The recent launch of Preferred Residences heralds the arrival of a new branded exchange program for luxury fractionals and high-end condo-hotel properties. In our private residence club outlook for 2008, we predicted the emergence of stronger exchange programs for fractional owners. The launch of Preferred Residences is an effort on the part of several companies to join forces to fill this niche. Interval International, a leader in the vacation ownership industry with a network of 2,200 resorts and 1.9 million members, and Preferred Hotel Group, which has 140 hotels and resorts spread across the globe, are forming Preferred Residences to provide fractional developments with a quality-controlled, branded umbrella organization under which to provide broad exchange options with a standardized points system.

The program is set up to offer owners optimum flexibility in scheduling stays at resorts and residences included in the network. In addition to fractional exchange privileges, the model promises other perks. Owners will enjoy preferential pricing and upgrades on stays at participating hotels in the Preferred Hotel Group, including discounts of 20 to 50 percent off published rates. Members will also receive a complimentary membership in Hertz #1 Gold Club and access to a 24-hour concierge available by phone or email to make dinner reservations and tee times. Complimentary Prestige access to 500 VIP airport lounges in 90 countries and discounts on Delta AirElite business jets are also included in membership. Additionally, owners receive a 15 percent discount on Preferred Golf Club membership, which includes an annual complimentary round of golf at each of the more-than-40 Preferred Golf Club resorts from Dromoland Castle in Ireland to the Sea Island Resort in Georgia.

The fractional real estate industry has long been in need of a straightforward exchange program, with many existing programs lacking cohesion and convenience, or merely lacking a sufficient number of options to make the programs compelling. It remains to be seen if Preferred Residences will break the mold; press materials on the organization are scant, and seem to be focused simply on attracting developments rather than educating consumers on this concept. In fact, at this point it seems Preferred Residences has only one club in its ranks, La Tranquila Breathtaking Resort in Punta Mita, Mexico, making it difficult to predict what the scope of their offerings is likely to become.

Halogen Guides will be following the development of this new option as it expands its portfolio of clubs, and as those clubs begin to market the concept to potential buyers. An easy to navigate exchange program would certainly add to the appeal of fractional ownership, coupling aspects that make the destination club model attractive to potential vacation home buyers—namely variety and flexibility—with the allure of deeded property ownership.