The concept of a timeshare is well-known among second-home owners, but the concept of a fractional – or a private residence club – is demonstrably not. A study this year by the American Affluence Center reported only 33% of their respondents (who averaged a net-worth around $3 million) to be familiar with the more luxurious private residence club concept. So what are they and why compare them with timeshares?

If you want to make a sales representative shudder, nonchalantly refer to a private residence club as a timeshare. Nearly every aspect of this new category- from the sales process to the properties themselves- has been composed to distinguish private residence clubs from timeshares. The stereotyped high-pressure two-hour pitch has faded away, as have the thin-walled, spongy-floor condos. Private residence clubs lure affluent consumers who are as unlikely to buy timeshares as they are to jump at discount airfare and free TV come-ons.

Timeshares on the Spot

Whereas timeshares are sold on a week-by-week basis (i.e., fractions of 1/52), private residence clubs are sold in much larger blocks of one to several months. Furthermore, the locations, amenities, design, spaciousness, and square-foot costs of private residence clubs are higher quality. Service level expectations are similarly elevated. The overall feel is quite distinct: a timeshare stay could be equated to borrowing a friend’s condo; a private residence club visit is more like renting the largest suite at a five-star resort, then adding a full kitchen, and few more bedrooms. Concierge services and exclusive access to golf courses is common, and not surprisingly, most well-known private residence clubs feature acclaimed five-star hospitality brands such as Ritz-Carlton, Auberge Resorts, Four Seasons, and Aman Resorts.

Owning A Second home

A logical question to follow ownership alternatives is, “Why don’t affluent consumers just outright purchase a vacation home?” Wholly-owned homes rarely provide the location, amenities and service levels of private residence clubs and never at the attractive pricing that they achieve. Year-round maintenance is an added perk, as owners don’t need to manage home upkeep while they aren’t there. Destination clubs may offer a broader selection of homes and destinations, but availability is often a concern, particularly if you’re in love with one or two specific locations. For families that are drawn repeatedly to a particular beach, mountain, city or other setting, private residence clubs can be the ideal choice. This is doubly true if you prefer the amenities and services typified by elite five-star resorts.

Unlike other forms of fractional ownership, private residence clubs tend to be focused primarily- almost exclusively- on second-home usage. Though private residence clubs are often sold as an investment vehicle, it’s prudent to place more emphasis on lifestyle and vacation benefits.

Trends: Up, Up, Up

In its young life, the private residence club industry has continually trended upward. Each newly-announced club aspires to be larger and more luxurious than its predecessors. Below is a summary of current trends:

• Larger fractions- at least 1/8th share
• Larger residences
• Higher quality finishes and furnishings
• More “luxury resort” caliber amenities
• Higher overall and per-square-foot prices
• More hospitality brands- usually command a premium on both buy-in and HOA dues