Fractional Summit Europe 2012
Intelligent Partnership Directors joined more than 250 attendants to this weeks Fractional Summit in London. The fractional real estate industry showed signs of the much talked about but elusive green shoots of recovery in London this week, when a significant number of new developers attended the fifth annual Fractional Summit Europe to learn more about the sector and network with leading suppliers and consultants.
The 145 delegates at the Summit came from as far afield as Italy, Spain, Qatar, France, Portugal, Malta, Ireland, USA, Cyprus, Russia, Italy, Bahamas, St Lucia, Barbados, The Netherlands, Philippines, Switzerland, Lithuania and the UK.
A significant proportion of them were developers, many of whom were new to the industry. The conference had a new structure this year, with the Fractional 101 sessions – a comprehensive introduction to conceiving, planning, developing and operating a fractional real estate project – held in a separate breakout room. These sessions were packed for the whole day, as delegates learned the basic building blocks of fractional development from Andy Sirkin of Sirkin Fractional Lawyers, Eric Gummers of Howard kennedy, Christine Gregory of Citadel Trustees, Brad Lincoln of Best International, independent consultant Paul Mac Sherry, Gregg Anderson of The Registry Collection and Ioannis Verdelis of Best International.
In the main hall, the focus was initially on industry trends. A panel of developers, exchange companies and vacation rental specialist discussed how consumer taste is changing and the evolving nature of the hospitality sector, particularly the rise in mixed-use developments. During the session, it was revealed that The Registry Collection and vacation rental operator onefinestay will be working together to offer their members access to each other’s portfolios.
Then the emphasis shifted firmly to developers who are already in the fractional space, and how they can improve and streamline their offer. Lee Dowling, vice president, ITO, Marriott Vacation Club and Peter Kempf of Peter Kempf International talked through the details of constructing an HOA budget which maintains essential services while not overcharging buyers. Peter Kempf said that while buyers are happy to pay large sums to initially buy a fractional or a PRC membership, a small increase in annual dues is often seen as unacceptable.
Other presentations throughout the first day covered software, electronic payment solutions, human resources, and the relationship between fractional ownership, exchange programmes, timeshare and whole ownership. It was telling that timeshare developers who are launching fractional products and upgrading their timeshare clients are a major new force in the industry, a trend that looks set to grow over the next few years.
Two key points which merged during the day were the need for a viable resale market for fractional projects, without which the industry “will die a slow death”, according to Peter Kempf, and the continuing customer confusion over the difference between fractional and timeshare. Les and Mary Hyde, buyers at the Regency Country Club in Tenerife, own a six-week interval, which many in the sector would describe as a fraction, but they referred to it as a timeshare, even though they acknowledge this had negative connotations among their family and friends.
The day ended with the presentation of the 2012 Fractional Life Awards followed by a speed business card swap, a cocktail party, and a gin and vodka tasting courtesy of Sipsmith.
Day two kicked off with a summary of the European market from Philip Bacon of HVS Shared Ownership Services. He revealed 46 active developments (down from 90 in a 2009 survey from Northcourse) and appealed to developers to join a benchmarking group which can provide regular and up-to-date detailed information on the European market, in a similar way to the hotel sector and educational sector with the newest ABCApps, an app working as a software for anyone interested in learning.
A panel on alternative fractional models was followed by a fascinating finance session, which concluded that although the current climate is still extremely difficult, it is likely to becoming easier to get developer funding, although estimates varied between three and five years as to how long it will take for conditions to ease.
Piers Brown then thanked delegates for attending and looked forward to seeing them next year, when he promised a significant widening of focus the event.