Should we be encouraged?

The following headlines came to me from Deborah at Rocky Mountain Realty in Montana.

CONSUMER CONFIDENCE SOARS IN MAY
-Associated Press 5/27/09
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MOST ECONOMISTS SEE RECESSION END BY END OF THIS YEAR
-Associated Press 5/27/09
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APRIL EXISTING HOME SALES RISE BY 2.9 PERCENT
BUYERS ARE TAKING ADVANTAGE OF A STEEP DROP IN PRICES
-MSNBC.com 5/27/09
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LOAN INTEREST RATES NEAR ALL TIME LOW, BUT INCHING UPWARD
-Associated Press 5/26/09

It’s really good to see these kind of headlines, but are we ready for a resurgence in Fractional and PRC sales? I have been optimistic since the beginning of all this, believing that their exists a fundamental need and desire among people to recreate, vacation, get away from it all, to renew and recharge, no matter what else may be happening.

It has always been a matter of confidence. We have suffered perhaps a debillitating blow to our national confidence. Hopes, dreams and plans shut down for a period of time, but, through it all, did our clientele think that the situation would be permanent or that they would forever give up their precious leisure lifestyle?

We and they have been waiting for some indication that we can plan and dream again. Do we have that sign?

Let me ask…What’s happening across the Vacation Ownership industry? Are things turning around…..not only in Fractional Ownership and PRC’s, but across the spectrum of vacation experience?

What news do you have? Can you share it here through your comments?

Dear Vacation Home Buyer:

It is the beginning of March and we have been inundated with bad news about our economy for months and the stock market is somewhere around 7,000. There is no doubt that we are in the midst of troubling times that warrant concern and caution. But, is there any doubt in anyone’s mind that we, as individuals and a nation, will prevail? Are we to give up on our goals, our dreams and aspirations? Are we to accept that our standard of living and quality of life are gone forever? Is this what Americans do? Have we ever not prevailed in the face of every adversity?

It is understandable why you would temporarily pull back from purchasing a new car or re-decorating the house and especially why you would put off your dream of a vacation home. That was the prudent thing to do, under the circumstances. We all waited to see what steps would be taken by a new administration to deal with the situation. While there still remains an aire of uncertainty, it is undeniable that steps are being taken, and remedies are being put into action. Not all of the actions may work but it does serve as sign to all that the American Dream, while bruised, is still very much alive and viable.

Many will continue to adopt a “wait and see” attitude, secretly acknowleding that individual and national prosperity and growth may never recover, and as a consequence, deprive themselves of the lifestyle they so richly deserve.  Others are ready to get on with their lives, betting on the resiliency, innovation and optimism of the American collective. Some are already preparing for a recovered economy and a continuation of the American Dream. This morning’s Orlando Sentinel ran a story on actions being taken by local hotelier Harris Rosen….”He is spending $30 million to upgrade his leisure hotels on International Drive. Improvements include pavers around the pools, flat-screen TVs and new furniture made in America. Lots of grateful workers are on the job. ‘We want to be perfect when this economy turns around,’ he says……It’s refreshing to hear someone say when instead of if. Everybody else is trying to survive today. Rosen is planning years ahead. The man who made his fortune during the tourism collapse of the mid-1970s is laying the foundation for an even bigger fortune in the aftermath of this collapse.”

Here is the question:  Should you, the successful consumer who has a job, has good credit and remaining home equity continue to deprive yourself of enjoying a quality leisure lifestyle because of this worrisome, but albeit, temporary situation?

Let me speak to Baby Boomers, specifically, (the tradional buyers of Fractional Ownership)……The clock continues to tick. The days continue to fly by at an alarming rate. The grandchildren grow up so fast and life can pass us by unless we seize on every opportunity.  Every day that you put off the joy of retreating to your vacation home or traveling through the exchange program or providing lifelong memories for you, your children and your grandchildren is a day lost forever. Those many years ago, if we had waited until everything was perfect, most of us would still be unnmarried.  We had faith in a better day and an undying hope that things would turn out OK. We need faith and hope now, more than ever before.

There has never been a better time to secure a second home

lifestyle through Fractional Ownership than right now.

If Fractional Ownership made sense to you before the downturn, then it makes even more sense now. The result of our current and temporary condition is that when we emerge, we will be smarter consumers. We will analyze more carefully each major purchase, waying the pros and cons and the benefits to our lifestyle. Fractional Ownership is the best choice to secure a second home. It combines all of the benefits of an expensive vacation home with the services, treatment and amenities of a fine hotel. It makes economic sense while at the same time delivering a superior experience to traditional second home ownership. There will always be reasons not to do things and the situation will never be perfect, but we Americans will still be here, enjoying the finest lifestyle on the planet, still the “shining city on the hill”. Don’t let the doom and gloom people steal your dreams. If you can afford it and it makes sense to you, then do it now. “Yesterday is history. Tomorrow is a promissary note. All we have is right now”.

With kindest regards,

Your Fractional Ownership Developer

The media continues to report dire news of the economy and politicos and other “pundits” insist that the end is nowhere in sight and that, in fact, it will get much worse. We are reminded daily that unemployment is at 7%, that businesses all over the place are going under, people are losing their homes and that we have not seen a situation like this since the Great Depression. There is no doubt that there are people who are genuinely hurting and that we are in a serious situation, but are they actually comparing our current economic woes to the worlwide collapse of the 1930’s? I wasn’t around during the Great Depression but I have seen the pictures and devastating video images of that era. We aren’t there! The fact of the matter is that 93% have jobs. The unemployment rate during good times pretty much hovers around 5% (plus or minus), representing those who are habitually out of work, leaving the real number of unemployed up about 2%. These are not Great Depression kind of statistics. 

"Migrant Mother" Dorothea Lange's depiction of destitute pea pickers in CA (1936)

It seems to me that “fear” is really what is propelling us into a downward spiral of anxiety, paranoia and a worsening economy. What we need is a “we have nothing to fear but fear itself” message delivered with the weight of an FDR. The only person, currrently, in our country who could deliver such a message is Barack Obama. Is he our FDR? Some have made the comparison. Let’s hope so. It’s not that the vast majority of Americans don’t have the resources, but rather that they are afraid to buy anything and have lost confidence in their own and America’s ability to pull themselves out of what is certainly a serious sitiuation.

Ben Stein provided an interesting point of view last week on XM Radio. Paraphrased, he said that those of us who have jobs and have some money have an obligation to go buy something. If 93% of us would go out and buy something…..a large screen TV for our kids….a new refrigerator…..paint the house……a new car….. or (Stein didn’t mention it, but out of shameless self interest) ….a Fractional vacation home, it would stimulate the economy better than the $350 Billion already given to the financial sector.

I see light on the horizon. I mentioned in my last posting that the marketing arm of my company, Case Marketing Group, Inc. was identifying relatively new players in the real estate sector, Scandinavia. By a strange coincidence (although I don’t believe in coincidence. I think we bring either prosperity or lack thereof through the power of our thoughts), Vince Cassano of Case Marketing was picking up a takeout order from Carraba’s this week and ran into a fellow from Sweden who was vacationing for a month in Orlando. Vince asked how things were going in Sweden and the gentleman reported that Sweden is not being affected nearly as seriously as the U.S. or some other countries and that a signiifcant number of affluent and semi affluent Swedes are buying real estate and vacation properties all over the world including America….and paying cash! As I post this entry, we are putting together a strategy to market Scandinavia.

Case Marketing is marketing a second home whole ownership project in South Florida and is reporting several sales, recently, in the $1.4 million+ range…..ALL CASH DEALS.  A colleague of mine in Destin, Florida says that sales of second home condos are begining to show signs of a turn around.

Granted, we are just now winding up the holiday season, but I have to tell you that I’ve never seen EPCOT or The Magic Kingdom more crowded and the same for Sea World. I don’t know what kind of figures they are going to post, but the town seemed very busy to me and I’ve had year around passes for 19 years.

These examples are anecdotal, to be sure, but I truly believe that people, who are not directly affected by devastating circumstances, are beginning to grow weary of the doom and gloom messages and are getting on with their lives. Life is too short to let fear and paranoia deprive one of enjoying the blessings of America and good fortune. Yes, affirmative and effective action by the government is helpful, but we hold the recovery in our own hands. When have we Americans ever relied on government or anyone else to determine our destiny? Recession is as much a psychological malady as an ecomonic one. Let’s learn our lessons from past mistakes and be prudent. Let’s manage debt effectively. But, let’s not let fear and lack of confidence cripple us. Let’s get on with our lives, enjoying our families and friends, our vacations, our leisure lifestyle and all the things make America the most resilient, most productive, and most inventive country in the world.  

Here’s to recovery and prosperity in 2009. Let’s not wait until 2010…2011….2012 or beyond, as some are predicting.

The end of the year and the holiday season is upon us once again. It’s been a tumultuous year with surprising and shocking news across a range of issues, unprecedented volatility, historic events and major challenges on the economic front. To say that it has been an interesting year would be an understatement. Perhaps we could look to a bit less “interesting” in 2009. It is evident that the Timeshare industry is taking a hit with substantial layoffs on the part of Wyndham, Westgate and even Marriott, here in the Timeshare capital of the world, brought on, primarily by the lack of owner financing. A prudent move, no doubt. These are strong companies and will rebound. Marriott reports that their situation is not nearly as bad as some others because they finance a good portion of their transactions. (By the way, let me, and many others, including Congress, express outrage directed at the financial sector. We, the taxpayers, have given them $350 Billion, so far, to loosen credit….AND THEY HAVE DONE NOTHING! SHAME ON THEM!

If there is a bright note, more and more developers and high end vacation home owners are looking to Fractional Ownership as, perhaps, an only option in this market. I think there is some merit in that line of thinking, especially in the high end and Private Residence Club sector, since about 70% of those buyers pay cash for their purchase, rather than rely on financing. Of course, that is cash to the developer and does not necessarily mean that they have not sought financing through other avenues, but in most cases, if some financing is required, it, most likely, comes from an equity loan on a primary residence or other real estate holding, where money is available for those with a lot of equity and are well qualified.

The only thing needed, in order for the Fractional arena to rebound is a level of confidence that we are at the  bottom and that there is hope on the horizon following the inauguration of a new administration. There aren’t many who are willing to predict what may happen in the first two quarters of 2009 and I won’t either, but I am optimistic. More importantly, if anyone is contemplating a Fractional offering, may I suggest that they get started now. The planning and set-up time is, at least, 90-120 days. Registration may take more than that. Be ready to go when things start to get better.

My onsite broker at Playa Langosta Private Residence Club www.playalangostaprc.comin Costa Rica is reporting an uptick in interest and sales from European buyers. My marketing arm, Case Marketing Group, Inc. is seeing a new consumer in the vacation home arena….Scandinavia, and we are actively cultivating that market.

As we wind up 2008 and get ready to welcome 2009, let us work harder, be smarter, get ready and greet the new year with optimism and resolve.

HAPPY HOLIDAYS EVERYONE

If you have any good news to report, please, leave a comment here. When you succeed, we all succeed.

One of the things I like about having a blog is that communication is fast and easy……yet another effective tool in an ever changing and fast paced technological world.

OK…we know that things are slow, but not dead. We also know that our business, be it timeshare, proper, or fractional/PRC’s will rebound. But, in the meantime, we have to be smart about our operations. It is well known that for the last few years I have, as a consultant, been helping fractional and PRC developers enter the business, provide whatever resources that are required, and make sure they don’t make any mistakes. That was then. Even now I know of several great proposed projects, that are going to be real winners, that are just waiting for money. Hopefully they will still be there when money is available and the market conditions improve.

For those projects already up and running and experiencing difficult times and difficult decisions, I have helpful advice.

1) TRAIN…TRAIN…TRAIN  With fewer prospects coming through the door and salespeople with more time on their hands, training is the best course of action for two reasons. Managers need to keep salespeople occupied with positive activities and you cannot afford to lose even one prospect to ineffective sales practices. Each and every saleperson has to perform at peak efficiency. Toward that end, please allow me to offer my “Sales In The New Bazaar - The Relationship Approach” training program. It has been called the most effective training in the fractional/PRC industry. Ed McMullen, JR at a conference in California a few years ago said that I had probably trained half of all the fractional/PRC salespeople in the industry. I’m not sure about that but scores who attended those training classes have communicated with me to say that the training they received was the primary reason they had become so successful. Many of those people are, today, sales and project directors and a few developers. I recommend a two or three day session that culminates in a customized 11-14 step approach to successful fractional/PRC sales. If you want to maximize current market conditions, please give me a call to get schedules and rates. 407.342.0178 or tomgoetschius@aol.com

2) For my timeshare friends….It is unfortunate and painful that during this time of upheaval and uncertainty you are faced with having to downsize your sales force. Of course, you manage by the numbers (efficiencies) and that’s a proven best practice. There is another tool, however, that you will find helpful. I have promoted for many years the Management Resource Associates (MRA) profiling technology. MRA is one of the most effective tools a manager or supervisor can have to hire the right people and effectively manage them on a daily basis. It may not be readily known that MRA is also effective in determining who to let go. Rather than downsizing, MRA prefers to call it “Right Sizing” . Who has the characteristics and traits to effectively handle the current frustrating time? Who has the behaviours and skill sets to weather the storm and prepare for the recovery? I am a master MRA instructor and, through “The Executive Leadership Seminar” have certified hundreds of managers and supervisors to use the technology during the good times…the boom times. MRA and I stand ready to assist managers and supervisors today as they face today’s challenges. The “ELS” is now offered, live,  online to certify your managers and supervisors or I can administer the MRA to your salespeople, evaluate the instruments and submit helpful reports so that you can sleep at night knowing that you have taken appropriate “Right Sizing” actions.

For more information about MRA  www.mra-ent.com

Thanks for reading.. I look forward to any comments or response.

In my premier posting, I mentioned that I was heading up an exceptional PRC opportunity in Costa Rica. Playa Langosta Private Residence Club is a 10,000 sq. foot ocean front multi million dollar Estate Home that combines the most extraordinary design and features that I have ever seen in a home with exemplary personal “As You Wish” services. The web site is live at www.playalangostaprc.com

We are taking non binding and fully refundable reservations for the 8 deeded fractional interests, with sales contracts in November and occupancy the first week in January of 2009. The first two fractional shares are priced at $695,000.

Please check out the web site. You can contact me if you need any additonal information.

In my ongoing commitment to affiliate my services, as consultant to the Fractional/PRC industry, with the top practitioners in the industry, I am pleased to announce a strategic alliance with  Robb & Stucky Interiors. Robb & Stucky has long been a leader in resort interior design and has a long list of industry projects. Robb & Stucky provides the finest furniture and accessories, award winning interior design, designer collections, exceptional furniture packages and a legendary reputation for style, selection and service. I have been assured by Dan Lubner, President of the Resort Division, that my clients will receive the best interior design, the best furniture and the best service. They are on the web at www.RobbStucky.com

It’s been a month since I launched the blog site and, boy, a lot has changed since then. Of course, aside from the upcoming election, the US, and apparently a large portion of the rest of the world, seems to be in free fall. I’ve called my financial planner three times to seek assurance that I am going to be OK, financially. I don’t know about you, but I wish the media would lighten up on the dire predictions and sense of doom and impending disaster. Of course, the situation is very serious. We get it. Thanks for letting us know. Now let’s get on with the recovery.

I just returned from the Vacation Ownership Investment Conference, sponsored by Interval International, held here in Orlando. It was quite somber at times and more than a few of the speakers took the opportunity, as the first order of business in their introductory remarks, to advise the assembled audience as to where the stock market was at that very moment…..and the news wasn’t good. But despite the credit freeze and plunging market, there was considerable optimism as to the resiliency of the vacation ownership industry and its ability to be among the first to rebound, based on historical data gathered from the aftermath of the Savings and Loan debacle in the 90’s and after 911.

Fractional Ownership and PRC’s continue to have a bright future, based on the irrefutable underlying logic of the concept and the undying desire of Americans and peoples of the free world to seek vacation and second home lifestyles.

I don’t know to what depths the downturn will go or how long it will last, but, never-the-less, there continues to be extraordinary Fractional/PRC opportunities available, provided by dedicated and passionate developers and there are people who are ready, willing and able to take advantage of those opportunites. We all might have to work a bit harder and smarter to seek out and fulfill the dreams and aspirations of those people, but whoever said this was an easy business, even in good times. One still has to have a project in the right destination and location, understand, precisiely, their clientele, have the right fraction size and use pattern, and rifle target an effective message of the extraordinary lifetsyle opportunity that Fractional Ownership provides, at a fraction of the cost.

As promised here are the 10 criteria I use to evaluate the viability of a proposed fractional project. A project should meet 8 of the 10 criteria in order to get a “green light”. I am grateful to Ed Mcmullen Jr. for his insight and experience in regard to these criteria.

1) A+ destination and location! Is the demand greater than supply? Vibrant second home market.

2) Is there a high barrier to entry in the marketplace? With $600 per sq. ft. whole second home ownership

3) Does property contain space onsite for core amenities, activities and services?

4) 30+ weeks of seasonality and if less then clearly defined seasons for fraction size

5) 70+% of the defined market is a return guest/property owner 3 or more times each year.

6) 70+% of the target customers (2 million annual visitors) must be within a 3 hour travel (Car or Plane)

7) Rental of comparable product must exceed $300 per night.

8) Exclusivity can be validated beyond the sales message.

9)  Intercept Marketing venues must predominantly touch target customer  (Incomes of $150,000+ with an affinity for the destination) (Prefer customers who have owned a second home before)

10) Developers have strong financials, partners and committed teams ….and…patience.

Welcome to the premier posting on my blog site. It is my hope that this can be a forum where there will be a beneficial exchange of information about Fractional Ownership and Private Residence Clubs. It is truly an idea whose time has come. I am getting more calls than ever before about the opportunities and benefits that Fractional Ownership offers both developers and consumers. Admitedly the current market conditions have a lot to do with the increase in interest. Whatever the reason, it is great time to be in this arena. In the very near future, as soon as I get some time, I will be posting or archiving articles that I have written. The first thing I am going to post are the 10 criteria that I apply to a proposed Fractional project. Please look for it in the next few days.

I will also be highlighting fractional/PRC projects that I am currently involved with on a consulting or marketing and sales basis. As a matter of fact included here is a photo of a 10,000 square foot Estate Home oceanfront in Costa Rica that I am heading up. Playa Langosta Private Residence Club is going to be offered in a 1/8th fraction with usage one week every other month. The web site will be ready in a week or two and then we’ll take reservations….So, stand by for more.

Until next time,

Promoting the best in the resort development industry

Tom