Last week marked the eighth annual Ragatz Fractional Interest Conference, a yearly gathering of movers and shakers in the private residence club and destination club industries.

First, the attendance numbers were impressive: over 700 people registered for the San Francisco conference, no doubt anxious to hear about how fractionals were weathering the current real estate slowdown. Historically, the Ragatz Fractional Interest Conference has grown year by year, with a similar strength as the fractional industry itself. In 2003, Ragatz reported an industry sales volume of $513 million. Last year fractional projects, private residence clubs and destination clubs raked in sales of $2.3 billion, up 8.3 percent from 2006. The numbers include new sales, preconstruction sales and also resales, which many mountain-based fractional developments are now seeing.

But even with these high flying numbers, the industry is clearly being impacted by the overall real estate market. In fact, the Ragatz report states that the increase in sales volume is primarily related to the rise in the number of projects entering an active sales phase. When Ragatz broke down the numbers by development, sales volume and prices actually “decreased slightly in 2007 relative to 2006” according to the report. The number of fractional and private residence clubs numbered 300 this year while destination clubs totaled 21 companies, including 16 non-equity and five equity-based, with approximately 6,400 members. That’s up from around 5,000 last year. Destination clubs saw approximately $610 million in sales, about six percent more than in 2006.

The more interesting nuggets from the conference? While the shared residence industry was conceived in the mid-1990s in ski areas like Telluride, Colo. and Park City, Utah, the appeal of these mountain towns to buyers may be fading. According to the Ragatz research, beach resorts are considered the most attractive location for buyers while only 21 percent of those buyers ranked ski resorts as a similarly appealing place to purchase.

Also, market penetration by the fractional industry is still shallow. Just 50,000 households have purchased a shared ownership residence, a figure that translates into 1.5 percent of a households with incomes of over $200,000, according to Ragatz number crunchers. The two major factors that resulted in a potential buyer hesitating about their purchase were worries about being able to resell the unit and getting access to the property at preferred times.

While developers are still rolling out fractional projects, there was a palpable concern about the state of the economy and its impact on the shared residence industry. One company announced that it was already a casualty of the uncertainty in the mortgage markets. First Fractional Funding, a Greenwood Village, Colo.-based mortgage company specializing in consumer loans for fractional properties, announced that its lending partner, the National Bank of Kansas City, pulled out of the fractional mortgage business.

Finally, the buzz of the conference. It was the topic that so many were talking about, but no one in the industry was willing to go on the record with this reporter. The scoop? Look for the entrance of a large new equity-based destination club with multiple locations. It has a famous name, substantial industry people and is slated to again shake up the shared ownership sector.