54 | MEDIA & MARKETING Hotels & resorts
BRANDS
are conveyed in a single transaction, as opposed to shared ownership like that found in the case of timeshare, fractional and PRCs) are designed and intended for a more transient form of occupancy. These units may be anything from high-rise condominiums to low density villas,” says the report. The owner usually occupies the property according to the rules in the governance documents and then allows the property to be rented out using the brand name of the hotel group involved and the power of its reservation system. The principle involved is very similar to traditional hotel rooms.
Shared Ownership (Timeshare, Fractionals and PRCs).
These schemes are designed to allow the sharing of ownership in a residence or lodging unit. The more common types of shared ownership products (timeshare, fractional, and PRCs), have very similar legal structures. However, “the physical
characteristics of the residences and the use rights associated with shared ownership differ dramatically among these product types,” says PR and the lawyers give the following guidelines: The big pitfall here is getting the contract right. There are some very big legal pitfalls. Broadly speaking, the asset acquired
under a shared ownership regime is either an interest in real estate (commonly referred to as a “deeded interest”) or it is a “timeshare estate.” They are often referred to as a bundle of contractual rights that do not entail a transfer of an interest in real property which is referred to as a “right to use”
“The use rights associated with shared ownership differ dramatically amongst products.”
product. Within these two categories there are many variations, the most signifi cant being: • Deeded Interests. A deeded interest or timeshare estate refers to (i) a right to occupy a dwelling unit for a recurring annual or bi-annual interval of time, along with (ii) a real estate ownership interest in the form of an undivided interest in real estate, an interest in a condominium or co-operative regime, or an interest in a trust. • Right to Use. A right to use interest or a timeshare license refers to a contractual right to occupy a residence for a recurring annual or bi-annual interval of time for a stated number of years, in the form of a license, lease or membership agreement.
Destination Clubs.
Destination Clubs are generally non-equity clubs in which the
member acquires a certain amount of annual guaranteed occupancy at the club’s various residences, as well as the right to additional use on a space available basis.
Destination clubs differ from right- to-use fractionals or PRC products in a variety of ways including the tendency for fractional and PRC products to be a discrete portion of a resort built expressly for that purpose. Destination club inventory tends to be a group of units located within a number of resorts not developed or owned by the destination club. “Destination clubs are a relatively new product,” says Proskauer Rose, “and one can expect some further defi nition of the product over time.”
Serviced Apartments. Often referred to as corporate apartments, vacation suites or extended stay products, these are another
“Don’t forget the pitfalls - the costs of branding ... and the re-sale rules and regulations further down the line.”
lodging product that is increasingly branded by the major hotel companies. Serviced apartments are common in Asia, where they serve as a furnished accommodation option with known standards and a variety of services and amenities designed to appeal to long-term visitors … typically business people. The market for serviced apartments has historically been dominated by a few large operators such as Ascott and Fraser, as well as the
www.opp.org.uk | AUGUST 2010
Swire Properties Group, which has been successful in Hong Kong with its serviced apartments at Pacifi c Place.
Branded Real Estate in Mixed-Use Developments
Planning and cost constraints have led to the growth in mixed use developments and the big hotel brands have come to recognise these projects represent an important source of additional revenue and brand distribution. And consumers like them because of the trust and recognition that the brand name brings to the development.
Checklist
If you decide to get involved in one of these projects, “the issues to consider” says Proskauer Rose include:
• The profi le of the potential purchasers.
• The feeder markets for each product type.
• An evaluation of the nature of the experience.
• The amount of each product type to be developed must be considered with a focus on absorption, economies of scale, exclusivity and the mix of product types.
• The confi guration of lodging units. • Amenities branding.
• The prospective purchaser’s purpose and expectations in acquiring the for sale product.
Associating your property scheme with a top brand can be very good for business but don’t forget the pitfalls … the costs of branding, the enforcement of brand standards, the threat of a brand walking away from your project, the compatibility of project components, re-sale rules and regulations further down the line.
Don’t gamble | Plan ahead and check all the legal pitfalls carefully to make sure that the cards fall in your favour
Visit the hotel and resort day at the OPPLive conference on Thursday October 14 2010. The sessions will be presented by the Hotel Solutions Partnership.
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