Thursday, July 28, 2005

Residence Clubs: An Intriguing Vacation Option

28 July 2005

In keeping with the theme of diversity on this site, I would like to address the topic of vacation planning, an issue of increasing interest for those approaching retirement or semi-retirement.

Having done quite a bit of research into the “residence club” concept, I can recommend this for individuals interested specifically in vacationing in high quality resort settings.

My first encounter with the residence club concept was through the Canadian hotel and resort operator, Four Seasons Hotels and Resorts. The Four Seasons program allows owners to utilize multiples of one or more weeks at two specific Four Seasons resorts, located in Scottsdale, Arizona and Carlsbad, California (Four Seasons Aviara). An additional advantage is that a single week in a 1650 square foot 2-bedroom unit can be “divided” into a full week each in a 1-bedroom and a studio unit.

After purchasing three weeks with Four Seasons, we discovered the after-market in residence club units. We have found this to have few downsides, as purchases of equivalent weeks of deeded ownership can be arranged from existing owners through licensed resellers. Through after-market purchases, we have added two weeks to our additional three, allowing us from 5-10 weeks per year of vacation time at the above mentioned two Four Seasons resorts. This provides ample opportunity to invite guests to stay with us as well, due to the spacious quarters provided.

Further, there are increasing, though still limited, opportunities to exchange with Four Seasons and partner properties in other locations. We have used exchanges through the Four Seasons program to travel to Jackson Hole, Cabo San Lucas, and Maui. (Please note that some exchanges are restricted to the original purchaser of the ownership week).

Of course, many other providers make similar products available, with particularly nice offerings provided by such operators as Westin and Marriott, as well as many more.

What is the upside? Basically, it is possible to stay in a much larger unit, and at lower prices, in very high quality settings. Additionally, one’s ownership of the vacation “week” is resalable, though at an after-market discount. However, with purchases in the after-market in particular, there is relatively little downside risk on resale. Further, weeks of shared ownership at residence clubs do not appear to have sustained the same inflationary pressures as have occurred in residential real estate. At Four Seasons, the prices for resale weeks have dropped steadily over the past 3 years, making them now very attractive, at about half the cost of new purchases, or even far less in certain cases.

What is the downside? Well, there is a commitment to return to more or less the same properties on a regular basis, and to pay an annual maintenance fee (usually increasing) for the privilege. There are associated travel costs to get there and back, and to defray costs while away.

In my own view, the downside is a less concerning proposition, as, even with increasing maintenance fees, the costs are far lower than for hotel rooms at the same settings, and the rooms or units are far more spacious and better-equipped. Further, hotel room rates are rising at a pace comparable to maintenance fees, so the relative advantage of the residence club tends to endure over time.

We have dealt with a very reputable operator in Scottsdale, SmartChoice Timeshare Realty
, who specialize in, but are not limited to, Arizona residence clubs. Smartchoice is presently offering particularly attractive resales at Four Seasons Scottsdale and Aviara. There are many other resale providers who offer a variety of attractive products. Much more information about many properties for sale can be found at RedWeek.com.

I will close by noting that much higher end options for shared vacation ownership are increasingly coming available, including more exclusive offerings from Four Seasons in Jackson Hole and Costa Rica – with many more on the way. Particularly attractive, but much more expensive offerings can be had through such providers as Ritz-Carlton, Abercrombie & Kent, Exclusive Resorts, Destinations, Private Escapes, Dreamcatcher, and now more than I can keep track of. These more exclusive providers may have some risks attached, as they are purchasing luxury homes and condominiums in today’s very inflated global real estate market, and the membership fee (typically from $100,000-400,000 US) is used to enable these purchases. However, most guarantee either equity in the purchased properties or an 80% refund on termination of membership. The program with by far the most extensive offerings is Exclusive Resorts.

If you are interested primarily in hiking and trekking; trailering; last minute trips; budget travel; or irregular vacations, then this is clearly not the option for you! However, if you enjoy regular vacation travel to high quality locations at a substantial discount to market rates, then the residence club option may prove to be a very appealing choice.

(2008: My most recent entry on this topic is here.)
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