RCI Ventures: January 2009

Richard McIntosh: “I can seemany opportunities to positionour business for better timesahead.” PAGE 7

Rita Rowe: “Positive wordof mouth from events isworth untold millions.”PAGE 35

Mark Bingham: “Werarely get people whobuy for lifestyle.”PAGE 22

Enterprising ideas for the vacation industryEnterprising ideas for the vacation industry January 2009

LEADING BRITISHARCHITECTS SETTHEIR SIGHTS ON

TIMESHARE

NEW BUILD

ENGAGE MEMBERS AND WINFAVOUR THROUGH EVENTS

FEEL-GOOD FACTOR

A CLEARGROWTHFOCUSCONFIDENCE IN INDIAN ECONOMYDRIVES EXPANSION PLANS

A DEDICATION TO THE FAMILYHOLIDAY EXPERIENCE HASBROUGHT MAHINDRAHOLIDAYS AND RESORTSEXTRAORDINARY SUCCESS.THE COMPANY CONTINUES TOBROADEN ITS PRODUCT BASEAND APPEAL WITH…

WHY YOU SHOULD CAPITALISEON THE GROWING TREND INURBAN FRACTIONALDEVELOPMENTS

HOTIN THE CITY

MONEY TALKRECESSION IS NOTWITHOUT ITSOPPORTUNITIES

ALL TO PLAY FOR INHOTELINVEST SECTOR

MODEL CONDOS

THE INTRIGUING BALKANSTATE IS STARTING TO

ATTRACT RESORT DEVELOPERS

SERBIA RESURFACES

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4 MARKET OUTLOOK:A news and views round-up from Europe, India and the Middle East

10 COVER STORY – FAMILY FOCUS:Mahindra Holidays and Resorts attributes the secrets of itssuccess to a diversification of product designed to attract thefamily and younger customer

16 MARKET REPORT – SERBIA:Enjoying a rise in in-bound tourism and looking forward to EUmembership, Serbia is set to make its mark in the East Europeanleisure property market

22 IN IT FOR THE LONG TERM:Despite the global economic gloom, three major players in thehospitality industry are confident that the condo-hotel model willpay long-term dividends

26 NEW COMPANY, NEW DEAL:British architects enter the residential resort business with bigplans for a development on the island of Cyprus

30 UPSCALE DOWNTOWN:Several developers of urban fractional properties discuss thefactors they consider to be vital to success in the city

35 HOST WITH THE MOST:A look at the value of hosting member events in building loyaltyand boosting business

38 FINAL CALL – MONEY, MONEY, MONEY:Though times are tough, RON HOWELL of HMC Funding believesthere can still be winners in times of recession

RCI Ventures, January 2009 | 3

CONTENTS EDITORIAL

VENTURES is published by Group RCI, Kettering Parkway, Kettering, Northants, NN15 6EY, UnitedKingdom. Tel: +44 (0)1536 310101. Fax: +44 (0)1536 314682. Email: [email protected]: Helen Foster. DESIGN: Richard Blaney. PRODUCTION CO-ORDINATOR: Claire Williams.ADVERTISING SALES: Media Line Ltd. Tel: +44 (0)870 250 8701. Repro: JP Repro. PRINTING: CKNPrint Ltd. Image for Market report from Getty. Original articles and contributions may bereproduced or transmitted only with written permission from the publisher. No responsibility isaccepted by RCI Europe for any losses or other consequences resulting from advertisements orother material appearing in this publication. RCI Europe reserves the right to accept or refuseadvertisements at its discretion without assigning any reason for doing so. © RCI Europe 2009.

As we enter the New Year, we do so in thecertain knowledge that tough andchallenging times lie ahead for all ourbusinesses.

Many of us have already restructured ourorganisations to make them more efficient inresponse to the changing economicenvironment and markets we find ourselves

in. However, it’s during such times that we value the strength that liesin teamwork. Despite the progressively difficult market conditions oflast year, Group RCI, in collaboration with its affiliates and businessassociates, still managed to achieve great things. And we will work todo the same in 2009.

On page 9 I have highlighted some of these achievements and Iwould like to thank everyone who has worked with the Group RCI teamto make them possible.

In the pages of this issue of Ventures there is evidence of theoptimism, confidence and resilience that will serve to strengthen ourindustry.

Club Mahindra Holidays and Resorts enjoyed extraordinary successin 2008 and has its sights set on further growth throughout the comingyear. In the cover story on page 10, Club Mahindra’s executives sharetheir growth strategy, largely based on the company’s design of aholiday experience that’s attractive to families and to the youngergeneration.

Many new developers entered the market in 2008, some in newlyemerging destinations such as Serbia, featured as the market report onpage 16 and in which we also welcome two new Group RCI Serbianaffiliates – Club Satelit and Kraljevi Konaci, both located in thespectacular Zlatibor mountain region. A new British residential resortdevelopment company, Blue C Developments, features on page 26 withits new development on the island of Cyprus which is signed to GroupRCI’s Rental and Exchange programme.

Many of Group RCI’s established affiliate developers are also provingto be both innovative and resourceful in diversifying into new marketsectors, such as Pestana Hotels & Resorts, which made its Londondebut with the opening of a condo-hotel, the Pestana Chelsea BridgeHotel, highlighted on page 22. While other developers are reaping therewards of investing in engaging their owners through member events,the benefits of which are clearly illustrated in the feature on page 35.

2009 is also RCI’s 35th anniversary. I would like to take thisopportunity to once again thank all those who have worked with RCIduring that time, many of you from the early days. Though a relativenewcomer to Group RCI, I’ve been greatly impressed by the depth oftrust and loyalty at the heart of this company’s business relationships.As we go into 2009, I know our business relationships will continue toflourish and hope many more will join us so that we can all lookforward to another 35 years and more of enhancing the world of holidayexperiences for all our members.

With every good wish for the coming year.

SincerelyJonathan Back

Managing director, Group RCI EMEAI

VENTURES MAGAZINE SERVING RCI’S MARKETS IN JANUARY 2009 EUROPE, INDIA AND THE MIDDLE EAST

Cover story: Mahindraexecutives RameshRamanathan (left) and Arun K Nanda

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4 | RCI Ventures, January 2009

UPBEAT ABTA OUTLOOK

RCI has become the exclusivethird-party exchange provider for DisneyVacation Club (DVC), enrolling DVC’s more than135,000 member families into RCI’s globalexchange network.

Disney Vacation Club Members will be ableto enjoy holidays at an unrivalled choice ofresorts in RCI’s exchange portfolio whichspans six continents. They will also be able toaccess all-inclusive options, more nightlyexchanges and a selection of high-endfractional properties. Similarly, RCI members

will have the opportunity to exchange into, orrent at, the eight Disney Vacation Club resorts.

Disney Vacation Club President, JimLewis, said: “Group RCI has the managementdepth, technology resources and globalmarketing infrastructure to align with DisneyVacation Club’s strategic growth plan. Thisrelationship will provide our member familieswith the most diverse experiences possiblebeyond our signature Disney Vacation Clubresorts.”

Geoff Ballotti, president and CEO of

Group RCI, commented: “It’s an honour forall of us at Group RCI to have been selectedby one of the most internationally recognisedand revered brands on the planet.

“For more than 50 years Disney has beenoffering unique family vacation experienceswith legendary service, superbaccommodations and magical touches at everyturn. We look forward to working closely withDVC to continue to build new and innovativeprogrammes to provide even more memberbenefits and opportunities.”

DISNEY VACATION CLUB MEMBERS TO RECEIVEBENEFIT OF NEW MULTI-YEAR RELATIONSHIP WITH RCI

A R O U N D - U P O F I N D U S T R Y N E W S , V I E W S , A N D P E O P L E T O W A T C H

Marketoutlook

Despite the economicgloom pervading the media, theAssociation of British TravelAgents (ABTA) has adopted anoptimistic outlook for 2009. In its 2009 Travel Trends Reportit states that the British publicviews holidays as more of anecessity than a luxury and itbelieves their enthusiasm fortravel will not be greatlydampened by the recession.

ABTA predicts further growthin mid- and long-hauldestinations such as Turkey,Egypt and the SpanishCaribbean, which are seen asgood value. According to Ascent-MI research last year, Egypt sawan increase in British visitors of

38 per cent, with a 32 per centincrease for Turkey and 23 percent for Mexico.

The report highlights valuefor money and ‘added value’ askey themes for this year, with acommitment to quality, serviceand choice helping to sustainbusiness levels in the hospitalityand travel industries. High-endoperators are reported to havetold ABTA that their customerswant more for their money, suchas room upgrades and free childplaces, rather than to tradedown.

The Euro exchange rate is acause of some anxiety amongBritish travellers, but ABTAremains confident that Spain,

France, Italy and Greece aredestinations that will stillprovide reasons to visit.

Much more than beachdestinations, these countriesprovide a great variety ofexperience the Britishholidaymaker is looking for with

sporting facilities, cultural andhistorical attractions, museumsand spectacular countryside.Importantly according to ABTA,Britons feel at home in thesecountries, reassured by goodinfrastructure, facilities and awarm welcome.

TRENDS:

The launch of a Ventures website is planned by the end of thefirst quarter 2009. The website will supplement the printededition, providing breaking industry and Group RCI news, aswell as additional features between printed editions of themagazine. It will be available via a link from rciaffiliates.comand directly. If you want to be the first to know when it goeslive or want to contribute your news and views to Ventures,please send your email address and contact details to theeditor, Helen Foster, on [email protected]

VENTURES WEBSITE LAUNCH

INDUSTRY:

Far left: JimLewis. Left:Saratoga SpringsResort & Spa isthe seventh andlargest of thegrowing collectionof DVC properties.Located acrossthe lake fromDowntown Disney,its 924 unitsrange fromstudios andtreehouse villas to spacious three-bedroomgrand villas.

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Denis Ebrill hasbeen appointed executivevice president of Sol MeliáVacation Club (SMVC),part of Spanish-based SolMeliá Hotels & Resorts.

Ebrill joins SMVC fromStarwood VacationOwnership where he wassenior vice president ofreal estate acquisitionsand development, having served with the group in Mexico and Central America prior to that. Born inDublin, Ireland, Ebrill (pictured inset) brings 36 years’ experience of the hospitality and leisure real estateindustry to SMVC. He has held corporate and hotel general management posts with Starwood andSheraton in Alaska, Boston, Brazil, Denmark, Germany, Venezuela and Mexico.

SMVC opened a new five-star project, The Reserve at Paradisus Palma Real (pictured above) in PuntaCana, Dominican Republic, last December. It features 190 one- and two-bed lock-off units and largerPresidential Club Suites, sold as a multi-week product. Ebrill said: “I have found this is a strong andpopular destination. The varied and unique product offering in Punta Cana continues to address theincreased demand for a luxury lifestyle product in the area.”

A series ofmember events are plannedby Group RCI to improvemembers’ understanding ofthe Exchange product.

The events will be run inconjunction with resorts andbased around memberAGMs. Group RCI staff willtake members online toshow them how to checkdeposits and exchanges,and answer any questionsthey may have.

About 20 events will beheld from July onwards,after which Group RCI plansto hold a larger exhibition-style event for membersand non-members in 2010.This event will includecooking demonstrations andfun activities from differentcountries and it is hopedthat resorts and touristboards will take stands tooffer destination advice andaccommodation.

Group RCI director ofWeeks and Points GerrySkipper-Byer said: “Wewant to use these events tolisten to our members andimprove the service weoffer, as well as showingthem how best to use RCIWeeks and Points. We alsowant to illustratemembership value byinforming them about thework we do in the Europeancourts to help counterscams, by offeringcompensation to memberswho complain about aholiday when they return,and in educating membersabout how we monitorresort quality.”


INDUSTRY:

GROUP RCIMEETINGMEMBERS

THE REGISTRY COLLECTION GROWS IN SOUTH AFRICASouth Africa’s Zorgvliet Private

Residence Club has affiliated four of itsexclusive properties to The RegistryCollection portfolio of more than 100 luxuryaccommodations.

Each property offers a different lifestyleexperience. Zorgvliet Vineyard Lodge & Spais an historic farm dating back to 1692 inthe Banhoek Valley. The Ka’Ingo PrivateReserve & Spa in the Waterberg region,and the Dinkweng Safari Camp in Limpopo,are both game reserves, while a relaxing river experience is offered by the Riviera on Vaal Hotel &Country Club, (pictured right) which enjoys a riverside location near Vereeniging.

Mac van der Merwe, CEO of the Zorgvliet Group, said: “More than a destination, we have created atrue multi-faceted experience. We chose to affiliate with The Registry Collection because we share apassion for offering exceptional five-star products and cast-iron standards.”

DIARY DATE FOR FRACTIONAL SUMMITFractional Summit 2009 is back with an

extended two-day agenda.This year the date is set for 23-24 April and

the venue is the Hilton Metropole in London.More than 250 fractional property professionalsare expected to attend from around the world forthe conference which will be titled ‘Fractional

ownership – the rewards, the opportunities’. On the agenda for discussion is why this

sector continues to gain market share, illustrated with case studies and expert opinionon the many facets of one of the world’s fastest-growing leisure real estate businessmodels. Visit www.fractionallife.com

PEOPLE:

PRODUCT:

EVENT:

NEW VP AND RESORTFOR SMVC



A R O U N D - U P O F I N D U S T R Y N E W S F R O M T H E M I D D L E E A S T

Marketoutlook

The UK venue for the 2009 Group RCI Christel House OpenCharity Golf Day has been confirmed as Ealing Golf Club, Perivale, inMiddlesex. It will be held on Monday, 15 June 2009.

Christel House is an international charity dedicated to helpingimpoverished and orphaned children to break the cycle of poverty andbecome self-sufficient, contributing members of society. The charity’slearning centres provide education, nutrition, health care and vocationaltraining for children all over the world.

The UK event is part of a truly international golf experience, with over26 Christel House Charity Golf tournaments taking place on the sameday across five continents and 20 time zones. The event opens with thefirst tee-off in Delhi, India, and will close as the last ball is holed in Oahu,Hawaii.

Participants will enjoy a great day’s golf, with a presentation dinnerand prize ceremony, while simultaneously raising funds for thetimeshare industry’s leading charity. All monies raised on the day will begiven directly to the Christel House charity for the benefit of the childrenin its care.

If you are interested in taking part in this unique event, please contactAmanda White on [email protected] for more information.

EVENT:

AN UNMISSABLEDATE FOR GOLFERS

With approximately 30,000consumers searching fortimeshares online in the UK aloneevery month, it’s worth making themost of your online space.

In the first of a regular toptips column, Shane Quigley,pictured, managing director of

Epiphany Solutions, an internet consultancy company,shares expert knowledge of how to ensure your onlinestrategy catches as much as traffic as possible – andengages them to interact.

■ An active strategy of attraction, engagement, datacapture and segmented targeting is the best way tosecure results.

■ Site usability and sales process are paramount. Toattract visitors to your website, think like that oftenfickle, irrational and elusive person – your customer.Think about where they are, what they think, whatthey’re doing and who they’re doing it with. Then thinkhow and where you can target, surprise, motivate andinspire them.

■ Strategic use of pay per click advertising and searchengine optimisation can capture serious investor interest.

■ Engage visitors with relevant content by ensuring it isconnected to the reason that they are visiting your webpage.

■ Carefully designed customer journeys through yourwebsite should lead visitors to strong calls to action.Track the metrics to ensure that visits and siteperformance are being optimised.

■ Build a relationship with visitors by capturingpreference data, and finding out how and when yourvisitors want to be contacted. Using visitor data, sendemails to database segments and track and comparethe return on investment of each segment to identifywhere to reinvest.

Epiphany Solutions and Ripe Design work as strategicpartners with more than 10 years’ experience ingenerating international property interest via the webfor market leaders such as Savills and Knight Frank.For more information visit www.epiphanysolutions.co.uk

The first tee at the Ealing Golf Club, the UK venue for the 2009Group RCI Christel House Open charity golf tournament.

Christel DeHaan, founder of the Christel House Charity Foundation,spends time with children at a charity school in India.

TOP TIPS – ONLINE



OTEnews

I RATHER suspect thatlike me, you’re all

hoping the year of the creditcrunch, the banking crisis, theexchange rates volatility, andthe drop in consumerconfidence, which is so muchinfluenced by the propertyprices and investmentperformance of our consumers,will soon be behind us.

We’ve all been impacted bythe economic shock to tradingconditions, but we must focuson demonstrating the strengthof our overall business sector,as we have done before indifficult economic times. Be

positive and don’t dwell on theoverused term ‘recession’.

I regard myself as anoptimistic realist and therefore,while accepting that 2009 isgoing to be a challenging year,I can see many opportunities toposition our business for bettertimes ahead.

I was honoured at ourMadrid forum last year toaccept the chairmanship of OTEfor the next two years and lookforward to working with allindustry associates towardsthose better times.

To meet changing industryneeds, OTE will change itsname this year to the ResortDevelopment Organisation(RDO) – a change led by itsmembership to allow theorganisation to represent thegrowth in other shared-ownership products, whetherfractional, PRC’s, destinationclubs or others. Theorganisation will also beextending its remit andresponsibilities beyond Europeto serve the industry in theMiddle East and North Africa.

We enter 2009 with a newTimeshare Directive which,having been passed by theEuropean Parliament, mustnow be implemented as law bythe member states within 24months. The OTE executive willbe watching its progress andlobbying where necessary toencourage individual states toadopt the directive to avoid the

introduction of unnecessaryfurther restrictive measures onour business. It remains apriority for OTE to workalongside law enforcementbodies, such as the Office ofFair Trading in the UK andEuropean consumer centres,as it continues to present allthat is good about our businessand to defeat those companiesthat continue to tarnish ourimage.

A new OTE website,www.gotimeshare.org, hasbeen designed to top thesearch engine pages. This is afurther opportunity for all of usto put our best practice in frontof the consumer, allowing usto strengthen the reputation ofour individual businesses andthat of the industry overall.

The European timesharestudy is set to be published inQ1 of 2009. OTE received morethan 30,000 responses fromtimeshare owners which willbe a useful source of data forus all.

While I’m sure we will allneed to dig deep into ourresolve in 2009, I wouldencourage you to be robust inyour support of OTE and ourindustry, as I do believe thatworking together we arestronger and a united industrywill result in benefits for ourindividual businesses.

Meanwhile, on behalf of OTE,I’d like to wish you all asuccessful New Year.

POSITIVELY EMPOWEREDNewly appointed OTE chairman RICHARD MCINTOSHcalls for a positive approach to business in 2009 andpresents several OTE initiatives to start the year off.

’’

‘‘

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“WE’VE been delighted withthe response from timeshareowners,” said Sue McNicol,head of operations, OTE UK.

“All three prize-winningarticles, along with a numberof extracts taken from othersubmissions, have beenadded to OTE’s new websitewww.gotimeshare.org, aninformative, up-beat andhighly positive site abouttimeshare. Positiveendorsements fromtimeshare owners themselvesare a great form of PR for ourindustry and we intend tomaximise their use.”

THE WINNERMy timeshare at ClubOlympus – Garden CityTenerifeWritten by Cathy Anthony ofSwansea who owns at ClubOlympus, Tenerife.“Our timeshare will alwayshold a special place in myheart. It is the place where Ispent my first ever holidaywith my husband. It is theplace where he asked me tomarry him just two weeksafter our meeting – I blamedthe Sangria in the pool bar…Or was it too much sun! It isthe place where we gotengaged three months later

and where we returned forour honeymoon, taking all thefamily with us.

“It is the place where Ilearnt that I was going to be a grandmother.

“It is the place our childrenand grandchildren visit everyyear. And I know it will be theplace all future generations ofour large family will grow tolove as well.

“Club Olympus may not befive-star but for the warmwelcome we receive everytime we stay, I consider it the best resort in the RCIDirectory.

“It is the place wherevisitors are always known bytheir first names, where theteam never seem to forget aface – how they manage this Iwill never know! You alwaysfeel you are back among oldfriends.”

A PRIZE WINNERClub La Costa deliversagain!Written by Diane Larner ofHaywards Heath a Club LaCosta points owner.“Arriving with our bumperfamily of three children and ababy we couldn’t fail to beimpressed by one of Club LaCosta’s latest and most elite

acquisitions. As the childrentumbled out of the car toexplore the woods we foundour lodge, contemporary,clean, spacious and welldesigned it embodied allthose outstandingcharacteristics we have cometo expect from a Club la Costaresort.

“This year we had chosenLes Cottages Du Lac, tranquillakeside lodges situated inBordeaux, just 15 km awayfrom the fine sandy beachesof the Atlantic. For those whoenjoy peace and privacy thelodges are cleverly designedwith a sheltered deckingarea, which is not overlooked.

“If you enjoy a more socialholiday the lodges are wellpositioned to allow for thistoo. Whilst we settled in, thechildren quickly made friendswith some French children

staying nearby, the separatecar parking areas meant littleones could cycle and playsafely.

“Days were spent baskingin the French sunshine andwatching the children diggingsand channels to the ocean.Evenings were spent enjoyingdinner with our new foundFrench friends. In theafternoons we swapped rolesand my husband got to blastaround the lake with equallyincautious sailing buddies. Itook the children off to thepool where I could read whilstthey splashed around. Atoddler’s area for non-swimmers was perfect forour four year old. Next to thepool was the kid’s club,restaurant and reception areawhere the odd bottle of wineand complimentary canapéshad to be sampled.”


OTEnews

EVERY TIMESHARE TELLS A STORY

To get to the heart of what is mostvalued by owners about theirtimeshares, OTE invited Europeanowners to enter a story writingcompetition to say what their timesharemeans to them. Here are excerpts froma couple of the best submissions.

Happy owner, Cathy Anthony, left, with her family on holiday at ClubOlympus – Garden City resort in Tenerife.

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MUCH TO CELEBRATE RCI is 35 years old this year andJONATHAN BACK, managing director, Group RCI EMEAI, looks forwardto continuing to help shape an exciting and vibrant industry.

I N F O R M A T I O N E X C L U S I V E L Y F O R G R O U P R C I A F F I L I A T E S

GroupRCInside

We at RCI are celebratingthe company’s 35th

anniversary this year and believewe have a lot to be proud of.

In just over three decades,RCI has been taken from itsfamed start-up as files in a shoebox, driven in its early years inthe US by its founders, Jon andChristel DeHaan, to become atruly global organisation helpingto bring high-quality, great-valueholidays to more than 3.7 millionmember families in the last yearalone.

That spirit of innovation andvery real passion for our productis as strong throughout RCI todayas it was 35 years ago – and nowwe share it with some of themost exciting and committedresort developers in the world.

From the largest-scaleoperation to the most intimate,we know our affiliates care abouttheir product and share our pridein delivering the best possibleholiday experience to our mutualmembers to enhance not justtheir own businesses, but thestanding of the shared-vacationownership industry as a whole.

Today we have 3,000experienced RCI Guides servingcustomers in more than 30languages who work to ensurethat owner members – our bestambassadors – are sure to getthe most out of their ownershipand membership.

The excitement of continuallyimproving the member experienceand, in achieving that goal, helpingto boost the revenues of ouraffiliates just as much as our own,

has not left us. From leading theway with RCI Points, a flexible newway to holiday that has becomethe fastest-growing holiday pointsclub in the world since its launcheight years ago, to creating TheRegistry Collection luxuryexchange brand which hasattracted 34,500 members in thefive years since its launch, RCI isalways looking for new ways towork with its affiliates to grow ourmutual businesses and the widerindustry.

Last year we launched theRCI Rental & Exchangeprogramme and the OwnerExchange Club – both hybridtimeshare/rental productsdesigned to bring greater varietyof destination and properties toour members while introducingpotential new purchasers to thetimeshare industry.

We have committed significantresources and funding to not onlymaintaining the world’s mostexpansive holiday exchangenetwork, but to further improving

it. Based on ourprojections, we will

invest $7.6m in2008 in product/user

experience improvementsand $20.3m in 2009. The launchof Enhanced Search will providean online facility to makesearching and confirmingexchanges more fun formembers, as well as moretransparent and user-friendly. Itwill soon be rolled out acrossEurope in multiple languages.

I’m happy to say that weclosed 2008 by welcoming nearly20 new resorts throughout theEME region to our network,opening up some exciting newdestinations such as Serbia withtwo new affiliate properties and ayacht club in Turkey. We closedthe year on a high by announcingDisney Vacation Club (DVC)signing a multi-year agreementwith RCI, bringing more than135,000 member families andeight magical DVC resorts intoour global exchange network.

As we embark on a new year, Iwant to say a big thank you to allour associates for your support.We all know the year ahead will bea difficult one but we share a beliefin our product, a passion for thisbusiness and a commitment toone another which will, I am sure,win the day for us.

I would like to wish you allevery success in 2009 and to saythat I, like everyone here at RCI,look forward to working with youto create greater opportunities foryour business by boostingbenefits for our members. ’’

‘‘2009 – RCI has more than4,000 affiliated resorts inmore than 100 countries andmore than 3 million memberfamilies living in 200countries, making it theworld’s largest holidayexchange network2008 – RCI Points reaches 1 million members2000 – RCI Points, theworld’s first global points-based holiday exchangesystem, is launched1995 – RCI membershipreaches 2 million1991 – Resort RecognitionProgramme introduces theRCI Gold Crown Resort andthe RCI Silver Crown Resortaward categories creatingstandards of resortexcellence1989 – 1 million familiesbelong to RCI1985 – 1,000th resortaffiliates with RCI1974 – Jon and ChristelDeHaan establish the holidayexchange industry – and RCI– with an initial member baseof 453 member families andpay neighbourhood children$1 an hour to assembledirectories and membershipkits on the dining room tableof their Indianapolis home.

35 YEARSOF GREATVACATIONS

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Mahindra Holidaysand Resorts is

enjoying phenomenalsuccess in India.

STEVE ADAMS looksat the customer-focus

and philosophieswhich form the

backbone of thecompany.


QUOTE: EVEN THOUGH OUR SALES CONVERSIONS ARE TAKING LONGER, WE AREMAINTAINING 30 PER CENT GROWTH OVER LAST YEAR, WHICH IS A MEASURE OF OURBRAND STRENGTH AND THE RESILIENCE OF OUR TEAM. RAMESH RAMANATHAN

COVER STORY

AS BUSINESSES throughout the worldlook to cut costs and shed workers in lightof the global economic downturn, onecompany is doing the exact opposite.Mahindra Holidays & Resorts India Limited(MHRIL) recently unveiled ambitiousplans to invest Rs 400 crore (US $100million) to double its inventory from 800to 1,500 apartments, adding six newresorts in the process.

A risky move given the currenteconomic climate? Not according tomanaging director Ramesh Ramanathan,who believes the Indian economy is inbetter shape than most.

He said: “We’re still planning for thefuture because we think the underlyingeconomic situation is still good. In Indiawe expect economic growth of aroundeight per cent – which is much better thanmost countries.”

Arun K Nanda, chairman of MHRIL,said timeshare was well positioned tosucceed, despite the economic downturn,especially as the company offered in-housefinancing options – usually involving a 60-month instalment plan – to its customers.

He explained: “Two of the benefits ofthis product are that it is perceived asinflation-proof and value for money. Butjust as importantly we run our ownfinancing, so customers don’t have to golooking for a loan from the banks.”

Ramanathan added: “Even though oursales conversions are taking longer, we aremaintaining 30 per cent growth over lastyear, which is a measure of our brandstrength and the resilience of our team.”

FAMILYFOCUS

OPTIMISTIC OUTLOOKThat degree of optimism is part of thephilosophy at MHRIL, where the feel-good factor of a company on the upis palpable. A growing subsidiary of theMahindra Group – one of India’s largestand best-known corporations with agross turnover of US $6.7 billion (seepanel, opposite) – the forward-thinkingcompany has developed an enviablereputation with consumers as well asoverwhelming brand recognition andloyalty. It was named BusinessSuperbrand of the Year 2008 by theSuperbrands Council, an accolade thatRamanathan believes reinforces thecompany’s confidence for futureexpansion.

He said: “This achievementempowers us to focus on our growthstrategies, backed by lots of confidence,to create new brands whilestrengthening our flagship brand.”

MHRIL’s flagship brand is ClubMahindra, India’s leading vacationownership business, with some 85,000members, 30 resorts – once the latest sixare fully operational – and a domesticmarket share in excess of 60 per cent.According to research conducted by ACNielsen, not only is Club Mahindra thenumber one holiday brand in India, butIndian nationals are more familiar with –and understand – the brand better thanthey do the concept of timeshare itself.

It’s an enviable position to be in, but

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ARUN NANDAMHRIL chairman Arun KNanda is also the MahindraGroup’s executive director andpresident, infrastructuredevelopment sector.

He has been with theMahindra Group for 35 years,having joined as amanagement accountant atMachinery ManufacturersCorporation Limited in 1973.

He was appointed to theMahindra Group’s board ofdirectors in 1992, and madepresident of the infrastructuredevelopment sector in 1994,covering areas includingproperty development,construction, leisure andlifetime holidays andengineering consultancy.

A graduate in commerce,Nanda is a fellow member ofthe Institute of CharteredAccountants of India as well asthe Institute of CompanySecretaries of India, and has adegree in Law from theUniversity of Calcutta.

RAMESH RAMANATHANRamesh Ramanathan ismanaging director of MHRILand a founder of Club MahindraHolidays, for which he is alsochief executive officer.

A pioneer in the Indianholiday industry, he joinedMHRIL from Sterling Resortsand has since gone on toestablish Club Mahindra asthe country’s leading holidaybrand and operator in thevacation-ownership market.

An economics graduatewith a management degreefrom the Indian Institute ofManagement, Ramanathanhas over 30 years’ workexperience in a range ofindustries from consumerdurables and tyres to theinternet, retail and hospitality.

A FOCUS ON… THE MAHINDRA GROUPThe Mahindra Group – alsoknown as Mahindra & Mahindra– is one of the top 10 industrialhouses in India, with a globalturnover of $6.7 billion.

A multinational businessconglomerate with interests inindustry sectors ranging fromautomotive and farm equipmentto trade and financial services,infrastructure and informationtechnology, it is one of the topthree tractor manufacturers inthe world, and India’s marketleader for multi-utility vehicles.

The company was founded in1945 when entrepreneurialbrothers JC and KC Mahindraopened a franchise forassembling jeeps from the US,after deciding the vehicle wouldbe ideal for India’s ruggedterrain and rural roads.

The company has neverlooked back, with expansioninto a wide variety of industrysectors – at one time it wasIndia’s leading importer of steel– it now plays a prominent rolein almost all sectors of theIndian economy.

The Group employs morethan 50,000 people worldwideand has several state-of-the-artfacilities in India and around theglobe. It is ranked in Forbes’ listof the world’s top 200 mostreputable companies, and thetop 10 in India.

workV-Mahindra2-rb:Layout 1 29/12/08 08:46 Page 3

GOING FOR GROWTHThe $100 million expansion plans at MHRIL –which will see its inventory double to morethan 1,500 apartments through acombination of acquisitions, construction ofnew properties and development of existingsites – are designed to keep pace with itsrapid growth in membership, according tochairman Arun Nanda.

Mahindra Holidays has more than 85,000member families, a figure it expects to rise to100,000 by March 2009.

Nanda said: “Growth at MahindraHolidays has been a direct corollary of our

pioneering efforts in the leisure hospitality industry. We are committed to providingour members with truly invigorating family holiday experiences through uniqueresort destinations in new locations. This capacity expansion is to accommodate thefuture growth of our member base.”

The move will see a number of resorts expanded and the addition of six newproperties – one at Corbett in Uttarakhand due to open in February 2009, a secondat Tungi in Maharashtra and a third at Theog in Himachal Pradesh, supplementedby three leased locations at Yercaud and Masinagudi in Tamil Nadu, andNaukuchiatal in Uttarakhand.

Ramesh Ramanathan, MHRIL managing director, said: “Our pan-Indian networkof 30 resorts offers a diverse range of holiday experiences varying from beachholidays to hill stations and jungle resorts.

“We took the decision to double our capacity base to 1,500 apartments to cater forour rapidly increasing member base and the addition of six new resort locations willsignificantly enhance the holiday options for our members.”

one that was only arrived at throughhard work according to Ramanathan,who is so committed to his role thathe regularly takes more pictures ofhotel rooms and facilities thanbeaches or sunsets when he goes onholiday.

“My wife gets quite mad about it,”he laughs. “But I think all hoteliersand hospitality people do it – whenyou go somewhere and see somethinggood you have to click it!”

The experience and track record of other timeshare operators was onething that definitely clicked withRamanathan when he first helpedestablish Club Mahindra in 1996. At that time the industry wasfloundering in India – largely due tothe negative publicity generated bydevelopers and marketers who failedto deliver on their promises – and theventure was as much a risk as it wasan opportunity for the MahindraGroup.

Ramanathan said: “When I helpedto set up Mahindra Holidays, Iinitiated research on the Mahindrabrand and the results clearly indicatedthat consumers saw the brand asrugged, yet reliable and trustworthy.

“We saw a huge opportunity inleveraging this brand equity in thevacation-ownership business, whichhad suffered negative publicity inIndia, the same as in several othercountries. The only caveat from theMahindra Group was that we shouldrun a business which would enhancethe Mahindra brand name.”

That requirement meant thecompany needed to offer a productwith a real and lasting value, excellentcustomer service and transparency interms of sales – it was the first to offera voluntary cooling-off period – butRamanthan realised it would need tobe different to established timeshareproducts in other ways too.

“I think the one thing we did was


COVER STORYQUOTE: USUALLY AN OWNER OR DEVELOPER GETS ATTACHED TO AN IDEA AND WANTS TOSELL HIS IDEA TO THE CUSTOMER, BUT WE TRIED TO UNDERSTAND WHAT THE CUSTOMERWANTED ON A HOLIDAY AND CREATED A PRODUCT SUITED TO THOSE NEEDS. ARUN NANDA

to change the logic of the business,”he said. “Rather than look at thefinancial aspect – which is how wethought most people viewed it, sellingtime intervals rather than fullownership – we approached it fromthe point of view of the customerexperience.”

Nanda explained: “Usually anowner or developer gets attached toan idea and wants to sell his idea tothe customer, but we tried tounderstand what the customer wantedon a holiday and created a productsuited to those needs.”

Rather than following a fixed-weekmodel, the company opted for aflexible 25-year package at a fixedprice, with a variety of options basedon season and size of apartment,typically ranging from studios to two-bedroom units. The average costis Rs 250,000 (US $5,000).

Providing value for money and adeal that makes financial sense is key,according to Ramanathan. He said:“Prosperity has only really come toIndia in the last seven or eight years,so a lot of Indian nationals are value-conscious.”

Club Mahindra resorts offer foodand beverage deals to owners – suchas the ‘Fun Dining’ concept which

DDiners in the restaurant atMahindra’s Hideaway Resort inCorbett can enjoy views of theunspoilt lower Himalayanhinterland of this holiday spot.



provides three buffet meals a day foraround Rs 600 (US $12) – as well ascash-back rewards for owner referrals.The latter is working well, attracting37 per cent of new customersaccording to Ramanathan.

MULTI-SALES CHANNELSThe company initially sold throughpermission marketing and homevisits, but now uses a variety of saleschannels, with some 200 in-housesalespeople, 80 direct sales agents and40 ‘Holidayworld’ branded off-sitesales centres, typically located inshopping malls.

A key part of the sales pitch is aninteractive presentation that givespotential customers a clear idea of theresort experience and the extent ofthe facilities on offer, which thecompany constantly updates andimproves according to Nanda.

He said: “Most of our resorts lookbetter now than they did when theyopened because we are constantlyimproving our product and service.

“We are in the industry for thelong haul and want to build a globalcompany so must constantly reinvestin it. Most people think that once youhave sold a property you don’t need tospend money on it, but we continue tospend on our properties because theyare our showcases which will bringcustomers to us in the future.”

WIDENING THE APPEALMeeting the varied vacation needs ofthose customers is another key factoraccording to Ramanathan.

He explained: “We recognisedearly on that while we have 80,000members, we have 320,000customers. In other words, werecognise that each member is afamily of four, and we need to meetthe requirements of the entire family.The husband, wife and children allhave their own requirements on a

A Snowcapped peaks,wooded slopes and grassymeadows make ClubMahindra Snowpeaks inManali a perfect familyretreat.

D Sea, sand and swayingpalms provide a favouriteholiday experience atClub Mahindra VarcaBeach in Goa.



holiday and we need to be able tomeet them.”

Those requirements are evenmore varied in India, given thatchildren tend to leave home at amuch older age – usually whenthey get married, and even thensometimes live as an extendedfamily – so the Indian familyholiday often involves a wide rangeof ages.

In addition to the age mix ofmembers and their families, MHRILalso recognised that India’s growingpopulation and economicprosperity were creating potentialnew market segments and quicklycame up with products to match.

In 2006 it launched Zest, a 10-year timeshare product for short-breaks aimed at young professionalsaged 25-40. It currently has morethan 2,000 members, and fiveresorts, with more to follow.

To meet the needs of evenyounger family members, it is dueto launch camps for children inMarch this year, which will operateat locations where it already hasresorts, though not on the actualresorts themselves.

Ramanathan explained: “Theidea is that we want to cover theage segments, right up from thefairly young. When we started outwe saw that timeshare in Europeand the US was mostly bought bypeople who were aged 50-55 andabove. We managed to bring the agedown – our product is mostly soldto people aged 35-50, and 80 percent of our members are agedbetween 35-55. Now we want totake the average age down evenfurther.”

As well as covering age ranges,MHRIL also intends to operateacross income segments, with plans

“on the drawing board” to offer aproduct for the budget traveller –likely to focus on popular touristspots – at one end of the financialspectrum, and a luxury fractionalproduct – expected to launch inMay 2009 – at the other.

As if that wasn’t forwardthinking enough, the company hascontracted with Group RCI to offera one-stop shop for travel services,launched health, environment andeducational social projects near itsresorts through its ‘Cheers’programme, and is exploringoptions for international expansion.

Ramanathan said the company’sglobal expansion would be basedon two key factors. First,

FIT FOR A KINGMHRIL’s newest holiday productenables guests to stay in exclusiveproperties where they could beforgiven for expecting to be treatedlike royalty.

Heritage Palace Breaks, part ofthe Mahindra Homestays brand,was launched at World TravelMarket 2008 in London inNovember, and gives holidaymakers the opportunity to stay at two magnificentproperties. Chittoor Palace on Cheranelloor Island in Kerala is the former summerresidence of the Maharaja of Cochin, built in the 16th century and maintained toreflect the history of the era.

Bhainsrorgarh Fort in Rajasthan is a fortified outpost of the kingdom of Mewar,built in the 18th century on a 200 foot rocky ridge overlooking the Chambal River.This resort was ranked among the best ‘in the know’ hotels in the Tatler TravelGuide 2008.

The palaces join more than 100 other properties across India in the MahindraHomestays portfolio, which is designed to enable guests to “experience the realIndia” according to Ramanathan. Mahindra Homestays properties combine thecomfort of a boutique hotel with the hospitality of staying with friends, offering thechance to gain an insight into the cultural traditions, history and everyday life of anIndian family. The product was launched in the UK in July 2008 and is initially targetedat the British market, but is soon to be sold into French, German, and Italian markets,as well as further afield.

Ramanathan said: “We identified this as an emerging segment of the holidaymarket, and since it’s our stated objective to be a dominant player in the holidaymarket, that means being dominant across a variety of markets.

“It makes tremendous business sense because it is a low investment model,getting us into a new holiday segment and giving us access to new people. We justneeded to set up a website, do the marketing and inspect the homes, all of which wewere confident about.”

For more information visit www.mahindrahomestays.com

COVER STORYQUOTE: WE RECOGNISED EARLY ON THAT WHILEWE HAVE 80,000 MEMBERS, WE HAVE 320,000CUSTOMERS. RAMESH RAMANATHAN

D Pictured top: BhainsrorgarhFort is marketed under Mahindra’sHeritage Palace Breaks brand andwas ranked among the best ‘in theknow’ hotels in the Tatler TravelGuide 2008.

D Pictured below: BhainsrorgarhFort in Rajasthan is a fortified 18thcentury outpost of the MewarKingdom.



identifying resort locations whereits national owners would be likelyto visit (the company currently hasresorts in Bangkok, Pattaya andKuala Lumpur), and secondly, tofind destinations suited toreplication of the Club Mahindramodel – markets identified includeSouth Africa, the Middle East andChina.

Nanda said the company wouldtailor its products to the marketrather than simply offering itsexisting model. He added: “Wewon’t be simply transplanting theClub Mahindra model into acountry. We’ll look at the needs ofour customers in that market andwork to develop resorts and servicespackages to meet them.”

Ramanathan said: “We mustexploit any opportunities that comeour way – Club Mahindra as abrand would be less relevant thanthe concept and product itselfoutside India.

“However, we pride ourselves onthe fact that we are innovative andbold in our thinking and we’re notafraid to think big, and to thinkdifferently.”

THE RELATIONSHIP –MAHINDRA HOLIDAYSAND GROUP RCI

Mahindra Holidays choseGroup RCI as its exchangepartner from the day it enteredthe timeshare market.Ramesh Ramanathan, MHRILmanaging director, said:“During our growth journey,Group RCI has been consistentin its support and has, indeed,proved to be our partner inprogress. As we expand andgrow, we are confident thatGroup RCI will continue to addvalue to our business ventures.”

Jonathan Back, below,managing director, Group RCIEMEAI, recently visited India tomeet with Mahindra Holidaysand he said: “We at Group RCIare proud to have been chosenby the Mahindra Group andMahindraHolidays astheir exchangeprovider.Mahindra’sholiday productis a shininglight in India, where itsrespected brand name andthe consistent high quality ofits product, operation andservice have done so much tobuild nationwide acceptanceand trust of timeshare.

Mahindra is nowexpanding overseas and Iknow it will enjoy greatsuccess in all its ventures,and bring credibility to ourindustry in any new market.Mahindra is undeniably one ofthe finest ambassadors wehave.

“I’m pleased to be able tosay that a great mutual trustand respect exists betweenour two organisations and thisis at the very foundation of ourworking relationship.

“Mahindra Holidays is ourfastest-growing affiliate in theregion and we service morethan 66,000 of its members,making it a most valuedassociate.”

C Pictured top: Tusker Trails resort in Thekkady, asthe name suggests, is a place where guests will beable to commune with wildlife among chains ofhills and spice-scented plantations, in the crisp,cool air of the Western Ghats.

C Pictured below: The family focus of Mahindraholidays does not stop it from spoiling guests withtouches of Eastern luxury and sumptuoussurrounds, as seen here in the bedroom of the ClubMahindra Kangra Valley resort in Dharamshala.

V


In recent months, Serbia’s status as a trade andinvestment market has started to resurface.KATHERINE STEINER-DICKS takes a look at one ofSouth East Europe’s most intriguing and speculativeproperty markets to find out if it has the potential tobe a key player in the shared-vacation ownershipmarket sector.


MARKET REPORT

LONG before the religious and politicalunrest in the Balkans during the 1990s,Serbia was envied within EasternEurope as a powerful business andpolitical player.

It is centrally located in the Balkansand has transport links, including road,rail and waterways, to Hungary, Austria,Montenegro, Macedonia, Bosnia andHerzegovina, Croatia, Romania,Bulgaria and Asia Minor. But what ismost telling about this country is thefact that the European Union is puttingSerbia on the fast track to EUmembership, following favourableelections earlier this year, withinclusion likely to occur in 2010. OnceEU membership is a reality, Serbia’sproperty investment market willbecome even more favourable toforeign direct investment.

Other factors are also helping Serbiaregain its trade status, including TheWorld Economic Forum, whichrecently brought Serbia into the GlobalCompetitiveness Report for the firsttime ever, ranking it 77th out of 102countries surveyed. Another positiveeconomic breakthrough in recentweeks is the news of US Secretary ofState Colin Powell signing a decreerestoring the normal trade relations(NTR) status to Serbia-Montenegro as asign of support of the state union’sreforms.

SERBIA:THE ONE TO WATCH IN EUROPE

ECONOMIC DRIVERSAnd for hotel and resort developmentinvestors, such positive developmentmeans Serbia is the next market inEastern Europe to watch since, at thismoment in time, Serbia is aninstitutional and commercial investormarket first and an individualinvestment market second.

Wealthy investors at present are theonly true active property investors inSerbia, where cash is king and anyonehoping to afford a mortgage will haveto put up a 20 per cent deposit and betied to an interest rate of eight per centover a 25-year term. According to areport by property investment analysts,Property Secrets, mortgage lendingaccounts for 2.9 per cent of the nation’sgross domestic product (GDP).

Much of the land is underdevelopedand there is a serious shortage ofresidential housing in Serbia, despite asevere drop in population growth sincethe 1990s. But the ascent of morecommercial property being built –office complexes, shopping centres, etc– is always a sign of what’s to come in aburgeoning long-term residential andbuy-to-let property market.

Property prices doubled between2001 and 2006, which is a sign thatSerbian property developers, investorsand estate agents are keeping a close eyeon how they can capitalise on a slowly

growing middle class eager to ownproperty, to shop for the latestconsumer goods and to live in modern accommodation.

The same trends occurred in otherCentral and Eastern European (CEE)markets. Not unlike Warsaw’s propertymarket in its first growth stages, Serbia’sgrowth has curtailed to some degree,but if major Serbian cities are to mirrorWarsaw we will soon see a rise ingrowth in the region of two to threeper cent during the course of the nextthree years. The hottest cities in termsof potential for hotel and resortdevelopers are Belgrade, Novi Sad andNis. Notably, Belgrade and Nis bothhave international airports.

As in other markets within EasternEurope, such as Poland and Romania,

workV-Serbia2-rb-JP:Layout 1 29/12/08 12:08 Page 2


once Serbia joins the EU, the mortgagemarket will become more competitivefor the domestic homebuyer. This is notto say that there are not currentlyhomebuyers in Serbia, but the road tohome ownership for the Serbs is aconservative one using savings andfinancial help from family members. It’s not uncommon in markets such asSerbia for mortgages to be boughtthrough the family’s combined earningsand assets and not just those of theindividual buyer.

SERBIA AS A TOURIST MARKETOn the Property Secrets website, thenumber of tourists to Serbia is reportedto have risen by a massive 90 per centsince 2000. The tourism marketgenerated $300 million in revenues in

Club Satelit’s well-appointed interiors and the quality of the furnishingsand fittings reflects the high expectations of consumers in this market.

Places such as Novi Sad, pictured, while having all the appeal ofa tourist destination are relatively underdeveloped in terms ofholiday accommodation.


2005 – a number likely to have beenexceeded in recent years.

The country offers not only asophisticated café culture in its bustlingcities, such as Belgrade and Novi Sad,but also a variety of attractions for spaand nature lovers.

For developers and investors keen toget in early, it’s worth knowing thatSerbian hospitality properties are inneed of upgrading to internationallyrecognised standards which, potentially,make this market a most profitableinvestment opportunity. Withbreathtaking scenery found in itsmountain regions of Zlatibor, Tara andKopaonik, all reminiscent of a 1960’sJames Bond film location, developerscan’t be blamed for their enthusiasm inwanting to create hotels and resortsnever before seen in the region.

Besides the underlying spa culture,there is a growing popularity foragritourism providing opportunities forthe hotel developers, as well for thesmaller rental property investor. UK-based property rental site,www.holidaylettings.co.uk, has justthree Serbian properties on its onlinebooks so far. However, the high qualityof the properties illustrates theexpectations of the customers and thestandards of the owners.

This website indicates the averagerental rate a Belgrade property ownercould expect to charge ranges from€321 per week in winter months to€413 per week in peak season. Ruralproperties can potentially generate€556 per week year-round.

TWO NEW AFFILIATES IN SERBIA FOR GROUP RCIGroup RCI has recently welcomed twonew affiliates with high-quality resortsin the picturesque Zlatibor mountainregion. They are Club Satelit andKraljevi Konaci.

Commenting on the new Serbianaffiliations, Jonathan Back, managingdirector, Group RCI EMEAI, said: “Wewant to invest in Serbia and are pleasedto have two first-class resorts as our firstaffiliates in this fabulous newdestination.

“The country is accessed by three


international airports and the variety oftourism products it offers have alreadyhad exposure to the internationaltourism market. This, together with itsclose proximity to many highly-promoted European holidaydestinations, makes us confident Serbiais set to see a rapid growth in itsinbound and outbound visitor levelswhich makes it a good place to be fortimeshare.”

Zlatibor has long been renowned forits clear mountain air, spas, excellentskiing, and a myriad of outdoorpursuits including trekking, cycling and

MARKET REPORT

fishing among lakes, rivers, lushpastures and pine forests. Add to this adestination that offers resortsembodying high standards and youhave a winning combination fortimeshare.

CLUB SATELITRCI-affiliated resort, Club Satelit, offersthe intimacy of a smaller developmentcomprising 12 one-bedroom units andeight studio apartments, together with arestaurant, indoor pool and fitnesscentre. The apartments are light, airy andfitted with every home comfort which

Pictured top: Club Satelit, one of two new Group RCI affiliate resorts in Serbia, isan intimate property set to attract an upscale buyer. Centre: The spacious villasand landscapes of Kraljevi Konaci. Bottom: Celebrating two new affiliations toGroup RCI are, from left, Group RCI’s Brett Archibald, Jonathan Back, GeoffBallotti, developers Goran Vuckovic and Srdjan Vasic, Group RCI’s DimitrisManikis, developer Ratko Jeremic, and Group RCI’s Vassilis Themelidis.



characterises timeshare accommodation.The names behind this resort areCanadian national, Gilles Durand,developer of RCI-affiliated Club VillasJazmin in the Caribbean, and SrdjanVasic, who also owns Closer MarketingClub (CMC) based in Belgrade.

Vasic has been a partner in thecompany since 1995 and has ownedthe business since 2000. Havingworked in the industry for 15 years he decided to turn his talents todeveloping luxury hotels and formed a partnership with Gilles Durand.

Vasic said: “Club Satelit has an airof exclusivity that’s right for this area,which attracts upscale visitors to its

excellent ski slopes and spas. We plan to extend the property onneighbouring land and are nowconsidering a five-star offering.”

Vasic is spearheading timeshare in the region, which is growing inpopularity with wealthier clientele andthe upper middle classes. That is whyhe and his team are carrying sales andmarketing on and off site. CMC hastwo sales desks in Belgrade, one inSofia in Bulgaria, one in Novi Sad,Serbia’s second largest city, and one inthe nearby Former Yugoslav Republicof Macedonia. He recently incorporateda new sales deck on-resort.

Vasic has worked with Group RCI

for many years. “Ihave good relationswith Group RCI asI’ve worked with thecompany sellinginventory in Spainand the Caribbean –promoting Club VillasJazmin,” Vasic explained.

Vasic plans to extend the propertyon neighbouring land owned by thecompany. He added: “The big questionis – do we commit to a five-star luxuryproduct? This area of Zlatibor hasmuch to offer the upscale purchaser,being renowned for its spa and healthtourism, it is also a fabulous area for

Anna Grybel-Kloc, property investmentanalyst with consultancy, Property Secrets,spoke exclusively to RCI Ventures about thecurrent and future risk and return ofproperty development in Serbia, and clearsup a few misconceptions on foreignownership of Serbian property.

Q: How would you describe the Serbian property investmentmarket at this point in time?A: We class the residential property market in Serbia asspeculative and, as yet, lacking the components crucial forsustained growth, namely, an emerging middle classbuyer, affordable housing finance and the willingnessamong Serbs to borrow in order to buy property.However, a speculative market also means high risk inreturn for high reward.

The market is currently more attractive forinstitutional investors in commercial properties, likeoffices or shopping centres. The yields are higher inthese segments than in more developed CEE markets likePoland or the Czech Republic.

Q: How does it compare to other CEE property markets in termsof property prices?A: Serbia is a fairly undiscovered location, especially forforeign property investors. Belgrade has the highestproperty prices in Serbia, but still low if compared toWarsaw, Prague or Bucharest. The current price level of€1,400-1,700/square metre is similar to prices inBudapest or Sofia.

In Novi Sad or Nis prices vary from €900 to €1,200per square metre. Similar price levels can be found inthird-tier cities in Bulgaria such as Ruse, or Romania’sBaia Mare.

The price level in Serbia is not as low as many wouldexpect. This is partially because of the strong performanceof the market in the past – prices doubled between 2001and 2006 starting from a very low, base level – and thecountry’s the country’s large informal economy.

Q: Is it true that you have to be a Serbian resident to ownproperty in Serbia? A: No, currently, non-residents can freely purchaseproperty in Serbia. The only restriction is that they can’tbuy properties in proximity to military land.

Q: Which factors are making Serbia a more dynamic place forproperty investment?A: Serbia has only just started to develop, having firstshopping malls, offices, and so on, opened only recently.That means the market is at the beginning and has a lot ofroom and potential to develop further. The huge boost thatproperty markets like Poland or Slovakia experienced afterjoining the EU still lies ahead for Serbia.

Q: Which cities and regions are the safer bets for investorsand why?A: As potentially the best investment location we’d tipBelgrade, Novi Sad and Nis. They are the most importanteconomic centres in Serbia with strong and improvingeconomies and they attract significant foreigndevelopment investment. Their property markets are thelargest and the most developed in the country.

Q: What factors are inhibiting faster growth? A: The key factor driving any property market is theavailability of credit. And even though it’s hard to forecastthe development of a mortgage market in the currentclimate, we believe Serbia has strong potential here. The key indicator is the mortgage debt to GDP ratio, whichin Serbia is only around three per cent. That’s low by CEEstandards (8.3 per cent in Poland, 9.6 per cent in Slovakia,and far from the Western Europe average of 50 per cent).

Currently, lending criteria in Serbia and therequirement that clients have to meet lenders whenapplying for a mortgage are very conservative, but we canbe sure that in the medium- to long-term they will beeased as has happened in other CEE countries.

For more information visit: www.propertysecrets.net

PROPERTY SECRETS ON SERBIA

Srdjan Vasic.



skiing and enjoys a great climate. It is a good year-round location.”

KRALJEVI KONACIOn the central Zlatibor plateau in alakeside location sits Kraljevi Konaciresort or ‘the King’s shelters’ as the nametranslates. This Group RCI-affiliatedproperty is designed to blend with theline of the surrounding pine forests and offers exceptionally spaciousaccommodation in the form of 110-square metre two-storey villas withgarage and garden. This property was thedream of Ratko Jeremic. He said: “It was17 years ago when I first had the visionfor this resort concept and I have beendeveloping and enhancing it ever since. I was inspired by my travels, workingon resort construction projects all overthe world, and I wanted to bring the bestof all that I saw back to Serbia, myhomeland, in my own resort.

“The first stage was completed in1999 and comprised 107 very spaciousvillas and on-site restaurant. The secondphase is now underway and will see thebuild of a new hotel on the site, morevillas, a spa centre, and a 600-seatconference hall and commercial centre.The project will be completed in aboutfive years’ time at a cost of €50 million.”

While most holidays are taken in thesummertime, anyone keen for a uniqueand breathtaking ski or snow-filledholiday will find Kraljevi Konaci an idealchoice. Jeremic said: “We have foundhigh demand among Serbians and theBalkan States. Serbia’s economy has nowstabilised and is growing. We have beenoperating for several years without anexchange network but affiliating toGroup RCI is now important for us toallow our prosperous Serbian owners theopportunity to start experiencingholidays in other countries. Timeshare isnew to Serbia and it’s very exciting to beable to introduce a new quality productto this market.”

The resort’s general manager, GoranVuckovic, has been in the tourism andtimeshare industry for 17 years havingmarketed and sold resorts in Serbia inboth Belgrade and Novi Sad as well asoutside the country in Skopje, Greece,and Cyprus. But it was in 2001 when he

returned to Serbia and joined withJeremic as a co-founder of the KraljeviKonaci Vacation Club.

Vuckovic said: “We wanted to affiliatewith Group RCI to provide the excitingexchange opportunity to our owners.This resort is one of the best in Serbia,having been developed with real passionby Mr Jeremic, it has an excellentlocation at a lakeside.”

Vuckovic said he was fortunate tomeet Ratko Jeremic who has theconstruction expertise needed for such aproject. He added: “The project is amixed-use model and I was able tocontribute my own expertise in sellingtimeshare.

“We find timeshare is in highdemand among Serbians. Zlatibor is alsoa popular winter destination, particularlyfor the Balkan holidaymakers. And this isthe first time Serbia has had any qualitytimeshares available.”

Serbians are also keen to takeadvantage of timeshare opportunities

MARKET REPORT

Pictured top: Kraljevi Konaci is the result of Ratko Jeremic’s vision and passion. His€50 million resort will complete in approximately five years. Below: from left with theGroup RCI affiliation plaque are Ratko Jeremic, Vassilis Themelidis and Goran Vuckovic.

outside their native country, according toVuckovic. “The economy in Serbia ismuch more stable than it has beenpreviously and we are experiencingstrong growth,” he said. “The granting ofvisas for travel remains an issue forSerbians, as the country is not yet part ofthe European Union. However, Serbiansfind it easy to visit Greece, which is aparticularly popular destination for them.”

Group RCI’s Vassilis Themelidisregional director for South East Europe,says that the market potential of Serbia asan entirely new market is exciting for thecompany. He added: “Group RCI wantsto invest in this new market because webelieve it is the way forward. We’reconfident that Balkan consumers willembrace the fantastic opportunity, notonly to enjoy holidays in these first classSerbian resorts, but to experience theworld of exciting quality resorts that willbe available to them through the GroupRCI affiliation of our new Serbiandevelopers” V


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LONG

TERM

The global credit crunch may haveclaimed some casualties in the‘hotelinvest’ sector, but there arethose who are convinced thisbusiness model will pay dividendsin the long term. SARA MACEFIELDtalks to three companies who haveadapted their condo-hotel operationsto weather the financial storm.


QUOTE: WE PACKAGED IT UP, PUT OUR BUSINESS MODEL IN PLACE ANDSOLD 92 UNITS, COSTING BETWEEN £99,000 AND £400,000 IN FOUR-AND-A-HALF WEEKS. MARK BINGHAM

CONDO-HOTELS

WHEN they emerged on to the UK lodgingscene a few years ago, condo-hotels werehailed as the new model for savvy propertyinvestors looking for high-return, added-valueinvestment opportunities.

As property prices soared, fuelled in part byeasy credit and the buy-to-let boom, the ideaof purchasing your own hotel room andwatching it ramp up even more earningsproved irresistible to some.

The benefits to investors of condo-hotelownership are three-fold – the ability to usethe accommodation for a specific period oftime, capital appreciation of their own hotelroom and a percentage of its earnings fromhotel operation.

A RISE AND FALLThis seemingly win-win situation was quick toattract investors once the concept wasintroduced to Europe and one of the highestprofile exponents of the model was marketnewcomer London-based GuestInvest. Itentered the market in 2004 with the distinctivecatchphrase ‘Earn money while others sleep’,which soon became a common sight acrossLondon, on the city’s buses, taxis andunderground stations.

The company’s developments were inLondon where its first two projects,Guesthouse West and Guesthouse Nest, soonsold out. These were joined by three others –The Chiswell Street Hotel, The Jones, and thechic celebrity haunt Blakes, a magnet for therich and famous.

GuestInvest founder, Johnny Sandelson,planned to sell rooms in the latter for £1 million each but, before any sold, thecompany fell victim to the banking crisis.

OWNER INVEST SET TO SOARIt would be logical to think that such a high-profile failure might pull the rug from under aconcept that had all the hallmarks of being arunaway success, being similar to developmentsin the US and France, where condo-hotels, alsoknown as apart-hotels, are well established.

However, while GuestInvest may havedisappeared, for now, other names and brands arenot only ready to fill that market space, butconfident that the differences in their businessmodels will make their proposition a strong andeconomically viable one, even in these tough financial times.

Owner Invest was set up lastyear by a group of hotelentrepreneurs with backgroundsin the financial and timeshareindustries who identified condo-hotels as a market ripefor development.

Managing director Mark Bingham admitsthat, having studied the US condo-hotel modeland being inspired by GuestInvest’s UKoperation, he felt it necessary to change somevital components for his own company. Heexplained: “Unlike GuestInvest, we sell thefreehold and not the leasehold of our properties,so this makes it a safer bet for investors as therooms cannot be taken off them. Our product is

Mark Bingham.

IN IT FOR THE

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Pictured clockwise from top: Owner Invest quickly soldout 29 of the 34 condo-hotel rooms in its city centrehotel in Frankfurt. A graphic of Owner Invest’s SesimbraBay Beach Resort on Portugal’s Costa Azul which opensin 2010. The Bali Kuta Hotel & Residence is OwnerInvest’s four-star property in Bali where a piece ofparadise at this property will cost from £25,000.


a hybrid of the GuestInvest concept andwholly-owned freehold property.”

Owner Invest’s first condo-hotel startedselling in January 2008. The Royal Suites Marbellawas a newly-built apartment complex that hadbeen left without any buyers in the aftermath ofthe Spanish property market collapse.

Bingham said: “We packaged it up, put ourbusiness model in place and sold 92 units,costing between £99,000 and £400,000, infour-and-a-half weeks.”

The company then marketed its nextproperty, a city-centre hotel in Frankfurt whereit is selling rooms for between €93,000 and€103,000. To date, 29 of the 34 rooms havebeen sold and Owner Invest is now turning itsattention to its next property, a resort hotel inPortugal where rooms will have a price tag ofbetween €169,000 and €600,000.

Bingham believes the differences betweenOwner Invest and GuestInvest will be the keyto its survival. Not only is Bingham’s companykeeping the purchase prices lower, its strategyis to develop properties in tried and testedtourist destinations and to target pure investorswho are primarily looking for a vehicle forself-invested personal pensions or SIPPs. SIPP purchases do not allow any personalusage.

“All but two of the Frankfurt hotel roomswere SIPPs puchases,” he added. “We rarely getpeople who buy for lifestyle. If they want alifestyle product, our advice is not to buy anyof our products.”

Despite this, Owner Invest does give itsbuyers up to 56 days’ personal use at theirproperties, though Bingham doesn’t expect allthe days to be taken as it eats into the owner’sletting income from their room.

The company promises that investors willreceive 50 per cent of the revenue generated bytheir room and on its first three properties thereturn on investment is predicted to be betweeneight and 12 per cent. Bingham pointed out thatwhere SIPPs are involved, the tax-free elementpushes up the income “phenomenally”.

To counter financial jitters among itspurchasers, Owner Invest has put togetherfinancial packages that buyers can utilise if theyneed to borrow funds. Its latest project, theSesimbra Bay Beach Resort on Portugal’s CostaAzul and due to complete in 2009, comes witha 90 per cent mortgage agreement, meaningbuyers only need 10 per cent deposit.

As a further benefit, on completion thedeveloper will refund seven per cent of the

deposit.Bingham said: “This effectively

means people are buying for justthree per cent and the developerpays all the closing costs. Where elsecan you get a €320,000 propertyon a frontline Portuguese beach andonly have to put down €6,000?”

As a general rule across OwnerInvest’s resorts, buyers can decidewhether to buy the room outrightor borrow what they need and usethe rental income from the hotelroom to pay off the balance.

PESTANA’S LONDON DEBUTGroup Pestana is Portugal’s largesttourism and leisure group andPestana Hotels & Resorts is makingits debut in London with its firstcondo-hotel property, the PestanaChelsea Bridge Hotel, due to open inOctober 2009.

Group Pestana’s board director, PeterBooth, admitted that acquiring the siteon the south side of the Thames adjacentto Battersea Park had marked asignificant milestone for the company.

He said: “London is one of the greatcapitals of the world and for a companythat started on the small island of Madeirato enter a market like London showed wehad matured as a brand.

“One of our strategies was to growour business and find hotels in majorEuropean capitals. Because the Londonsite is a new-buildproject, we couldstart with a blankcanvas and build ahotel exactly toour specifications.”

The result is a218-room four-star property withspacious 30-square-metrerooms that Boothclaims are largerthan those in mostLondon hotels.

Having studiedthe market, GroupPestana felt theproject wouldlend itself to the


CONDO-HOTELSQUOTE: LONDON IS ONE OF THE GREAT CAPITALS OF THE WORLD AND FOR ACOMPANY THAT STARTED ON THE SMALL ISLAND OF MADEIRA TO ENTER AMARKET LIKE LONDON SHOWED WE HAD MATURED AS A BRAND. PETER BOOTH

Clockwise from top:ThePestana Chelsea Bridge Hotelis Group Pestana’s first condo-hotel property. Thehotel, located bottom left ofpicture, enjoys a prime Londonlocation which is important forthis business model to sustainhigh occupancy levels. Roomsare exceptionally spacious andwell appointed. The luxuryfinish of the hotel comes at aroom rate of between €140and €170 per night – a ratethat’s sustainable in a resilientcity hotel market.



condo-hotel model, but only on its own terms. Unlike theGuestInvest model, Group Pestana plans to sell only one-thirdof the hotel’s rooms on 990-year leases. This enables thecompany to maintain its stake in the property – which it willalso continue to operate rather than putting the day-to-dayrunning of the hotel into the hands of an outside company asGuestInvest and others have done.

Booth said: “By selling off 66 rooms, it generates enoughcash to help us expand on this model, but also maintains ourvested interest in the hotel which is also good for the peoplethat invest with us.”

In view of the economic downturn and fears of recession,Booth conceded that it was likely to be more difficult to sell therooms as quickly as originally anticipated. “The timing has beenunfortunate,” he admitted. “We are still getting a high level ofinterest, but we will have to see how the market develops.”

Having decided to make the Pestana Chelsea Bridge Hotel itsfirst condo-hotel in October last year, the company launchedthe rooms in February with a price tag of €320,000. Thecompany is promising buyers they will receive 50 per cent of

the net room revenue with a gross six per cent returnper annum on the overall investment in the first twoyears. Owners will also be given 30 days’ usage oftheir room or an option to use half their allocation atthe group’s other hotel properties around the world,including in Brazil, Mozambique, Argentina, SouthAfrica and Portugal.

Booth said the initial response was better thanhe’d hoped with around 30 potential buyersexpressing interest and 15 or so planning to buy. Butproblems surfaced when it came to purchasersgetting finance after the halt in mortgage lending.

To date, 10 rooms have been sold and plans are inhand to market to the group’s 25,000 timeshareowners. “We’re looking at 60 units initially and I thinkthere’s a sales opportunity through existing Pestanaowners and we are following up leads,” said Booth.

The hotel rooms to be sold will take up three floorsin the middle of the 11-floor hotel, but any that arenot sold by the time the property opens will simply berun as normal hotel stock. “It’s a hotel product we’reselling,” he added. “If we have a buyer, that’s good; ifnot it stays within the Pestana portfolio and we willstill derive the benefits.”

Room rates at the Chelsea Bridge are set between€140 and €170 a night and the company is confidentthe resilience of the London hotel market will help tosustain such rates, despite difficult trading conditions.

However, Booth admits the groupis treading carefully with any Europeanexpansion plans. He said: “We want tosee if this concept has wider appeal.It’s a low-risk strategy for us and we’rewell-placed to grow our business inthe next few years as opportunitescome up.”

Such is the allure of condo-hotels that family-ownedCaribbean all-inclusive chainSandals Resorts is consideringits first move into this market.

The company, which has astring of resorts across theCaribbean under four brands -Sandals,Beaches, RoyalPlantation andGrandPineapple - saysthat demandfrom customersand its own staff wanting to buyinto the Sandals product hasprompted its move.

The company intends tobuild a luxury RoyalPlantation resort on a 21-acrebeachfront site next to one ofits Beaches family resorts onProvidenciales in the Turksand Caicos Islands.

Sandals chief executive,Adam Stewart, pictured,said plans had been drawnup for the 100-roomproperty, which would havethree-, four- and five-bedroom apartments, alongwith a choice of restaurantsand a spa.

The company intends tosell off most of theapartments, keeping back ahandful for itself.

However, Stewartstressed that the best sellingpoint would be that Sandalswould continue to run andmanage the property,bringing its branding andexperience to thedevelopment.

Originally, the group hadintended to start work on thehotel this year, but plans havebeen delayed for around 12months due to the unstableeconomic climate. Stewartsaid if the project wassuccessful, Sandals wouldlook to add a second condo-hotel in Jamaica.Peter Booth.

SANDALS ONTHE SCENE

V


After years ofrealisingdevelopers’

dreams, three British architects havedecided it’s time to make a few of theirown come true. DINAH HATCH discoversthat the partners of newly-formedproperty development company, Blue CDevelopments, are thinking big with theirfirst residential overseas resort on theisland of Cyprus.


QUOTE: I KNEW I’D BE TAKING ON BOARD MORE OF THE RISKBY BEING THE DEVELOPER, BUT THAT ALSO MEANT A GREATERSHARE OF THE POTENTIAL REWARDS. STEVE CARLE

COMPANY

BUSINESS PROFILE

NEW

DEALNEW

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JUST four years ago SteveCarle, Mark Lumbis and SarahGraves formed IntegratedDevelopments Ltd (IDL), acompany of award-winningarchitects in central London.Now they’re set to make theirmark in the residential resortmarket.

The partners had ambitions,not only to bring theirtrademark cutting-edge,minimalist design tocommercial buildings, but toextend their expertise tocomplete land developmentprojects of their own, a goalthey’d all shared while workingin their previous companies.

Once in control of theirown destinies, Carle, Lumbisand Graves tested the developerwaters with small scaleresidential projects, dottedaround the UK. Building on thesuccess of those early projects,they decided to branch outinternationally with thepurchase of properties in Maltaand two large developmentplots near Bafra, Cyprus, anarea which still offered valuefor money in terms of landprices and labour costs, as wellas good land and propertyvalue appreciation prospects.

Recognising that this scaleof development was a wholenew ball game, the partnerscreated a new brand anddedicated company, Blue CDevelopments, specifically forWhiterocks, a luxury residentialresort complex in Cyprus.

Upscale design appealing to

an aspirational consumer isbread and butter for Carle andhis partners, whose IDL clientsinclude Champneys Health andSpa Resorts, Marks & Spencerand the Royal Festival Hall inLondon.

Carle said: “In previous rolesI’d spent so much time workingon ground-breaking designs forothers. Clients would come tome with fantastic land parcelsand ask our practice to designsomething wonderful, and Irealised that I’d actually like tobe doing that for myself. I knewI’d be taking on board more ofthe risk by being the developer,but that also meant a greatershare of the potential rewards.”

WHITEROCKSWhen Carle, Lumbis and Gravesaw the 49,000-square-metreland plot on the east coast ofCyprus looking out to sea, theyknew it was the location torealise their vision forWhiterocks.

The small village of Bafrawill be home to the £55 million Whiterocksdevelopment of wholly-ownedfreehold properties set in aresort-style complex. It is theonly officially-designatedtourist area in the north part ofthe island, and investment intourism infrastructure in Bafrawill fund a new marina, coastaltropical gardens and a golfcourse. Blue C Developmentswill also be building aboutique-style shopping malladjacent to the luxury

Clockwise from top: A graphic image of thefaçade of Whiterocks, which will be one of themost upscale residential resorts on Cyprus whencompleted in 2012. Some examples of thecutting edge design of Integrated DevelopmentsLtd and some of the brand names in theirportfolio, among them Neal’s Yard, ChampneysHealth and Spa Resorts, Marks & Spencer andthe Royal Festival Hall.



residential complex.With an architect’s desire

for design perfection at theheart of the concept, Carle isconfident the four-phase,408-unit resort will be themost luxurious propertydevelopment in Cyprus for along time.

He said: “We knew wecould go into this market andcreate something reallyspecial that was simply notavailable and that’s what wehave done.

“Whiterocks will be atruly five-star development.The luxurious, high-qualityfinish will differentiate ourproduct from others in thisregion. As architects it’susually a case of getting theclient to agree to your designbut we are our own clients inthis development so we areaiming for ultimate luxury.

“We spent two yearsdesigning Whiterocks and webelieve that tells. We’re proudof everything about it, fromthe architecture, styling andbuild quality, to thefurnishings and fittings.”

The completeddevelopment will incorporatemore than 20 differentdesigns, and comprise a mixof one- and two-bedroomapartments, duplexes,penthouses, houses and villas.Many of the houses and villaswill have long terraces,bespoke pools and integratedwhirlpools. Carle added: “Youname it and we’ll have itbecause we’ve incorporated asmany different types ofaccommodation as possible toattract a whole range ofbuyers and budgets.”

The luxury aspect of thedevelopment does not,however, eclipse anotherimportant feature of the resort– sustainability. To start with,as much construction

material as possible will besourced locally.

The incorporation of a cross-ventilation system willminimise the need to use air-conditioning, while smartshading will reduce thepotential for overheatingwithin guest areas. All theresort’s electric lighting will beenergy-saving and grey waterwill be recycled for use in theirrigation of the resort gardens.

PHASED PLANThe first phase will becomplete by July 2010,though Blue C will be sellingoff plan and showhomes willbe open for viewing by nextspring.

There will be 11complexes on four or fivelevels in phase one, with atotal of 96 two-bedapartments. Like the rest ofthe development, they will besold ready to move in andenjoy, coming witheverything a home needs,right down to wine glasses inthe kitchen and towels in thebathroom. The luxury touchwill be present throughout,from the branded appliancesin the kitchen to the 36-inchHD plasma TV and designerfurniture in the lounge.

The design underlines thequality of the resort, witheach apartment having twobalconies and 360-degreeviews, while high ceilingscreate a feeling of light andspace, complemented by theopen-plan design.

The second and thirdphases will comprise 250one- to three-bedroomapartments and penthouses inelegant linked terraces. A‘village square’ will be createdin the heart of the resortwhere residents can visitTurkish baths, work out at thegym, go for a dip in the


QUOTE: WE’RE TALKING TO GROUP RCI ABOUT WHAT THEY THINK PEOPLEMIGHT BE LOOKING FOR IN A RESIDENTIAL RESORT STYLE DEVELOPMENTAND WE’LL THEN PROCEED ACCORDINGLY. STEVE CARLE

BUSINESS PROFILE

Steve Carle, front left, signing the first European R&Econtract with Jonathan Back, watched by Mark Lumbis,managing director of Blue C Developments, back right,and Geoff Ballotti, president and CEO of Group RCI.

The completed Whiterocks development willincorporate more than 20 differentaccommodation and architectural styles.

ABOUT STEVE CARLESteve Carle has been an architect for 19 years. He started outwith his own architectural company, Consarc, before joiningLewis and Hickey Architects as managing director of its Pragueoperation. Lewis and Hickey then appointed Carle as managingdirector of its London offices, where he worked until 2005 whenhe left to set up Integrated Developments Ltd.


THE R&E KEY TOPROPERTY SALESThrough its new Rental &Exchange (R&E) Programme,Group RCI, a long-timeinnovator in the leisure realestate industry, providesproperty developers with anattractive option to deal withthe challenges of selling to acautious consumer in today’sunsettled economic climate.

The programme givesdevelopers of wholly-ownedleisure real estate the ability tooffer their purchasers theopportunity to put their unusedweeks into the global rentalnetwork of Group RCI’s sistercompany, Holiday CottagesGroup, to generate potentialrental income. Purchasersmust deposit a number ofweeks’ usage rights in theirproperties into the RCIexchange programme in returnfor the opportunity to selectholidays from the company’snetwork of more than 4,000affiliated resorts worldwide.

To provide developers withan added tool to boost initialsales, the R&E Programmeenables affiliates, like Blue CDevelopments, to furtherattract purchasers by grantinga points allocation which theycan exchange through the RCIPoints exchange programmefor holidays – even while theyawait completion of their ownproperty.

Jonathan Back, managingdirector of Group RCI EMEAI,said: “We’re delighted towelcome Whiterocks, the firstluxury five-star resort in thenorthern part of the island, asour first European affiliate tothe Group RCI R&EProgramme. As architects,Blue C Developments hasbrought vision and creativityto the design of Whiterocksand we’re proud to work withthem.”


indoor or outdoor pools, orsimply sit in the communalgardens before lunching atpoolside bars and restaurants.Family needs are high on theagenda with playgrounds,children’s pools, internet cafésand creches all likely to beincorporated into the plan.

Carle explained: “Thegreat thing is that we’re veryflexible and can design andbuild what people want.We’re talking to Group RCIabout what they think peoplemight be looking for in aresidential resort styledevelopment and we’ll thenproceed accordingly.”

Phase four will see Blue Cconcentrating on the moreprivate accommodation in theresort, creating two sites ofindividual villas with theirown pools. “We’ll still makesure the residents in theseproperties have all theadvantages of the facilities onsite, but we’ll be adding moreprivacy and exclusivity to thedeal,” said Carle.

Phase one is due forcompletion by July 2010,with resort completion set forApril 2012. Phases two andthree are programmed to starton site in April 2010, whilephase four will start in April2011. All properties will befreehold sold on the basis ofwhole ownership andapartments start at £80,000,with the villas and privatehouses starting at £230,000.

THE MARKET ANDMARKETINGAs the consumer cashliquidity crisis bites everdeeper, finding purchaserswill be a challenge. Carlebelieves the location ofWhiterocks will be a big plusin sales. He explained: “Allthe signals are strong thatboth governments in Cyprusare now behind reunificationand, if that happens, propertyvalues are likely to rise so itrepresents a good investment.Also, we’re dealing in arelatively stable Turkish lire,not euros, so we don’t haveexchange rate issues.”

As the first Europeandevelopment to sign to GroupRCI’s unique Rental &Exchange (R&E) programme,Blue C can pass on topurchasers the benefits offlexibile property use –owners can exchange useperiods for holidays throughGroup RCI’s global network ofmore than 4,000 affiliatedresorts and optimise rentalpotential through Group RCI’sinventory distributionnetwork – making it anattractive proposition to thesavvy buyer.

Carle said: “We will betargeting holidaymakers whohave a good eye for aninvestment. These days therearen’t many people who buyproperties simply for theirretirement. People want totake the family out on holiday

there knowing it is generatinga good income to pay themortgage the rest of the time,so they think of it as aninvestment.

“Group RCI has 35 yearsof experience in the holidayexchange business and, viasister company, the HolidayCottages Group, access to aninternational rentaldistribution networksupporting about 30 brands.Being able to work with anestablished and reliablerental company will helpour purchasers maximisetheir investment potentialwhich greatly strengthensour sales proposition. Theaccess our customers willenjoy through thisprogramme to thousands ofresorts in great holidaydestinations across theworld is definitely the icingon the cake in terms ofgiving them the best valuefor their money.”

Although it has two salesoffices in Cyprus and has hadrepresentation at overseasproperty events in London,Blue C’s marketing strategy isprimarily web-based withtheir customer base in anumber of diverse overseasmarkets, particularlyScandinavia, Russia, Israel, theMiddle East. Though the UKmarket remains a strongcustomer base, the financialcrisis has had an undeniableimpact on it.

All Whiterocks properties will be sold on the basis ofwhole ownership with Group RCI’s R&E programmewrap. Phase one is set for completion in July 2010.

V


Ask anyone in real estate what the most importantfeature of any property is and they’ll cite the oldmaxim ‘location, location, location’. But as fractionaldevelopers in the world’s greatest cities are proving,the right location is just one factor in creating animpressive urban fractional, writes SARAH LEE.


QUOTE: THE KEYS TO DEVELOPING A SUCCESSFUL URBAN FRACTIONALARE TO MAKE SURE IT’S IN A CITY THAT PEOPLE WANT TO RETURN TOREGULARLY. STEVE DERING

FRACTIONAL

DOWNTOW

NAS THE fractional market takes off in Europe, city-based properties arebecoming more and more popular with developers and owners alike.

Urban fractionals aren’t necessarily going to work in just any old city – ithas to be somewhere with international appeal, a global business hub, attractvisitors, come rain or shine and be the type of place people have an enduringdesire to visit and revisit.

Get it right and an urban fractional can prove a winning formula andattractive investment, as developers in New York, Paris, Dubai and Londonreveal in this tale of four cities.

A SLICE OF THE BIG APPLENew York’s ever increasing property prices and hotel rack rates promptedManhattan-based real estate developers Millennium Partners to consider thefractional product for New York. The company teamed with DCP International(DCP), which had developed the first equity residence club – the Deer ValleyClub – in 1992, and opened The Phillips Club in 2000.

DCP created an ownership and pricing structure styled on resort-basedequity residence clubs – otherwise known as private residence clubs – for ThePhillips Club. DCP partner Steve Dering explained: “At resort locations weallow owners to reserve three holidays in advance and additional time on aspace available basis. There is no limit on use so if some owners use the clubless, others can use it more.

“For The Phillips Club we predicted owners would want more spontaneoususe and would visit more frequently than at resorts, but have shorter stays.Therefore we introduced just one long-lead time reservation and the balance ofuse on a space available basis.”

The average stay at The Phillips Club is 4.5 days versus sevendays at DCP’s resorts, while The Phillips Club’s 592 ownersaverage eight per apartment.

Pricing for a one-eighth one-bedroom apartment is$225,000. The Phillips Club is now completely sold out and asecond phase – the Phillips Club II – has sold 111 fractionalshares in the past year.

“The main differences we found in developing an urbanequity residence club as opposed to a resort-based one is that New York isfrequented more by couples than families,” said Dering. “Therefore themajority of residences are one-bedroom apartments, whereas in resorts three-bedroom residences are most common. The other difference is in theway we tailored the reservation policy to fit urban visitation patterns.

“The keys to developing a successful urban fractional are to make sure it’s ina city that people want to return to regularly and to craft your owner perresidence ratio and reservation policies to satisfy your market. We alsostructured the residence club programme for Palazzo Tornabuoni, a

UPSCALE

Steve Dering.

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TOP CITIES RIPE FOR FRACTIONALPRODUCTS

Our interviewees felt most citiesin the world would havesomething to offer the fractionalmarket, but top of their listswere:

San Francisco Washington DCChicago MadridBangkok Rio de JaneiroRome FlorenceBarcelona Prague


15th century palace in Florence, Italy,and, like The Phillips Club, a significantpart of the market comes from the US.Since US buyers will spend substantialmoney and time on travel for each visit,they want longer stays. Consequently, wepredict US owners at Palazzo Tornabuonivisit less frequently but will do so for upto two weeks, so our reservation policiesallow for longer stays.

“Equity residence clubs arebecoming more attractive becausepeople are buying only what they needin a place that they love, which fitsperfectly with today’s ‘green’ focus.Owners at The Phillips Club have asense of belonging – they are greetedby name by staff and there is a pride inowning real estate in a great Manhattanneighbourhood.”

The Phillips Clubs’ owners hail fromFlorida, California, New York,Connecticut and New Jersey, and areaged 55 plus. Dering added: “Direct

mail has been our marketingworkhorse. We have it down to ascience in terms of list selection,response analysis, adding, deleting,resting and re-charging a wide varietyof lists. But it’s also the presentationthat has made it work so well.”

A PIED-Á-TERRETwo years ago Walid Halabi who ranParis-based holiday apartment rentalsset out to identify other businessopportunities to not only boost hisincome, but also allow him and hiswife Charla to maintain their lifestyle.

It was following a fractionalconference that he realised thepotential his properties afforded himto meet both of these goals.

He established Paris-Pied-á-TerreFractional Ownership, now called the

Paris Residence Club, with hisproperties in the city’s 6th and 7th

arrondissements and has since soldone-twelfth fractionals – two fixedand two floating weeks a year – toempty-nesters and families with apassion for the city of romance.

He said: “Our owners purchasehigh-end luxury residences with thefacilities and amenities of an upscaleresidence club. They get the comfortsof home with all the services of a finehotel. People come here to get a realParis experience. But if they want achange we also have a house inProvence and a yacht in the South ofFrance they can exchange into.

“Location and quality areimportant factors in establishing anurban fractional, but the service levelsare just as critical.


QUOTE: I’VE FOUND THAT CUSTOMER SERVICE LEVELS IN PARIS ARE NOT AMONGTHE BEST IN THE WORLD, SO I HAVE TAKEN TIME TO FIND GOOD STAFF AND NOWHAVE MY OWN MANAGEMENT AND MAINTENANCE TEAMS. WALID HALABI

FRACTIONAL

Right: Parisienne eleganceabounds in the Paris Boulevard

de la Tour Maubourg.

Below right: Paris Rue de Neslecharacterises the appeal of the

Paris Residence Club, designed toattract empty nesters who wantto enjoy the romance of the city.

First impressions are critical andThe Phillips Club has made sure itcreates the right one.



“One of the major challenges withdeveloping an upscale product in Parisis sourcing quality management andmaintenance staff. Our owners expecta certain level of service. I’ve spent 10years catering to this clientele and amblessed with fantastic managementand maintenance teams. This is whatsets Paris Residence Club apart.”

Paris Residence Club’s customersmostly come from the US, Canada andMexico and will visit for a minimumof a week at a time. “They are babyboomers,” said Halabi. “They haveworked hard at executive level andwant to enjoy their money.

“A mistake people make is inselling a fractional just as an idealproduct for families. While this ismostly true of rural areas, a largenumber of my owners are emptynesters who see it as ‘their’ place,where they can come for a breakwithout children and grandchildren.”

According to Halabi there is noseasonality for the Parisiennefractional, as people will visit the cityyear-round, and though his businesshas experienced a slow-down with thecurrent economic pressures, he is stillreceiving regular enquiries.

“People who buy fractionals arenot really affected by the currentconditions. In fact this economicdownturn is drawing more attentionto the fractional market as it is seen asan attractive alternative to wholly-owned vacation property,” he said.

LONDON CALLINGToby Pocock is embarking on anexciting phase in his career, and inLondon’s hospitality market. Hiscompany London Fractions is poised toenter sales on the first of its fiveproperties and become the first pure

fractional product available in the city.Up to now, only Grand Residences

by Marriott’s 47 Park Street has gracedLondon with fractional accommodationand this, as Pocock points out, is a verydifferent package to his offering.

He explained: “We are selling 28-dayshares to 12 investors in each of ourproperties, so we will be pooling asmall number of investors, thus makingownership more personal than if youwere to purchase a share in a hotel.

“I spent 10 years working in wholeownership but could see that the marketwas heading towards fractionals.Although most fractional products arein traditional resorts, I thought Londonwas a place where people would wantto spend more than a few days.”

London Fractions has properties inupmarket areas of the capital – Mayfairand St James, Knightsbridge andBelgravia, Marylebone, Westminster andthe South Bank, as well as Tower Bridgeand the City. The company’s research hasshown that properties in these areas rentfor around £3-5,000 a week.

Pocock said: “This is a substantialamount of money and people don’t likestaying in hotels anyway, as they like toentertain friends where they are stayingso a fractional makes a good alternative.”

Being the first project of its kind inLondon, Pocock is naturally reticentabout divulging too much about the

company’s sales structure, but thecompany plans to sell its fractionalproduct for anything between £70,000and £300,000, and owners will be ableto visit the property on fortnightlyrotations each year. There will also bethe potential to exchange within thecompany’s group of properties.

So far interest in London Fractionshas been good, with most of it comingfrom Asia, the Middle and Far East, andpeople aged 40-45. “I thought we’dhave a lot of interest from Americansbut this doesn’t seem to be the case sofar,” said Pocock. “Perhaps this is due tothe US being hit more by the creditcrunch than other parts of the world.

“The weather is a less importantinfluence on urbanfractionals thantraditional resorts. Ifguests visit in April andthe weather is bad, itdoesn’t matter as muchas there’s plenty to do inLondon. But then ourfractional product is aimed more at thebusiness market than holidaymakers andthis has been reflected somewhat in thefact that much of our interest has comefrom executives, aged 40-45. Around 50per cent of enquires have come frompeople working in banking.”

As with most fractional operations,

Walid Halabi andwife Charla.

London is a city which attractsvisitors all year round, whateverthe weather.

Toby Pocock.



London Fractions will provide aconcierge service but it will also offerowners membership to London clubs.Pocock explained: “We look to packageentertainment opportunities with ouraccommodation, so that our ownerswill have all the comforts andconveniences of home here in London.”

LUXURY AT THE PALMDubai has become a byword forvisionary developments and lavishproperties, and IFA Resorts and Hotels’(IFA) latest project is no exception.

The company is set to open a luxuryprivate residence club in 2010 as part ofits Kingdom of Sheba mixed-use resorton the Palm Jumeirah. Fairmont HeritagePlace, Kingdom of Sheba, will comprise46 accommodations – ranging fromtwo-bedroom apartments to five-bedroom homes with swimming pools.It is situated on a site including 350private residences, a 150-room FairmontHotel, and a 100-unit shared vacationownership club. IFA joined forces withFairmont Hotels and Resorts indeveloping the club, so owners will beable to exchange for stays at otherFairmont resorts and world class hotelssuch as The Savoy, London.

Deputy vice president, vacationownership, Kevin Wash explained thatDubai’s first private residence club wascreated with discerning clientele inmind. He said: “We’re offering ownersthe space required from a second homeproduct plus all the services of aboutique five-star hotel, plus totalflexibility with a reciprocal useprogramme so they can stay at anyFairmont or Raffles hotel worldwide oralternative Fairmont Heritage Places.

“We have had a lot of interest fromGCC nationals, people from India,Pakistan and China.”

Entry level properties at the PRC start

from $400,000 for a four-weekownership, however IFA is selling just 40weeks per property to allow owners tovisit whenever they wish. So far IFA hassold 85 per cent of released inventory –35 per cent of the total available.

Despite such high levels of interest ina resort that hasn’t yet opened, IFA hasno plans for another urban PRC. Washexplained: “We have another PRC,Zimbali, set to open 40 kilometres northof Durban, in South Africa. And althoughwe can see the benefit of urban PRCsthey wouldn’t work with our businessmodel.

“As developers of mixed-use resorts,we need a lot of space and you rarely getthat in a city. Dubai is the exception tothe rule because it’s still growing.”

However, for Wash, identifying a cityand developing your resort are just thefirst steps to a successful urban fractional.“You need the sales and marketingexpertise to make the product work,” hesaid. “Equally important is to provide theluxuries of a boutique five-star hotel –concierge, and quality interiors, as wellas individual services such as givingowners space to display their ownkeepsakes and mementoes.”

Wash agrees that the fractional marketis seeing more challenging times in theface of the global economic downturnbut he says there are many individualswho are unaffected, and there will alwaysbe a market for luxury items.

SPOTLIGHT ON CITIESGroup RCI has also identified thepotential in the urban fractional market.

Vice president, business development,Nick Turner said: “The reasons whypeople buy a fractional point to the factthey’re a great product for cities. Theywant to buy in desirable destinationswith year-round appeal and attractionssuch as culture, shopping, or in the caseof Dubai, all this plus great beaches.

“Most fractionals purchasers are cashrich and time poor. They have a high networth but it is these people who arebecoming a little more cautious withtheir spending.

“In the past people who may onlyhave used a second home five weeks ofthe year could at least see capital growthin their investment, but the opportunitiesfor such growth are shrinking along withproperty markets in these countries.

“This is making the urban fractionalan increasingly attractive proposition andwe’re expecting more high-end realestate companies, serviced hotels andapartments to enter the fractional marketin cities worldwide.”

As an indication of the speed ofdevelopment of the urban fractionalsector, Group RCI has established adedicated team to work with Europeandevelopers to grow their fractional,destination, or private residence clubs.

QUOTE: AS DEVELOPERS OF MIXED-USE RESORTS, WE NEED A LOT OFSPACE AND YOU RARELY GET THAT IN A CITY. DUBAI IS THE EXCEPTIONTO THE RULE BECAUSE IT’S STILL GROWING. KEVIN WASH

FRACTIONAL

Accommodations atFairmont Heritage Place

private residence club willrange from two-bedroom

apartments to five-bedroomvillas like the one in this

design image.

V


Traditionally resorts haveheld sales and marketingevents aimed at introducingpotential new members totheir products or gettingmembers to buy more weeksand points.

As Hannu Mäntyharjudeputy CEO of Group RCIaffiliate, Holiday ClubResorts (HCR), explains, thiscan be a profitable exercise.Staff at one of the company’srecent events achieved a 57per cent closing rate.

“Our sales figures arevery good from our events,”says Mäntyharju. “We holdabout 30 a year and sellmore RCI Points to ourowners, as well as gainingnew sales from owners’friends. Marketing costs for

the events amount to just fiveper cent of the net sales.”

HCR events usuallycomprise a weekend stay forowners at one of thecompany’s 25 resorts inFinland, Sweden, Russia andSpain. At a recent event about200 members attended aweekend at Holiday ClubSaariselkä – most of themmeeting in Helsinki for a 17-hour coach trip to theLapland resort.

Mäntyharju said: “Ourowners really enjoyed this. Itgave them a chance to meetwith friends, talk about theirtravel experiences, and tomake plans for the weekend.”

During the weekend HCRput on day trips to Lake Inari,the Russian border, the townof Sami, and a Lappishmuseum, as well as a naturewalk and dancing with famoussingers and bands in theevenings. A sales presentation

of up to two hours and talkson how owners could makethe most of HCR’s productswere also held.

Mäntyharju said: “Duringthese talks we’re able to showowners how to make betteruse of our products. They canalso discuss any issues with usor representatives from GroupRCI, which results in greatersatisfaction with theirpurchase.”

Group RCI regionaldirector, Riitta Apiola, whoattends many of HCR’s events,said: “This is an opportunityto meet our members as well.We inform them about newthings within Group RCI andhelp them make better use oftheir membership. We alsosend their feedback to GroupRCI’s member services.”

C Hannu Mäntyharju, left.Owners enjoy an event atSaariselkä Holiday Club.

HOSTING events for theenjoyment of their membersmay not top the list ofpriorities for resorts dealingwith lots of everydayactivities, but a number ofdevelopers have found thatmember events can be a fun,informative and socialplatform for boosting salesand ensuring customerloyalty.

So your membershave bought theirweek, exchangeoften, pay theirmaintenance feesand offerfavourablefeedback aboutyour resort. Jobdone? Think again,writes SARAH LEE,as she exploreshow memberevents can boostyour business.

MEMBER EVENTS

HOSTWITHTHEMOST


FUN FOR FINNISHMEMBERS

workV-MembEvents2-rb-JP:Layout 1 29/12/08 11:01 Page 3

Member events don’talways have to involve salesand marketing activities tobe successful.

Spanish holiday homedeveloper, Polaris World,recently held a series ofevents in the UK purely toboost the ‘feel good’ factoramong its owners.

One Polaris owner,Louise Verde, was veryimpressed by the Friends ofPolaris event she attendedat Birmingham’s HyattHotel. She said: “I boughtmy Polaris property fouryears ago and thoughpleased with it, I wasn’tplanning to buy another, so I was surprised to beinvited to the event, as wellas being told we could takefriends along.”

The night was one ofeight Polaris World hostedacross the UK and includedSpanish food cooked bychefs flown in fromMurcia, wine local to thatregion, a flamenco groupand other performersentertaining the audience.

Verde said: “On arrivalwe were taken to a meetand greet area and givenchampagne and canapés,while we listened toSpanish music.

“They then showed us ashort video on PolarisWorld resorts, which wasvery aspirational and madeus feel proud that we’dpurchased one of theirproperties.

“We expected a saleselement to the evening, butthey didn’t try to sell usanything. It was more aboutmeeting other owners and

finding out who yourneighbours were. When weleft we were each given aninformation pack, completewith DVD, and an orangetree to act as a reminder ofour home in the sun.

“After the party myhusband and I couldn’t stoptalking about how specialthey made us feel and whenwe got home, we watchedthe DVD three times. We’vetold all our friends andfamily what a great time wehad and what a goodcompany Polaris World is.We have another propertyin Murcia with anotherdeveloper, and although itis a bigger property thanour Polaris World one, wefeel so much more positiveabout Polaris World as acompany.”

Rita Rowe managingdirector of Mason WilliamsPR agency, which organisedthe parties, said no salespeople were present at theevents.

She explained: “Theparties were organisedpurely as a ‘thank you’ to

owners for purchasing aPolaris World property andas a chance for them tomeet other owners.

“It was also a chance forowners to meet with PolarisWorld staff and pose anyquestions they had, in theknowledge their issueswould be addressed, if not there and then, thefollowing day. When youpurchase at a Polaris Worldresort it can be difficult tomeet people so the idea wasto bring owners together tocreate instant friends.

“We also wanted tomake it a celebration ofMurcia, where the Polaris

World resorts are based,hence flying in the chef andperformers. Where ownersmay have felt disconnectedfrom Polaris World becauseof its Spanish base and thecultural differences inworking practices betweenSpain and the UK, theevents strengthenedrelationships and opened up channels ofcommunication betweenthe company and owners.

“It’s difficult to measurethe value of the ‘feel good’factor, but the positiveword of mouth from theseevents is worth untoldmillions.”


MEMBER EVENTS

C Rita Rowe, above, valuesthe ‘feel-good’ factor ofPolaris World owner eventssuch as the Friends ofPolaris Event pictured here.

PARTY WITHPOLARIS


Increasingly, timeshareresorts are investingsignificantly in strengtheningrelationships with theirmembers through events.

At Kilconquhar Estate andCountry Club in Scotland, anumber of events are heldthroughout the year but themost popular is the annualdinner and dance.

The event is held over aweekend just beforeChristmas and members payto stay at the resort. Most stayfor two or three nights andparticipate in a golfchampionship and cookingcompetitions before themain dinner and dance.Around 250 people attendeach year and the resortcharges £100 per person forthe weekend stay, includingthe dinner and dance.

As the property isaffiliated to Group RCI,representatives of theexchange company alsoattend the weekend to dealwith any queries membershave. Group RCI affiliateservices manager, MarjAnderson, said: “Theseevents offer a fabulouschance to meet the resortmembers to find out whattheir needs are and to showthem how our system works.That personal attentionmakes all the difference tothem.

“Kilconquhar has a bigdevelopment plan underwayand these events also offer achance to manage members’expectations and informthem of how the changes areshaping up and how theywill affect them.”

The dinner and dance is

black tie, but most men dressin kilts, while the resort layson a five-course mealfollowed by a Ceilaigh – aScottish dance, and disco. Theresort committee memberscan attend so they can meetwith owners in an informalsetting, while a member ofstaff sits at each table.

Kilconquhar developerJim Vance said: “Sometimesmembers will bring theirfriends to the dinner anddance and they have, in

turn, ended up buying atimeshare. However, that’snot the purpose of theevent. Although it’s a socialevent, it has become quiteprofitable for us – we madejust under £30,000 lastyear and we have nomarketing costs, as it is sopopular people book forthe following year beforethey leave.

“I think membersappreciate that we’re tryingto offer them more than justtheir annual holiday. Around250 people attend the dinnerand dance, while 100 attendour summer barbeque –none of these events entailany heavy promotion butmembers are left feeling thatthey get value for theirmembership.”


MEMBER EVENTS

WAYS TO A WINNING EVENTHave a running order and ‘dress rehearsals’ so everyone

knows what’s expected of them. If it’s going to be a sales opportunity, make sure staff are

trained and experienced enough to handle tough questions.Make it interesting – perhaps choose a theme.Make it ticket only to avoid gatecrashers.If you have ‘giveaways’, employ a mechanism to ensure

people can’t just take them.Be prepared for people to arrive early, and keep them

entertained so they don’t feel unattended.Leave guests feeling happy about the event and they will

become your ambassadors.Get your staff onboard so everyone understands the benefit

of the event to the company and make sure they have fun.Ensure the information you offer is correct. If you can’t

answer a question there and then, get the member aresponse as quickly as possible afterwards.

V

C Jim Vance believes thereare many benefits of hostingmembers events such asthe dinner at Kilconquharpictured above.

MEMBERSHIPVALUE ATKILCONQUHAR


EVERYONE in the hospitality industry isspeculating as to how the international

banking crisis and recession will impact the leisurereal estate industry – and particularly the timeshare,fractional and whole ownership markets – over thenext few years.

I believe that the impact to individual businessduring the next two years will largely depend onwhere you operate.

Listening to the US president elect talking aboutchange and defining moments, there is hope for thetimeshare and fractional markets. I feel sure thatwe’ll see even more money pumped into thebanking system to kick start lending and underpinthe insurance markets with guarantees, to ensurethe recession is as short as possible for the US.

However, change and that defining moment arealready affecting the US timeshare industry.Timeshare and fractional sales are classed asproperty and any loans are categorised asmortgages under the US Real Estate PropertySettlement Act (RESPA). As a result most timesharedevelopers use Special Purpose Vehicle (SPV) as ameans of customer financing and to raise funds,often for ‘pulse customers’ – if they’ve got a pulse,sell to them.

Well, the defining moment is that this method offinancing has been terminated and chances of itsreturn are looking slim.

The change we will see is that banks will onlywant customers with an AAA credit rating. This shifthas already resulted in mass layoffs in thetimeshare industry in places such as Florida,California, Las Vegas and New England.

In some ways the European timeshare developeris in a much better position to really weather thefinancial storm and they might even be able toidentify opportunities.

In Europe many countries have part nationalisedtheir banks, offered financial support in the form ofguarantees, or banks themselves have foundsovereign state funds from the Middle East to

address their core 1 tier ratio of funds. This is thebalance of cash that the banks hold against theirloans, mortgages and business loans, meaningthere’s still a reasonable supply of third partyfunding, though costs have risen as the supply offunds has diminished.

In Europe there are many development projectsthat have been abandoned in the current crisis. Thereal winners in these times will be those developersthat have the liquidity to acquire newly-completed orpart-developed projects. Currently the banks areholding such projects with no effective solution and Ifeel sure they would look favourably on a propositionfrom a timeshare or fractional developer offering totake them off their hands. And with a properlypriced product, both fractional and timeshareproducts remain a good proposition on anunsecured loan finance programme.

I will close with the thought that in every pastrecession there have been many opportunities forthose in a position to exploit the deals that areundoubtedly out there. As the old adage goes –timing is everything – particularly inthese days of recession.


QUOTE: THE REAL WINNERS IN THESE TIMES WILL BE THOSEDEVELOPERS THAT HAVE THE LIQUIDITY TO ACQUIRE NEWLY-COMPLETED OR PART-DEVELOPED PROJECTS. RON HOWELL

FINAL CALL

With everyone feeling the credit crunch bite, RCI Ventures invited RON HOWELL, sales director with HMC Funding, specialists in consumerfinancing for the fractional and timeshare markets, to give his view onhow the shared-vacation ownership industry might fare.

ABOUT HMC FUNDINGHMC Funding was founded in2003 and since that time hasbecome a leading provider of all types of personalfinancing, specialising inconsumer financing in theleisure property markets of both fractional andtimeshare ownership,including cruise products.

Before joining HMCFunding, Ron Howell was asenior executive with theFirst National Bank.

For more information onHMC Funding, please visit www.hmc-funding.co.uk orcall +44 (0) 1934 751 850

MONEY, MONEY, MONEY

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’’

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For more information, please contact: Amanda White on +44 (0)1536 314 651.

“Through the years, Hilton and RCI have enjoyed a great relationship. When we dream big and present ‘what if’ ideas, RCI always steps up to help us bring our Owners’ vacation experiences to the next level. As a result, our travel advantages remain unique, flexible and ever-evolving. Our successful collaborations with RCI are based on years of trust, and a shared commitment to bring dynamic ideas to life. We celebrate RCI’s 35th Anniversary and look forward to the innovations ahead!”

Kim Robert KreigerSenior Vice President and Chief Club Officer, Hilton Grand Vacations

RCI Affiliate since 1993

With 35 years of experience, more than 4,000 affiliated resorts worldwide and over 3.7 million members, we continue to be the global leader in vacation exchange. We are committed to bringing the highest level of reliability, customer service and innovation to every developer relationship so that you can achieve your goals in shared ownership. Because after all… your success is our success.

RCI and related marks are registered trademarks and/or service marks in the United States and internationally. All rights reserved. ©2009 RCI, LLC. All rights reserved.

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RCI Ventures: January 2009