort clubs offer a great alternative to |
| number of vacation properties a household owns. | | | | the full ownership model. |