Is Fractional Ownership Making a Comeback?

Before the economy took a dive during the great recession and the real estate market plummeted, fractional ownership was going strong. But, like most vacation ownership properties at that time, it too took a hit. Now, it looks like fractional ownership may be making its way back into consumer consciousness, but only for a few properties - and location and financing seem to be key issues. 

Current Fractional Activity 

Seahorse Beach Club

A while ago we did a blog on fractionals and mentioned the new Seahorse Beach Club on the gulf outside of Houston.  At that time, the fractional ownership resort developed by Star Resort Group, was up and going, and according to Carl Barry, CEO of Star Resort Group, "Seahorse was knocking down its first sales".

Checking in with Carl now, he reports on his blog that sales at the luxury, private residence club "remain very sluggish due to pricing and the energy retraction in Houston."  Carl states, "Sales have been like pulling teeth. We still believe in the project and the homes we have built, but buyers have been few and far between, and the overall market slow."

Marathon Key and Crystal Cottages

Carl, a pioneer in the shared vacation industry says, "Though sales in fractionals in the past year have been few, the assumptions behind the product remain strong". In his opinion, "As prices for whole homes continue to rise, fractional interest looks all the better". One of the hot markets is the Florida Keys, a location that may contribute to the success for recently financed projects, Marriott's Residence Inn and Crystal Cottage in Marathon Key.

Other fractional projects in the works include Burnt Mill in Wells, Maine, Sunset Boulevard and Big Bear Lake in Southern California, and Telluride, Colorado.

What's the Fractional Appeal?

One Steamboat Place

An article in the Wall Street Journal a few months ago, touted the benefits of fractional ownership, one of which was the ability to own a million dollar vacation home for far less money than buying outright. A case in point, a couple who recently purchased a fractional ownership at One Steamboat Place, a Timbers Resorts' development in the affluent ski town of Steamboat Springs, Colorado.  In 2012, the resort was given a highly regarded industry award, "Best Fractional Development in the US, Canada, Mexico and Caribbean".

According to the Journal, what sold the couple on One Steamboat Place, was "the thought of a second home without the maintenance hassles, and the ability to stay in luxury properties in other areas." The couple said, "We didn’t want to feel like we had to go to the same place all the time to justify having it".

More Advantages Add to the Appeal of Fractionals

  • Fewer owners - Most fractionals have only 2-12 owners per unit.  
  • Longer Stays - Fewer owners means fractional owners visit their property more frequently and stay longer. (Typically 3- 4 weeks per year)
  • High-end/luxury accommodations and amenities - Fractionals more often feature luxury accommodations with concierge-level services. With larger ownership shares and more time spent on the property, fractional owners tend to take more pride in ownership. Properties are usually maintained better and operated more efficiently.
  • More owner control - In properly structured fractional properties, owners have more control of the operation of the property. Fractional associations operate much like homeowners associations and retain authority and control over their property. If the manager or management company responsible for day to day operations is not doing their job, owners have the right to replace them.

As with any major purchase, do your homework before signing on the dotted line. For a comparison of fractional vacation ownership options check out "Analyzing, Comparing and Choosing Among Fractional Vacation Ownership Options" at 

0 Responses

Post a Comment