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Feature: The Fractional Market

William Kissel

January 1, 2004

The fractional homeownership concept, estimated as a $6 billion business today, originated in 1994 when ClubCorp built 28 identical three-bedroom, three-bath luxury homes adjacent to its hotel on Hilton Head Island and sold a percentage of each house to 13 families for their rotating use throughout the year. The Owners Club, as it is now known, has since added properties in Telluride, Puerto Vallarta, Barton Creek in Austin, and the Homestead in Hot Springs, Va. The benefits vary based on location, says Vice President of Marketing Kate Murphy, who adds that most of the residences are built around country clubs to accommodate golfers. “Our clients are mostly semiretired or families with kids. They are usually active travelers and generally used to a club environment at home.” Murphy notes that ClubCorp deeds start at $84,000, with annual membership dues between $3,400 and $4,800.

The Four Seasons, Ritz-Carlton and Marriott offer similarly successful residence clubs, although all have gone through growing pains to get there. “It’s an emerging business, so there are a lot of different iterations. First they were golf and ski resorts; now there are beach and urban locations,” says Gyetvan of Four Seasons Residence Clubs, which has condo-style residences in Jackson Hole, at Troon North in Scottsdale and at Aviara in San Diego. “It’s like the beginnings of the computer industry, where you had a variety of different platforms.” Nevertheless, she says, “this is a new and exciting way to satisfy the need for a second home but in the context of a brand you trust.”

“From a service standpoint, it is everything you would expect from a hotel experience—housekeeping, turn-down service, in-villa dining—but delivered in a residential environment,” adds Beth Vairo, senior manager of brand public relations for the Marriott Grand Residence Club, which has properties in South Lake Tahoe and London’s Mayfair district. Vairo handles the same duties for the Ritz-Carlton Club, which operates in Aspen Highlands and Bachelor Gulch, Colo.; St. Thomas; and Jupiter, Fla. (Click image to enlarge)

Location is another compelling advantage, notes Four Seasons’ Gyetvan. “You have to spend a lot to live slopeside in Jackson Hole these days. And even if you found a property, you wouldn’t be getting the level of service Four Seasons offers without hiring a huge staff. So this provides access to an amazing location and the opportunity to live in an incredibly high-quality environment with all the amenities of a Four Seasons resort. That’s pretty tremendous.”