Key Aspects of a Successful Program

Putting together a successful fractional program is much more complex than it seems. Often an important aspect of the program is overlooked or off the mark and this is the reason for poor sales performance. It is important to differentiate your fractional program from a timeshare property. These are two completely different animals.

For the more educated & knowledgeable buyer, timeshares have fallen completely out of favor. Most timeshares are sold by the big-name hotel chains. Their programs are complex and many require significant planning to get what you have been promised. Our opinion is independent resorts should stay away from the timeshare model.    

Important aspects of the fractional program are:

Deeded or non-deeded model – Buying into a deeded property overcomes many potential apprehensions a buyer might have. It may just be the icing on the cake for your prospects. A deeded model moves your property away from “timeshare” properties where owners just own time and nothing more. There is no opportunity for building value there and the savvy buyer will not consider this type of model.

A Deeded model offers an asset with the potential for appreciation. It’s just as much a property purchase as buying a property outright. It’s something tangible parents can leave to their children. It has more value both short and long-term and this fact helps close the sale.

Fraction % - The number of days related to the fraction needs to be determined based on several factors:

The climate – Looking at all four seasons and tourist visitation is one of the key factors of determining the number of days per fraction and the structure of your program

Max stay limits – If the country has a maximum stay limit for individuals

Transportation – Less flights to and from a location usually means longer stays

Where your potential owners are visiting from. The farther away they travel the longer they may wish to stay.

Fractional model – They are many fractional models which should be considered for your program:

Rotational model – This is where all fractions are the same. The visitation time rotates from year to year for all owners. For example, an eight-week fraction (16% ownership) where owners are given two consecutive weeks each season (fist two weeks of Q1, Q2, Q3 and Q4 for year #1, the 2^nd year you get weeks #3 and #4 in each quarter).

Fixed model – Owner’s buy the exact time on the calendar they want and they own that time forever. For example, the month of April. Depending on the climate at your location this may be a tricky model to sell once all the “prime time” is sold.

Hybrid model – There are many hybrid models in the fractional industry. The most common involves both “fixed” and “float” time. This is where owners can buy “fixed” weeks which also come with “float time” which are weeks which are not assigned before-hand, rather there is a system to either assign or have the owners select this time. The float time is also deeded so owners are guaranteed to receive it every year. Here the way float time is assigned or selected is of the utmost importance.    

Annual / Bi-Annual – This is when your time at the resort can be used on an annual or bi-annual basis. Bi-annual times they are more affordable to purchase.  

Same unit – An important distinction of fractionals over timeshares are timeshares only guarantee time at the resort. Not a physical unit (#18) with a particular view. Even if all of the resort units are the same their views and proximity to certain attractions are different (beach, pool, golf etc.). Selling time in specific units gives owners more a sense of real ownership than just being out in different units year after year.

No expiration - Again, an important distinction of fractionals over timeshares are timeshares usually expire after 20 to 50 years. Fractionals are deeded and never expire. It is a key selling point buyers understand. Timeshares have a bad reputation in the industry and for good reason. It is well known they are a horrible “investment”. A true fractional is deeded just like full ownership. A deed is something you can leave to your kids. It’s easier to understand all of the benefits associated with fractionals and therefore easier to sell. With a fractionals you can sell it as an investment where is the timeshare model the on-the-level companies would/should never sell it that way.