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Alternaty - Fractional sale and timesharing - EN


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Our specialist, Mr. Rudolf Hever spoke on November 15, 2012 at the Vietnam Hospitality Management Conference named Catching The Growth Curve With The Right Strategy, where he is also interviewed about Vietnam tourism and hospitality. The conference held by Irving Seminar and Training Vietnam is designed to bring all investors, hotel owners, operators who expect right solutions from specialists, consultants and service & technology providers to take their developments and operations up to the next level. Mr. Hever discussed the topic of Fractional Sale and Timesharing Models (Mô hình bán quyền sở hữu và chia sẻ kì nghỉ) along with their opportunities and risks. Also, the broadcasted video revealed other opinions on hospitality market insights.

What is Fractional sale and timesharing?

. Whole ownership
. Whole ownership with rental pool
. Fractional – quarter share
. Fractional – twelfth share
. Timeshare
. Fractional vs whole ownership
. Exchange and pointing systems
. Benefits of fractional sale and timesharing models
. Risks
. Case studies on fractional and timesharing models

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Alternaty - Fractional sale and timesharing - EN

  1. 1. Fractional Sale & TimesharingModels for DevelopersOpportunities & RisksPresented by:Rudolf HeverExecutive 933 902 530
  2. 2. Slide 2 15/10/2012Presentation outlineAlternative real estate productsWhole ownershipWhole ownership with rental poolFractional – quarter shareFractional – twelfth shareTimeshareFractional vs whole ownershipExchange and pointing systemsBenefitsRisksCase studies
  3. 3. Slide 3 15/10/2012TimesharingNinh Van BayCondotelBest WesternNha TrangBranded ResidenceHyatt Regency DanangFreehold OwnershipOcean Villas DanangFractional OwnershipBeach RepublicKoh Samui, ThailandLeasehold OwnershipThe Sanctuary Long HaiPrivate Residence & Destination ClubThe Ritz-CarltonDestination ClubHotel RoomIntercontinental SaigonTRADITIONAL ALTERNATIVEAlternative real estate products
  4. 4. Slide 4 15/10/2012Full priceNo obligation for specific standard of furnitureNo rental management providedTypically use weekends or holiday weeks (actualusage is approximately 8 - 13 weeks per year)Limited option of management (no rental)Possible investment gain:1. Capital appreciation onlyAlternative real estate productsWhole ownership
  5. 5. Slide 5 15/10/2012Alternative real estate productsWhole ownership with rental poolAUnit CB DGrossRent$1,250 $1,000 $1,500 $1,250Rental Pool (total rental income) = $5,000Minus $500 Management Fee = $4,500Minus $750 Maintenance Fee = $3,75020% Developer 80% OwnersNetRent$750 $750 $750 $750$7501 2 3 4
  6. 6. Slide 6 15/10/2012Alternative real estate productsWhole ownership with rental poolFull priceObligation of a specific furniture packageTypically management company is involvedTypically owner usage allowed is 30 - 60 daysHigh management fee (International brand)Possible investment gains:1. Capital appreciation2. Rental pool system (Revenue - operations cost -developer share)In Vietnam this model has had mixed success(the selling price is too high and low returns)
  7. 7. Slide 7 15/10/2012Alternative real estate productsFractional – quarter shareAUnitOwnerUsageOwners3 months 3 months 3 months3 months1 2 3 4Usage1 month 6 weeks 2 weeksRentalPoolExchangeSystem
  8. 8. Slide 8 15/10/2012Quarter of the price (1/4) + Premium for fractional clubmembershipRecommendation on specific furniture packageTypically no management company involved, managed by thedeveloperTypically owner usage allowed up to 13 weeks (3 months)Rental pool option available for unused weeksExchange program for ownersFloating weeks or fixed weeksMembership club benefits (Golf club, gym, spa, etc)Possible investment gains:1. Capital appreciation2. Rental pool system (Revenue - operations cost - developershare)3. Fraction share appreciationAlternative real estate productsFractional – quarter share
  9. 9. Slide 9 15/10/2012Alternative real estate productsFractional – twelfth shareAUnitOwnerUsageOwners1 month each2UsageRentalPoolExchangeSystem4 6 8 9 11 12103 5 71
  10. 10. Slide 10 15/10/2012Twelfth price (1/12 of price) + premium for fractionalclub membershipObligation for a specific furniture packageTypically no management company, managed by thedeveloperTypically owner usage is up to 4 weeks per share (1month)Typically there is no rental pool optionExchange programMembership club benefit (Golf club, gym, spa etc)Limited investment gains:1. Rental pool system (Revenue - operations cost -developer share)Alternative real estate productsFractional – twelfth share
  11. 11. Slide 11 15/10/2012UnitOwner UsageOwners1 week eachUsageExchange SystemTime - precious and limitedSharing - For everyone’s benefitTimeshare - the purchase of accommodation for: a specified amount of time in a specified location during a specified timeframeAlternative real estate productsTimeshare
  12. 12. Slide 12 15/10/2012Lower investment entry level (can be as low asUS$20,000 per share)Use only what is needed (second home is used only 4- 8 weeks per year)Higher return for rental pool management Lower operational costs Lower brand costs (maintenance fee) Shorten rental period to fill (if you own 1 month, you only have 4weeks to rent, if you own 12 month, you have 52 weeks to rent)Option of exchange system (Vietnam or overseas)Higher capital gain (if property price increase and ifshare price increase)Club benefits (discount F&B, spa, golf etc)Fractional vs whole ownership
  13. 13. Slide 13 15/10/2012InternationalExchangeExchange and pointing systemsAMember deposits1 weekWeeks Fixed Floating Points
  14. 14. Slide 14 15/10/2012Affordable to a much largertarget marketAccess to the internationalmarketShortened sales periodMultiple income streamsVacation Club Benefits Upfront sale of rooms (upfront cash) Additional F&B and spa spending Secured maintenance fee Increased marketing longer average length of stay International marketing and clienteleRoom nights soldMember staysAlternative real estate productsBenefits
  15. 15. Slide 15 15/10/2012Sales riskLong term member management obligationCreation of the membership program and usagerotationPoints system managementMarketingSale training programExchange systemPricing and upgradesResale options and membership transfersLegal frameworkAlternative real estate productsRisks
  16. 16. Slide 16 15/10/2012Location: Lamai Beach, Koh Samui, Thailand. 15 mins frommain beach (Chaweng Beach)Access: 30mins from Samui international airportConcept: Mediterranean hip, beach club, sexy,sophisticated, cosmopolitan. A beach club with villasSell 2 week sharesPayment terms $3,000 reserves unit 30% down payment registers unit 60% of net rental income paid to owner Financing options availableAnnual owner’s dues per 2 week share: $650 - $1,000depending on unit sizeDivided pricing into 3 seasons (peak, high, shoulder)Case Study: Beach Republic
  17. 17. Slide 17 15/10/2012Case Study: Beach Republic
  18. 18. Slide 18 15/10/2012Case Study: Pine Cliffs Resort, Algarve,Portugal
  19. 19. Slide 19 15/10/2012Case Study: Laguna Phuket, Thailand
  20. 20. Slide 20 15/10/2012Timesharing and rental pool are actually two verydifferent conceptsExchange companies do not manage your resortFractional sale companies do not work for 2%commissionTimesharing will not clear your 90% unsold unitsTimesharing will not improve your 80% vacancyrateChoose an effective management solution beforechoosing an aggressive sale teamFinal suggestion: plan carefully before you actDo’s and don’ts for developers
  21. 21. Slide 21Alternaty is a boutique real estate firm providing specialist advice for hotel, resortand second home projects. Our approach is to forge partnerships with developersto provide a suite of consulting services throughout the development lifecycle.AlternatyReal Estate•Vacation ownership•Fractionalownership•Private residence &destination club•Condo hotel•Hotel investmentBoutiqueConsulting•Market research•Feasibility study•Financialprojections•Cash flow modeling•Highest and bestuse analysis•Developmentrecommendations•Due diligence•ValuationOperatorSelection•Operator selection•Managementagreementnegotiations•Equity investment•Sale & leaseback•Long term leasewith key money•Technical servicesnegotiation•Franchiseagreements•Management withguaranteed returnInvestmentServices•Joint venturepartners•Private equity andfamily offices•Opportunistic,special situationsfunds•Absolute beachfrontland for sale•Distressed assets•Exit strategyexecutionInvestorRepresentation•Timely marketupdates•Active surveillancefor opportunities•Constant point ofcontact•Meeting set-up andattendance•Negotiation support•Site finding•Identification oftarget point ofcontact•Site inspection15/10/2012BoutiqueConsultingOperatorSelectionInvestmentServicesInvestorRepresentationAlternative RealEstateAlternaty – Alternative Real Estate
  22. 22. Slide 22 15/10/2012Alternative Real Estate Service Co., Ltd.Unit 23, 26 Ly Tu Trong Street, District 1,Ho Chi Minh City, VietnamT +84 836 028 591This presentation produced, by Alternative Real Estate Service Co., Ltd. (hereafter“Alternaty”), is provided for general information purposes only. Whilst making allreasonable effort to provide correct information, no legal responsibility can be acceptedby Alternaty for any loss or damage arising out of the use of or reliance on the contents ofthis presentation.Subscribe to our periodical newsletter at:www.alternaty.cominfo@atlernaty.comAlternaty Hotels + Resorts Newsletter
  23. 23. Slide 23THANK YOU