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Fractional Ownership News
Creating a business opportunity from the ashes of an industry in shamblesDate: 28/09/2009
Article source: www.fractionalownership.co.za
Creating a business opportunity from the ashes of an industry in shambles
Mac van der Merwe, CEO of Zorgvliet Private Residence Club
How best to acquire vacation ownership has for a long time been a bone of contention.
Over the past decade or two, various models have been developed by property developers to sell vacation and leisure products in a growing market. The focus was on innovative pricing structures and hard-sell tactics, which not always served the best interests of the consumer. Timeshare salespeople earned huge commissions and had no or very little annuity responsibilities to the client. Some unscrupulous sales agents made unrealistic promises, which hurt an industry which in essence offers great vacation opportunities.
The meltdown of the industry was as a result of the above - obviously compounded by the global economic situation. As in many other industries, this situation created a new dispensation and opportunities.
Various market surveys indicate a clear shift to experience-based vacations – living the story, not just looking at the photos. Creating ‘vacation brands’ is a move towards brands offering excellent locations, luxury facilities, sound value propositions, high-level supporting hospitality service levels, and above all - aspirational experiences. Bland brands are of no interest to new-generation consumers. Some of the multinational role-players are offering excellent products, underpinned by efficient administration backbones. Mixed-use developments are becoming the norm in the hotel industry. Companies such as Interval International provide credible global vacation exchange options in association with the developers.
The economic crisis is fuelling the evolution of more and better options. The sales processes are also undergoing a shake-up. The promise-maker and the promise-keeper should be integrated and speak as one; on-site presentations have become the norm, where consumers can have a thorough understanding of what they are buying into.
Some discerning consumers desire more intimate and unique vacation experiences, which opens the door for smaller vacation providers to find a special niche. These destinations are usually not able to offer economy-of-scale vacation ownership benefits without losing their identity in mergers or corporate agreements. Affiliation with credible global exchange service providers is difficult to achieve, member services are limited, value-added advantages not competitive, with a lack of industry training, non-comprehensive communication of vacation ownership news and access to industry soundboards difficult to sustain.
To some extent South Africa is not different from the rest of the world in this respect, but as an emerging market we do offer exciting green field opportunities. The eyes of the world are slowly focusing on South Africa as the gateway to Africa and the 2010 World Cup is adding additional incentive for developers as well as consumers to ‘get into’ the country.
The Zorgvliet Group started to research vacation ownership in August 2007, the objective being to develop a business based on multi-destination niche products under one umbrella. At that stage the Group had already developed a number of properties – five-star game and safari offerings, various inland leisure resorts and a unique wine and vineyard vacation concept - and established a sound hospitality backbone. The research brought to the fore key success factors and consumer hot buttons. We got very excited when we saw that our strategy of developing experience-based offerings is the essence of many successful Private Residence Clubs. We were not selling dreams that still have to be constructed, and can convey to consumers that we have faith in our product strategy - having first developed and then selling gives us an additional edge in the market.
Development of the various properties started in 2002 with rebuilding of the 1692 Zorgvliet Estate in the Banhoek Valley outside Stellenbosch. Surrounded by mountains and rich in South African history, the platform was set to create something very special. Vineyards were planted, a state of the art cellar has been constructed, an old manorhouse dating from 1692 restored as an authentic Banhoek Valley restaurant, the Zorgvliet Boutique Hotel constructed and a range of leisure facilities developed. The Zorgvliet brand evolved around the promise of ‘special experiences for special people’, and Zorgvliet wines are regarded as some of the best in South Africa. Vineyard holidays were established where guests can get involved in the total chain of viticulture activities and wine-making. Plus - members of the Zorgvliet Private Residence Club (ZPRC) get 24 bottles of award- winning Zorgvliet wine per year with a personalised wine label!
Developing Ka’Ingo Private Game Reserve in the malaria-free bushveld as a part of the ZPRC has taken shared vacation ownership to a new level. Three five-star safari camps in this privately owned big five reserve created various accommodation offerings for ZPRC members - from Dinkweng’s three-bedroom self-catering lodges and Ka’Ingo’s main camp luxury rooms with Ka’Ingo restaurant and extended leisure area to the River Camp overlooking the Mokolo River. Traversing a 16 000 hectare nature reserve where elephant, lion, leopard, cheetah, white rhino, buffalo and antelope roam flat savannah grasslands bordering the Mokolo River, rolling hills and breathtaking gorges, Ka’Ingo Private Game Reserve is the epitome of wild life conservation. Members of the ZPRC can participate in the various conservation projects if they wish or just learn more about the activities from the professional game rangers. Daily game drives, rock art excursions and other activities all support this unique experience vacation destination. Zorgvliet Portfolio was further extended to include inland resorts such as the Riviera on Vaal Hotel and Country Club outside Johannesburg and Protea King George Hotel on the Southern Cape Garden Route.
The ZPRC club structure was subsequently developed incorporating all the elements of a multi-destination, niche experience-based private residence club. In order to address the need for total flexibility the usage is on a floating booking system with minimum usage restrictions. The model pivots on hospitality agreements with the operating entities at the various destinations. By not selling more than 50% of the time, members are ensured of adequate inventory availability. ZPRC was affiliated to Interval International, securing global exchange opportunities through Interval’s unique programmes. ZPRC members can benefit from the Request First or Deposit First options, Getaway offers where members can buy additional global vacations from R2500 per week and various special offerings only available to Interval members. The company is market-driven and has developed vacation options including perpetual ownership and concessionary usage products secured by a registered rental deed from R72 000 per week per year. The ZPRC brand is being acknowledged internationally as a unique model for smaller experience-driven vacation developers.
Since the international introduction of the ZPRC we have received many requests from parties interested in pursuing alliances as well as the related investment opportunities. Parties showing interest are from Bulgaria, the USA, UK, Germany and Mozambique. ZPRC is structured to accommodate similar products and developments; in addition, potential investors are invited to participate in the equity base of the company and new developments.
Interest in South African properties and investment opportunities is constantly growing, and the Zorgvliet Group is well positioned to capitalise on this. The company is family-owned with low gearing, and well positioned to optimise on the 2010 World Cup focus. The ZPRC is currently driving a project on the back of the World Cup event aimed at ongoing relationships with the soccer tourists, offering vacation ownership with guaranteed accommodation over the event.
Contact Mac van der Merwe at firstname.lastname@example.org.