One tends to see it stated everywhere that the rise of the wealthy is going to be good news for the fractional industry. Now obviously to indulge in this sort of leisure spending you have to have a good chunck of disposable income (and probably capital), but I wonder if fractional ownership is really the answer for the seriously rich. My concerns about this are twofold:
1. The rich have worked hard for their money, and (I imagine) don’t want to compromise on their leisure experiences and when they can take them. If they are able to pay $300,000 to buy into a “luxury” private residence club they are probably in the position where they could put this money down as a deposit and get a mortgage to buy a property outright. They would then be able to use the property whenever they wanted and possibly arrange to rent it out at other times.
2. Anyone I have ever met who has accumulated a fortune tends to be quite careful with money. This is not the same as saying that they don’t spend it, they just want to see that they are getting good value when they do. Most so-called fractional schemes on the market today ask for a large capital investment (in addition to an ongoing fee) with no possibility of captial appreciation. Surely most seriously wealthy consumers are going to see through this?
Point 1 above is common to all forms of collective ownership. Point 2 however is related to the types of schemes that are currently on the market. If there were more schemes in which the fractional owner could benefit from capital appreciation (and possibly investment gearing through mortgages) then this situation would be improved.
