Hotel & Motel Management - November 19, 2007 - (Page 34)

34 Timeshare CONDO-HOTEL UPDATE H&MM November 19, 2007 | HotelMotel.com www.HotelMotel.com/digital_edition Despite slow market, condo hotels thrive IN THE details Demand still remains The condo-hotel industry may face challenges from the condition of the real-estate market, but positive news remains for the industry, including: Development projects on the rise Lenders want condo hotels Ideal buyers ﬁnd success By Christine Blank CONTRIBUTING EDITOR ON time Starwood Vacation Ownership launched sales at The Westin Desert Willow Villas, Palm Desert (Calif.). During construction, sales will take place at a new sales gallery located adjacent to the resort in Palm Desert. Construction of the new Westin Desert Willow Villas was scheduled to begin in October with occupancy currently scheduled for late 2009. Intrawest ULC appointed Charles Massicotte to the position of president and c.o.o. for Mont Tremblant resort in Quebec. Interval International announced the addition of Monarch Grand Vacations’ Cabo Azul Resort & Spa to its global vacation exchange network. The 332-villa luxury resort, developed by Paciﬁc Monarch Resorts, is set on 12 oceanfront acres on an azure bay in the heart of Los Cabos, Mexico. It will feature one- and two-bedroom villas, as well as threebedroom grand penthouse villas. Phase one recently opened, and phase two, with an adjacent boutique hotel, is scheduled to open in late 2008. Wyndham Vacation Ownership began renovation of the historic Hotel Canterbury to transform the property into Wyndham Vacation Resorts San Francisco. It is anticipated that the 115-unit urban resort will open fall of 2008 and will operate in the FairShare Plus by Wyndham program. Sol Meliá Vacation Club added a new location in Cancun, Mexico. The Sol Melia Vacation Club Resort at ME Cancun shares facilities with the new ME by Meliá hotel. Compiled by Elaine Simon, esimon@questex.com lthough the condo-hotel industry has had ﬁnancial challenges over the past couple of years, many developers still see a healthy demand for the product. “Condo hotels have gotten a lot of bad press. But, condo hotels are better than condos for second-home ownership,” said Bob Waun, c.e.o., Vacation Finance, Birmingham, Mich., a lender for individuals buying second homes. “We put a sign out, and they purchase,” said LaMarr Hope, director, product development and real estate, Boyne Realty, Petosky Mich., which operates three condo hotels and other resorts and golf courses. Waun and Hope, along with other industry experts, discussed the condo-hotel market at the 2007 Vacation Ownership Investment Conference in Orlando in October. Despite some well-publicized condo-hotel deals failing, condohotel development projects are on A The Mountain Grand Lodge and Spa at Boyne Mountain Resort in Boyne Falls, Mich., is a condo-hotel that offers 220 rooms and suites with a restaurant/lounge and the 18,000-square-foot Solace Spa. the upswing, according to Smith Travel Research. As of July 2007, 196,332 condo-hotel rooms were in construction, a 20-percent increase from July 2006. Another 307,634 rooms are in planning stages, a 7.9-percent increase from last year, according to the research ﬁrm. In addition, some lenders are looking for condo-hotel projects, Waun said. They recognize that condo-hotel developers typically are cash-rich—they can put around 20 percent down—so lenders don’t have to bear the entire load. “Lenders who understand this are saying they want more of it,” Waun said. In addition, consumers who view condo hotels as a secondhome ownership option rather than a way to make money handover-ﬁst have an advantage in buy- ing condo-hotel units. For example, a condo owner in Florida who Waun represents lost $30,000 over the last year because she couldn’t ﬁnd a renter for her property. Meanwhile, the owner of condo-hotel unit in Miami ended the year $1,800 in the black and was able to use the property for two weeks in the past year. The ideal condo-hotel owner is somebody who wants to use or rent out the unit part of the year and has the option to exchange the unit for a vacation in other locations, said Angus Rogers, president, Floridays Resort, a condoresort property in Orlando. Despite some positive news, real-estate market conditions are challenging for condo-hotel operators. “When we ﬁrst started selling, we were in the push of the market going up and couldn’t take con- tracts or reservations fast enough. In our ﬁrst phase, we sold out at a pace of 20 to 25 units a month. Now, we’re only selling six to seven a month,” Rogers said. In order to attract condo-hotel buyers in this market, Floridays has to go after them much more aggressively than in the past. “We do expect this crazy time in the real-estate market to turn around, but you have to beat the bushes to ﬁnd those buyers and work every one of them,” Rogers said. Floridays focuses its marketing dollars on Internet marketing and third-party sales to its primary target market: Western Europe. “The Internet has been very good to us, so we probably spend less than 10 percent on marketing. We put our money into what we’re doing,” Hope said. And, condo-hotel owners are learning the best ways to establish owner and rental agreements so they are proﬁtable for both the owners and the developers. ResortQuest Hawaii LLC, which owns several condo properties in Hawaii, customizes owner agreements to maximize asset appreciation. “The gross revenue is sometimes split 50-50 with condo management and the owners. In other cases, we receive a straight management fee off the top,” said Kelvin Bloom, president, ResortQuest. John Melicharek, a partner in the law ﬁrm Baker Hostetler, recommends setting up the ﬁnances of the property as a hotel, then establish ownership agreements. hmm@questex.com Study: Robust ﬁnancial indicators in industry The annual benchmark study of the timeshare industry conducted by PricewaterhouseCoopers and released by the ARDA International Foundation underscored the robust financial performance of the vacation-ownership industry. The study, which focused on an industry subset of 40 companies encompassing 298 timeshare resorts in active sales, showed key ﬁnancial ratios such as sales and marketing costs remained in line, as companies posted 14.3-percent growth in 2006. This year’s ﬁndings reveal a 14.3-percent year-over-year increase in net sales of timeshare resorts in active sales, as the industry subset reported $5.8 billion in U.S. net originated sales. Average net sales per active resort were $19.6 million. Activity during each quarter of 2006 showed substantial growth from the prior year. Compared to 2005, net sales in 2006 were 13.1 percent higher in the ﬁrst quarter, 18.9 percent higher in the second quarter, 10.6 percent higher in the third quarter and 15 percent higher in the fourth quarter. The study participants included eight publicly traded companies or their subsidiaries, which accounted for 71 percent of net sales reported, and 32 privately owned companies. Geographically, the survey respondents broke down as follows: 43 percent of companies are headquartered in the Southeastern U.S.; 28 percent in the Northeast and Midwest; and 23 percent in the Southwest and West. Two of the respondents are based in Canada, and one is based in the Caribbean. BOYNE MOUNTAIN RESORT http://HotelMotel.com http://www.HotelMotel.com/digital_edition

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Hotel & Motel Management - November 19, 2007 Contents Torrid Hotel Sales Pace Persists Boykin Takes Steps to Regain Foothold Best Western Sets 10-year Plan Perspective At Your Risk HotelWorld Update Sales Clinic Events Trends & Stats Charting H&MM's Top Lodging Design Firms Fitness Equipment Supplier News PMS Software Provides One-Click Solutions High-Quality Linens Require Higher-Quality Cleaning Despite Slow Market, Condo Hotels Thrive Ad/Editorial Index Marketplace Classifieds Checking Out

Hotel & Motel Management - November 19, 2007

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