14 | FRACTIONAL
NEWS By Amit Katwala
CALLS for greater transparency and a positive attitude to building the future of the industry dominated the Fractional Summit 2011 last month at the Marriott Hotel in Grosvenor Square, London. Delegates included key speakers
and experts from across the fractional industry, keen to network and give their views on what’s to come for the industry. The fi rst day began with an introduction from Piers Brown, of organisers Fractional Life. He highlighted the summits theme of ‘Building for the future’, and said: “It’s a very challenging marketplace. Its important to talk with realism, and transparency.” The opening remarks were followed
by two ‘Fractional 101’ sessions, covering some of the basics involved in setting up a fractional development, and the different options available to developers. Jerry Cobb of the Fractional Ownership Consultancy said events like the Fractional Summit were important because they helped “collectively move the industry forward”. He acknowledged that the term
had become somewhat tainted in Europe because of large margins and annual fees, and the lack of a resale market, but said he believed it had a “huge future in the UK.” The managing director of HVS Shared Ownership Services in Madrid, Philip Bacon, gave an insight into the spectrum of different shared ownership models, ranging from ‘pure fractional’ to holiday clubs to shared ownership funds. He said it was the industry’s role to “fi ll the gap between hotels and traditional second home ownership”. Chris Allen of Citadel Trustees espoused the benefi ts for developers of appointing a trust to set up the legal structures involved in fractionals, including setting up holding companies and escrow accounts. He said: “The shared leisure industry is a great industry, and a trust is about increasing consumer confi dence, and reassuring them of the long term security of their investment.” Ioannis Verdelis of the Best Group fractional consultancy said: “The ideal development is the one that sells.” He said developers need to make considered decisions from the start of a project, to ensure a saleable fractional product. He
www.opp.org.uk |MARCH 2011 Building for the future at 2011 summit
Piers Brown | It is important to talk with realism and transparency about the market
said: “Fractional is not the solution to a problem project. Design intelligently, and think about who will buy, and whether or not it makes commercial sense for your company.” Also talking on the subject of planning, marketing and sales was Peter Kempf, the founder and CEO of Peter Kempf International. He described selling fractional developments as a “numbers game”, and said given a percentage conversion rate of around 3%, 5000 leads were needed during the sales cycle. He said “Marketing must start in February”, because of the need to get buyers out to the destination during the holiday season from April onwards. Kempf said fractional developers in untested locations should stick to their guns in the face of criticism. “The people who said, “it won’t work here” were wrong. If you follow the basic fundamentals, hire good people, plan properly and commit resources, you will succeed.” HVS’ Philip Bacon resumed proceedings
Delegates | included industry experts and speakers from all over the world
on day two with some research conducted into the fractional industry. He said: “The attitude of the buying market has changed, possibly forever. Baby Boomers have the time and money, and younger generations have money but are time poor.” He added that inspiring trust in the end consumer was vital for the fractional industry if it is to thrive. “Confi dence is the one thing that we need to get across.” This was followed by the views of
Fulvio de Rosa | (right) won the Services to the Industry award for Borgo di Vagli
four customers who had taken the plunge and decided to buy a fractional, telling the assembled crowd about why they had decided to buy, and what their experience had been. Judith Wade-Duffee, who bought a fraction at Borgo di Vagli in Tuscany, said she found the development online, and it was a “good website that won me over.”
One interesting point from this session was that none of the four fractional buyers had taken exchange programs into account when purchasing their homes, and none had any intention of using such a system if available. Wade-Duffee said she would “absolutely not” consider exchanging her days in Tuscany for anything else. The buyers also warned against hard-sell sales techniques employed by some agents. “Let your product sell itself – don’t thrust it down our throats,” said Wade-Duffee. Peter Kempf of Peter Kempf International
was also adamant that successful fractional sales come through relationship selling, through in-house sales teams, arguing against the effectiveness of distribution networks. He said: “Distribution networks won’t work when you have to explain the complexities of the fractional agreement, entitlements and exchange.” However, Xavier Wiggins of RGG,
which helps set up agent networks, disagreed. He said: “It’s very diffi cult to market to all the relevant markets at the same time. I believe that the best way to do that it is to build networks.” Although he acknowledged that relationship selling was a good approach for “super- luxury” developments, he said: “Those who are selling lots in this market are selling to the mass market through sales networks. It isn’t impossible for agents to sell fractionals – they are selling them in big volumes.” The Fractional Life Awards 2011
were also presented at the summit. Tuscan development Castello di Casole did well, picking up the Best Fractional Development EMEA, as well as the Reader’s Choice award, which is voted for by visitors to
FractionalLife.com, the conference organisers.
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