News for the Hospitality Executive
(April 15, 2010)-- Star Resort Group (Scottsdale, AZ), a leading
marketer and seller of resort real estate in North America, has reacted
business climate with a “cautious optimism” when it comes to fractional
Carl Berry, CEO of Star Resort Group and pioneer in the shared ownership resort industry, notes that there are key hard steps and soft steps to success in making the product work in 2010-2011.
Steps to Success
1. Know the market. Are people ready to buy? Star Resort Group’s SMART assessment program surveyed customers to determine this factor. Surprisingly, in late 2009 and early 2010 the results have been surprisingly positive.
2. Know new media and new media lead generation. There's lots of talk about web sites on steroids, social media, blogging, search engine marketing, EDM marketing, pairing with industry websites, with real estate broker websites and the like. There's lots of talk out there. But, how does one make it work?
3. Get a CRM program (such as SalesForce.com) to capture all these new media leads in a format that works for 24/7 and gives permitted users access 24/7 to track prospects and sales.
4. Get the right project. Sounds simple doesn't it? But, the core adage of location still holds true, quality building is still important, stylish furnishings are still necessary, and the correct size for the bulk of the market is paramount.
5. Determine the right share size to sell. Offer multiple share sizes. Be innovative in the use plan. Have a common sense reservation plan. All this sounds simple, but this is the area where success or failure will largely be defined.
6. Build the HOA budget with a combination of 'built-in' services and other a la carte services. The balance in this task is to meet the expectations of the owner for carefree vacations with an annual fee that makes sense as it’s applied to their use. At Star we've done a full 180 going from all-inclusive to a combination of included services and extras. Naturally, there's no fooling with the maintenance and reserves for replacement part of the budget.
7. Deliver a level of hospitality management that will fulfill the owner's expectations.
8. Educate and train the selling staff in the science of how to sell fractions. There's no 'art' here; just the science of knowing the product and documents; to be unconsciously conscious in the presentation; and to fully understand the decision making process of the buyer who are concerned first with personal use and second with ongoing costs. Lastly the staff should understand that maybe one of the buying 'unit' will want the fraction more than the other, so if there is an 'art' it's bringing along the trailing buyer.
9. Sales of documentation and registration in selling jurisdictions are necessary and must be accomplished before hard sales begin.
10. Marketing from Branding to EDMs, from Old to New Media must be skillfully planned and executed to first fill the customer pipeline with qualified leads; and secondly, to keep the pipeline full for the selling staff.
11. Administration and escrow management is vital for this process and translates the product into cash in the final analysis. Does the title and escrow company accept credit card down payments? Can a documented sale be closed within 30-days?
12. Purchase financing is mandatory. At this time there is no third-party financing available due the financial collapse of September 2008. Therefore, developers have to make the loans and warehouse the loans until they can be sold. Star estimates that will be mid-2011.
The twelve steps above are all 'soft' steps.
The 'hard' steps involve product:
Product to Sell
1. The ideal situation is to have completed product, completely furnished, with all amenities in and ready to use. However, presales are sometimes necessary and provide an advantage in that, last minute configurations to the product can be made based on customer response. If presales have commenced, a firm construction loan needs to be in place, subject to the presale requirement, so the buyer can expect a semi-firm date for construction to begin and occupancy to occur. At Star we've sold in all situations. In a recovering market like there is today, the more certainty the better.
2. Before there can be new product to sell there’s the total lack of development and construction financing, and also buyer financing. These markets are still frozen save for a very few isolated cases of local banks continuing to work with their developers. The vise banks find themselves in is that on one hand the Federal government says to, ‘Get the money out’, and on the other hand the FDIC auditors say, ‘Don’t you dare make any loans’. This is a nationwide situation.
3. The current end loan options out there are:
A. The developer makes and holds the balloon loans for the 3, 5 or 7 year period.
B. Some brokers are working with developers to ‘package’ their developer-made loans in the right form to be sold, if and when the market opens up.
C. Lastly, some developers are just stuck as they don’t have the capacity to get releases from their lender, save for all cash sales or huge down payments, and to then carry the paper themselves.
4. There’s been talk of private money coming in for the loans, but there’s also the consensus that private money will flow first to timeshare loans as they yield is much higher than for fractions.
The real question is how will fractional developers move beyond potential stumbling blocks to successfully bring in those who want quality, vacation home living at an affordable price?
Star Resorts is a leading developer, marketer and seller of luxury fractional ownership real estate, private residence clubs, timeshares, and whole ownership resort real estate products in The Americas and soon in Europe. Star Resorts provides sales and marketing, development and management expertise to developers throughout the United States, Canada, Mexico and Central America. The Company also develops resort projects for its own account, and is unique in that aspect.
Find out how Star Resorts can assist in the development of your project. www.starresortgroup.com
Star Resort Group is located at 4248 N. Craftsman Court - Suite 100, Scottsdale, Arizona 85251[tel] 480 922 6801 [fax] 480 922 6805
Georgi Bohrod (619) 696-8018
Carl Berry (415) 519-1015