VOIC 2008: Opportunities among the Maple Leaves

By Colleen Isherwood
Editor

ORLANDO—Vacation ownership opportunities are alive and well in Canada, and while the credit crunch is affecting the country, Canadians have not experienced the meltdown faced by its American neighbours. That was the bottom line at a panel of five Canadians at the tenth annual Vacation Ownership Investment Conference hosted by Interval International and held in Orlando Oct. 6-8, 2008.

Ross Perlmutter, president of the Canadian Resort Development Association, gave a rundown of the situation from west to east. There is a lot of development on Vancouver Island, and developers are moving onto Gabriola and Saltspring Islands, he said. Whistler is built out except for the über rich who can afford to buy [timeshare] in the $250,000 plus range.

The Okanagan is the hottest area with inflationary prices. It has had astronomical growth. “It is our Napa Valley with wineries,” said Perlmutter. Kicking Horse, Invermere and Radium Hot Springs are the next frontier, he added.

Canmore, AB, a bedroom community for Banff, started being a new Whistler for Albertans about 10 years ago. “At this point, we have 10 times the amount of oil in Alberta than in Saudi Arabia,” said Perlmutter. The build-out for Canmore is 17,000 people.
Ontario cottage country is doing well with boutique-type fractional ownership—that market is extremely expensive. Quebec is dormant due to legal issues, but there are rumblings that it will come back soon.

The Maritimes have a phenomenal amount of ocean property that is very cheap. “Keep your eye on the Maritimes for the next explosive place,” he said.

Romanowski: Favourable climate for timeshare

Legislation in Canada is favourable to timeshare in Canada, Ed Romanowski, president and CEO of Bellstar Resorts told the panel.

“We have world-recognized events such as the Calgary Stampede, the Winter Olympics are coming to Vancouver in 2010, and there’s still a ‘positive hangover’ from when Calgary hosted the Winter Olympics in 1988.”

In Vancouver, Edmonton and Calgary there is a encouraging number of buyers, and there are also some from smaller markets such as Regina and Winnipeg.

“Canada is very influenced by the U.S.,” said Romanowski. The U.S. is Canada’s largest trading partner by far, and current economic conditions have an effect. The difference is that Canada has a far more regulated banking system, he said.

“There are major opportunities for vacation ownership in the west and in Canada overall. There has been a lot of growth in fractional and private ownership clubs—more than 20,000 units in Western Canada in the past 10 years. Great financing is available,” he added noting that some people say BC means “Bring Cash”.

“A recent People magazine article about what’s in and what’s out said that California’s Napa Valley was out, and people are now going to the Okanagan,” Romanowski added.

Perspective of a new fractional resort developer

Bill Van Gelder of Bluewater Acres Resort near Ontario’s Algonquin Park brought the perspective of a newly minted owner of a fractional project.

“This is my first project, so I am not speaking with 30 years of development experience,” he told the panel. “I can say that I have operated a resort for almost 30 years, and two years ago I started a fractional project. The launch was very successful.”

A lot of Ontario resort owners are looking for exit strategies, and they see vacation ownership as a great cash cow—easy money, he added. “Here are some thoughts to consider.”

o    If you get into fractional ownership, expect to spend half a million to a million dollars in startup costs for the launch. This is the year of highest risk for an entrepreneur.

o    Eastern Canada can be a four-season destination – if you’re selling five weeks, there must be something for every season. Winter activities are a must, and it’s good to have a major attraction—in Van Gelder’s case Algonquin Park—close by.

o    For months like November and April, an affiliation with a company like Interval International is essential, so that owners can trade their weeks for resorts in the sun.

Atlantic Canada benefits from the nostalgia trend

Panel moderator Sue Nickason, a principle of Canadian Resort Consultants Inc., hails from Atlantic Canada. She sees three advantages and three disadvantages in that market.
On the positive side, the cost of land is very competitive. There’s a nostalgia move—people who migrated west earlier in their lives want to go back east, especially after they turn 55. And the East Coast has good branding—known for things like Anne of Green Gables and the Cabot Trail.

The disadvantages are limited air transportation, the weather, and the fact that the infrastructure is not as developed as in other parts of Canada.

Advice to new developers

Pierre Genest, director, business development for Travelers Acceptance Corporation, has some advice for people looking to get into the Canadian vacation ownership game, noting that although Canada is similar in size to the U.S., it is a sparsely populated land with one tenth of the U.S. population. At the same time Canada has 13 jurisdictions and two official languages, all with different laws pertaining to selling vacation ownership and membership-based options.

“Look around and get good advice to find out what you can and can’t do,” Genest said.
In terms of the economy, Canada has not had the same reaction as the U.S., said Genest. “The valuation of our houses has not seen a significant decrease—most Canadians didn’t receive the same decrease in personal net worth.” In the near future he expects a lot of American-based resorts will market to Canadians.

“People feel with the market they’re completely out of control,” said Perlmutter. “We have a product that gives them control over the most important part of their life—their vacation. We are selling empowerment.”