In a survey released today, Slingerlands, N.Y-based market researcher Reach Advisors finds that many owners of private residence clubs (PRCs) are dissatisfied with the availability of reservations and would not recommend the purchase to friends. The survey, which focused on 300 owners at seven fractional developments in Colorado, found that just 38 percent of respondents were happy with the availability of reservations.

The survey focused primarily on availability rather than specific services and amenities, like on-site concierges at the fractional developments. Such five-star services, said James Chung, Reach Advisors’ president, are common at these developments and luxury residence clubs do well at filling that role. “At this level of PRC, service is expected to be good,” said Chung. “If it wasn’t good, they would be dead in the water.”

Disgruntled Owners Find Lack of Reservations

Instead, what fractional properties are struggling with is owner satisfaction when it comes to the ability to book vacation weeks when they want them, said Chung. In fact, only one PRC, the Club at Tristant in Telluride, had more than 40 percent of owners respond that they were pleased with availability. The 300 responses covered owners at seven fractional residence clubs and averaged 21 to 55 per club, or about 20 percent of owner base.

Thirty-six percent of respondents at Telluride’s Fairmont Heritage Place and the Four Seasons Jackson Hotel said they were happy with reservation availability, while less than a third of respondents from One Willow Bridge Road in Vail, the Ritz-Carlton Bachelor Gulch and the St. Regis Residence Club in Aspen were satisfied with the availability to snag a reservation. At the Ritz-Carlton Club in Aspen Highlands just five percent of respondents were pleased with reservation availability. The survey found that overall owner satisfaction tended to be higher at smaller boutique brands than at large-scale hoteliers like the Ritz-Carlton and Four Seasons, while PRCs that allow rentals tended to score lower than those that prohibited the practice.

While the breadth of disgruntled owners is certainly surprising, the Reach Advisors report makes clear that this level of dissatisfaction wasn’t entirely unexpected. “Why are some of the leading private residence clubs flooded with members that have placed their club memberships on the resale market?” Chung states in the report.

Though the services of the club staff and various amenities, like spa treatments and on-site concierges who can deliver ski rentals and lift passes, certainly please owners, the frustration over actually getting to use those services and book stays at the properties leaves many owners unwilling to recommend membership to close friends. Just 58 percent are highly likely to recommend the purchase.

The Halogen Guides Take

Fractional developments are still a relatively young concept, but the Colorado Rockies have the most mature luxury residence club market. Many developments have been in operation for years, with several included in this survey having long been sold out of developer inventory, and with many including the Ritz-Carlton and St. Regis having multiple units on the resale market. For a look at owner satisfaction, it makes sense to put this particular market under the microscope. But are these PRCs getting a bad rap?

First, a note on the actual survey sent out by Reach Advisors. It offered respondents just three answer choices for a question. That survey technique serves to favor the middle response. In fact, the best, most statistically sound surveys offer respondents at least five choices and often up to seven. If the survey had employed a wider breadth of answers, the findings may have been more specific and better able to reflect the level of satisfaction or unhappiness among the owners who responded. Also worth noting, Reach Advisors has done consulting work with Epiphany Clubs, the owner of the Club at Tristant, which performed well in the survey, with most owners satisfied with availability (the club’s model is unique in that it has fewer members per residence and guarantees availability), and also the highest percentage willing to recommend the purchase to others.

Beyond the specifics of market research, there is also the question of looking at the ski market as a bellwether for the entire PRC industry. In fact, while ski PRCs do make up 50 percent of all fractional developments, these developments have their own unique set of challenges not faced by other shared ownership properties.

For starters, vacation homes in ski areas have a decidedly short prime season, generally from Christmas until the end of March (depending on the cooperation of mother nature). That fact alone has made such clubs an attractive option for second home shoppers who don’t want to shell out $1 million or more for a home that they might only use a few weeks a year. But PRCs have also marketed their developments as family friendly retreats with multiple bedrooms, and as a result, a large percentage of owners with school-aged children are vying for the same prime weeks that coincide with school holidays. Private residence clubs in beach or golfing areas have their own prime seasons, but the time frame is not as limiting as that of a ski resort.

Rotating reservations promise to dole out the best weeks equally among owners, but no doubt a year or two of landing early December or the last week of March, on the cusp of spring run off season, would frustrate anyone who has shelled out several hundred thousand dollars for a ski retreat.

So are the owners themselves partly to blame? Perhaps. Private residence clubs that allow owners to rent out their units creates a system that leaves little wiggle room. Enterprising owners who do manage to snag, say, that prime President’s Day week could, in fact, rent it out for an amount that might come close to covering their annual dues for the year. Developers still selling PRC inventory may rent out units as well, which further contracts availability.

For owners considering purchasing a fractional residence in a ski area, don’t throw in the real estate towel yet. While the survey no doubt has some holes, it does reveal the importance of full due diligence on the part of buyers. Now that many of these PRCs are fully sold out and have been in operation for years, there is the chance to talk to other owners about their usage before buying. Take a hard look at your own vacation needs. If you have small children who will be in school for the next decade, know that you will likely be facing heavy competition for prime weeks. If your children are grown, and your vacation schedule is no longer at the whim of the school calendar, you might find these PRCs a better fit. Also make sure that you fully understand the reservation process and how those prime weeks are rotated among owners. And don’t just take the word of your club’s salesperson or a real estate agent. Visit the club and talk to owners. If they’re happy they’ll rave, and if they aren’t you’ll hear their complaints.

For a closer look at buying a fractional home, download our Decision Guide to Private Residence Clubs.