PROFessiOnal - Tourism

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PROFessiOnal - Tourism
Watch and Roll: auto clubs
P rof e s s i o na l
Ferrari, Lotus, Porsche, or Rolls-Royce – who would not wish to drive these babies at least now and
then. Exotic or luxury cars bring not only the highest pleasure; they can be very costly with respect to
their maintenance and insurance. A popular alternative nowadays are car clubs offering a wide range
of beautiful cars for your choice. How do these clubs work? Can anyone join? And ... not that it is of
much interest but ... what is the price?
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DRIVE LIKE
A MILLION
BUCKS
A
number of factors were diminishing Gianluca Baldo’s desire to drive the latest luxury car.
As the owner of two vintage Alfa Romeo Spiders, Baldo knew
he wouldn’t have to shoulder just the cost of the new ride, but
also endless repair bills, time spent ferrying the car to the dealership for tune-ups and oil changes, and concerns about where
to keep it. In no time, the model would be out of style and he’d
be back at the starting line.
More than a year later, Baldo is driving covetable vehicles
such as the Lamborghini Gallardo, Ferrari F430, and Maserati
Spyder. And he doesn’t worry about dents or annual inspections. «It’s great to walk into someone else’s garage and they
throw you the keys,» says the 49-year-old owner of New Marble
Co., a high-end stone supplier in San Francisco. «There’s no
way I can provide that to myself. It’s way too much money.»
As a member of Club Sportiva, a «fractional car club» that
serves the Bay Area, Baldo has his pick of a collection of rare
and expensive cars, without the hassles of ownership. He started out with a basic annual membership costing around $3,200–
the price of a couple of repairs on his Alfa Romeos–and recently
upgraded to the elite level. For the additional $25,000, he drives
whatever he wants, whenever he wants.
Such operations aren’t like traditional clubs that bring together devotees of Mustangs or Minis; neither do they usually offer
part ownership in the cars, as fractional jet programs do with
planes. Instead, they are businesses that assemble collections
of automobiles and lend the vehicles to members for short periods of time.
Fractional car clubs began to appear in the U. S. around 2000
(the first, Classic Car Club, started in London in 1995), and
since then have been thriving on Americans’ growing desire for
affordable luxury. At last count, there were 17 such clubs, with
more cropping up every month, says Jamie Cheng, cofounder
of Helium Report, a San Francisco-based online consumer
guide for the wealthy.
Torbin Fuller treated himself to a 1982 Ferrari 308 when he
was working in finance for Ford Motor, but quickly realized he
was spending more time servicing the car at the dealership than
actually driving it. Maintenance was costing $1,000 a month.
«When I netted it out, it just didn’t make sense,» said Fuller,
who started Club Sportiva after selling the Ferrari two years
later. «Why not just share it? Part of the psyche right now is,
I want everything and I don’t want to be limited.»
There are, of course, some limitations. Car club members
pay an initial fee, plus annual dues that range anywhere from
around $3,500 to $30,000, all for the right to choose from a
selection of automobiles that they can drive for a certain number of days. Some operate on a point system–the nicer the car,
the more points required. However, shares often work out to
be less expensive than luxury rentals, which start around $600
per day for a Range Rover to upwards of $2,000 for the latest
Lamborghini. Plus, clubs throw in extras like home delivery and
detailing.
While members don’t experience the thrill of owning the cars,
they do get perks in addition to the driving. The initial focus in
the U. S. was on the vehicles themselves, but car clubs have
now morphed into country clubs with wheels. Most have large
clubhouses with bars, cigar rooms, and lounges. (Donna Karan
staged a fashion show and Sen. Barack Obama had a fundraiser at Classic Car Club Manhattan.) There are organized
road trips in the Bavarian Alps and overnight road rallies. For
the most part, members aren’t newly minted investment bankers; most drivers are middle-aged executives who already own
several automobiles. There are also celebrities: driver Mario
Andretti and Apollo 12 astronaut Dick Gordon are Club Sportiva
members. They tend to be cash-rich but time poor, Fuller says.
Why join an exotic car club?
Most members of an exotic car club are someone who:
...would rather have access to a fleet of exotic cars than owning one.
...doesn’t want to pay for an exotic car.
...doesn’t want to lose money on depreciation.
...doesn’t want to be bothered with maintenance and repairs.
...doesn’t want to pay extremely high rental prices.
...travels a lot and doesn’t want to see their car sit in a garage.
...doesn’t have time to use an exotic car for most of the year.
...wants to be a part of an exotic car club culture with added concierge services, programs, events, and other offerings.
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ing sold or sent to other branches, so there’s always something
new to drive, and members have a reason to renew. «Variety
is important. Cars go out of style; new models come in,» says
Milton Pedraza, chief executive officer of the Luxury Institute,
a New York-based research group. «It’s all about the experience.»
It’s also about money. The vehicles can cost upwards of
$250,000 (a 2006 Lamborghini Murcielago sells for $350,000),
and repairs, maintenance, and a garage can eat up more than
$12,000 annually per car. Then there’s depreciation: Some models can lose as much as $75,000 per year. Between buying cars
and creating a nice clubhouse, starting a car club requires at
least a $3 million investment, according to Michael Prichinello,
director of Classic Car Club Manhattan. «It’s a sexy business,»
Prichinello says. «But it’s not an easy business.»
«You get to play with fun toys and hang out with nice people
in a great space,» said Sean Kavanagh-Dowsett, 40, the owner
of three English restaurants and stores in Manhattan. His favorite lender: the 1965 AC Shelby Cobra. «We can’t all be Ralph
Lauren and own a stable of cars, but you can get a taste of that
world.»
Most collections include at least one Bentley, Lamborghini,
and Ferrari; the cars are rotated every few months by either be-
http://www.portfolio.com/
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SUPERCAR TIMESHARES:
HOW TO RATIONALIZE DRIVING
A FERRARI
if they wanted to allocate resources that way. All understand the
downside of keeping a Ferrari F355 happy and screaming.
Troubles with Exotic Cars
«Fixing them is not fun. Have it break and shuttling it to the
shop isn’t fun,» says car buff Keith Wolters, who founded the
Premier Car Club in Salem, N. H.«The fun part is when you hop
in and turn the key and it goes like it’s supposed to.»
«I have seen a lot of the headaches that exotic car owners go
through,» says Collin Smith, a Bay Area resident who works in
finance. And that’s the rational explanation of why Smith joined
San Francisco’s Club Sportiva, which also operates in Silicon
Valley, Calif. The other reason was the first sight of the club’s
1969 Jaguar convertible XKE, a classic racing green two-seater
with a long louvered hood.
Soon after joining Club Sportiva, whose annual fees range between $3,500 and more than $18,000, he booked the club’s 1982
Morgan Plus 8 for the week of his Napa wedding. He takes one
of the two Bentleys to the opera and up to wine country when he
wants room for another couple. «We try and find what’s appropriate,» Smith says. Some outings, that’s the orange 2005 Lotus
Elise. Other times it’s the red 2003 Maserati Spyder.
An unexpected result is that Smith realized he didn’t need
anything fancy or extravagant in his own garage. In fact, he
commutes in a Honda Civic that he can mile-up and not worry about. «I have the club, and it satisfies that desire,» Smith
says.
That’s what keeps these clubs multiplying. Most operate on
a point system and have varying deductions for each type of
car, day of the week and length of time used. Some have a
pay-perride scale.
As
of early 2007, there are nearly a dozen sports-car clubs
in the country that use a fractional or timeshare ownership model popularized with yachts, jets and vacation homes.
All offer members the chance to drive some of the world’s most
lusted-after automobiles without squelching that passion with
the worries of ownership. Many of the people who join the clubs
have owned an exotic car in the past. Or, they could afford one
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Scott Hoover, president of the Atlanta Driving Club, did some
research nationwide and found that people who owned what
he called «weekend cars» drove them an average of 40 days
a year. That makes the Atlanta club, which has three levels of
membership from $6,000 to $16,000 annually, a solid value for
drivers looking to take weekend jaunts in exotic cars.
Exotic yet Economical
Curvy Road, an offshoot of Exotic Car Share near Chicago,
offers fractional ownership, which means owners get a share
of the selling price. Among the clubs are the Classic Car Club
of Manhattan, the Otto Club in the Boston area, Privatus, in
Charlotte, N. C., the Van Horssen Group in Scottsdale, Ariz.,
and Velocity, which opened on April 4 in Greenwich, Conn., a
town synonymous with wealth long before hedge-fund managers settled there. Such was the demand that Chris Maybury,
one of Velocity’s founding partners, signed up potential members at the opening party. Among the 15 cars on display was a
rare Aston Martin DB9.
To drive that car or the club’s Porsche Carrera GT and Mercedes SLR McLaren, applicants must provide character references and pay a $3,500 initiation fee, then a $28,500 annual
fee. The club figures that two years of membership would cost
$69,260 and save $150,700, compared to buying that Porsche
for $455,000, only to pay taxes, maintenance and interest while
watching it depreciate in value $320,000.
Numbers like that are a huge selling point and a key reason
for the burgeoning numbers of clubs nationwide. «The economics work out well,» says John Caron, founder of the Otto Club.
This includes insurance that varies from state to state, but most
often uses the member’s policy as the primary protection.
Welcome to the Club
Jamie Cheng, founder of the Helium Report luxury market
research firm, suggests that anyone considering a club membership go beyond getting info on the number and models of
cars. He says prospective members should ask about availability, so they’ll know how likely it is they’ll get the car they prefer
at the time they want it. He also recommends getting a clear
understanding of exactly what comes with membership. What
are the extra charges? Is the club more about the cars or the
club program? «Some are places to hang out, like cigar clubs
were 10 years ago,» he says.
Joining one of these clubs isn’t necessarily easy. Most rely
on word of mouth to find new members. All the clubs put prospective members through an extensive application process. At
Club Sportiva, not only does the club check driving records, but
staff members interview applicants to determine their expectations and predict whether they’ll fit in with the group, says Torbin
Fuller, the club’s founder.
Picking the right people keeps everyone happy. «You want
like-mindedness,» says Otto’s Caron. Give them what they
want, and more enthusiasts join. He didn’t plan on having a
cigar room in the clubhouse, but members thought it would be
great, so now there is one.
When the group clicks, «it’s great,» says Stephen Doherty, a
Premier Car Club member who lives in Andover, Mass. He says
he enjoys the camaraderie of the club almost as much as driving the Hummer or the Lamborghini.
Club Sportiva coordinates wine tasting, scotch and cigar
nights, go-carting expeditions, quarterly road rallies, poker
nights and events like a private tour of the Tesla headquarters.
At all the clubs, concierge services are the norm: Tickets to
sporting events, travel arrangements, car services and even
dry cleaning pick-ups are offered. Sportiva also operates an
auto brokerage, buying cars for members for about 1 percent
above cost, then handling all the paperwork and delivery arrangements.
Almost all the clubs solicit member opinions before buying
new cars. In Atlanta, the debate is between a late 1960s Pontiac GTO or Chevrolet Camaro convertible. «I think the GTO
is in the lead right now,» Atlanta’s Hoover says. In Greenwich,
there are discussions about a chauffer-driven Bentley.
Training, Training…
Another universal feature is driver training. A trip to driving
school, if not required as part of joining, is strongly encouraged.
«A Lexus is not a Lamborghini,» Sportiva’s Fuller says. Before
each drive, Club Sportiva members receive a 45-minute tutorial
on the nuances of their ride. «The goal is comfort and safety,»
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are instructed to roll down their windows so they can hear the
Ferrari’s V8 or V12 engine echo through the canyons. The route
twists by the mountaintop fortress that was the villain’s stronghold in the 1969 James Bond movie «On Her Majesty’s Secret
Service.» Keep driving down the same Alpine road to track the
chase scene involving the Aston Martin and Ford Mustang from
the 1964 Bond classic «Goldfinger.»
Some Sportiva members spend as long as a month driving
through Europe, says founder Torbin Fuller, but the average is a
week to 10 days. The club makes route recommendations and
handles all arrangements.
Take the winding roads of Italy’s Amalfi Coast or detour off
the Strada Chiantigiana as it dips and twists through Tuscany
between Florence and Siena. If top speed in a straight line is
on your to-do list, then Germany’s Autobahn beacons between
Audi, BMW and Porsche factory tours.
In September, Boston’s Otto Club is planning a six-day tour
for up to 20 members and guests. The program starts in Stuttgart, with a private tour of the Porsche factory. While the exact
itinerary has yet to be finalized, a Porsche factory driver is selecting the route and leading the way. In addition to driving, club
members said they wanted to learn more about fine watches
while in Switzerland. Private tours and presentations will be
held at three houses.
European group tours are in the planning stages for members
of Exotic Car Share, located in Palatine, Ill. Until then, founder
George Kiebala helps members plan a trip. He also encourages
local tours, such as a jaunt to the historic town of Galina, Ill.
While Austria, France, Germany and Italy are top destinations
when club members vote, individual drivers also roam through
France and occasionally north to Scandinavia. Insurance and
red tape keeps the clubs out of scenic spots elsewhere in Europe, like Croatia, Greece and Turkey.
Of course the car share clubs offer stateside trips, too. This
May, Classic Car Club will lead 20 of its members on a rally from
their Manhattan home base to New Orleans in the club’s elite
vehicles, taking southern back roads along the way. Classic Car
Club bills the second annual trip as the «Rally to Hell» and «the
ride of a lifetime.»
Renting Exotic Cars vs. Joining a Fractional Car Club:
Renting an exotic car is usually impractical, since exotic car rental companies
charge extremely high rental rates. For example, a 2006 Ferrari F430 Spider
is rented for $3,000 per day or $18,000 per week, on average. Compare those
prices to the average prices of $300-$450 per day to use a Ferrari as a member
of a fractional car club. Also, exotic car rental companies usually have limited
options, that are often booked during busy periods, and so exotics aren’t always
available with rental companies as they are with clubs.
Fuller says. If they’re comfortable with the car, they’re safer.»
In four years of operation, the club has yet to have one of its
vehicles in even a minor fender-bender.
Driver training is perhaps even more important for the clubs
that operate in areas where winter brings snow and ice. None
of the clubs close down, but they do bundle up. The Hummer
gets a workout at the Premiere Car Club. The Otto Club gives
members credit for days when it snows and they must keep the
car in the garage.
Suzanne Garner, a Silicon Valley software engineer, tends to
wait until Northern California’s rainy winters end before exercising her Club Sportiva membership. An «Elite» member, she has
access to every car in the club, and uses them. «I love cars and
I love driving… I put a lot of miles on the Sportiva cars.» An
enthusiastic participant in club events, Garner became the first
female amateur to drive a Formula One car on a U. S. track, an
opportunity that the club organized. On more ordinary weekends she takes driving trips by herself – it’s «a chance to get
completely away,» she says.
Garner admits that without the club taking on the burdens of
maintenance, storage and repair, driving such exotic vehicles
would be less appealing. «I couldn’t manage all the work,» she
says «The cars are always beautifully detailed. You just get in
them, drive and have fun.»
Tours in Europe
Another way exotic car share clubs seek to optimize the enjoyment and minimize the hassles of driving supercars is by
arranging tours of Western Europe in sports cars comparable to
those in the home stable.
While any Ferrari owner can arrange a tour of the Maranello
factory through his or her local dealer, the clubs’ forte is handling
all the coordination before and during travel, thus buying time
for members while assuring them of peak experiences. Befitting
the level of exclusivity of the cars these clubs offer, all hotels
are world-class, all meals gourmet and all problems solved, if
humanly possible. Clubs will even handle all of the paperwork
(purchasing, licensing and shipping) involved with carmakers’
own European delivery programs.
But true enthusiasts will most appreciate the car club staffers’ inside knowledge: On an Alpine route, Sportiva members
by Elizabeth Blish Hughes
http://finance.yahoo.com/
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FINE LIVING TOP 5:
LUXURY CAR CLUBS
The price for such a fabulous life? It will take a joining fee of
$1,500 and an annual membership fee of $7,000 or $10,500,
depending on your intended level of participation. The best option may simply be the lifetime membership for $55,000.
With a goal of 80 cars, there are already over two dozen on
hand. Next to Jerry Seinfeld’s collection, the fleet is one of the
nicest in New York, reading like an enthusiast’s wish list: Ferrari,
Lotus, Porsche, Rolls-Royce, and so on. One of the cool things
about Classic Car Club is the lineup that can’t be found with
other clubs. Love mechanical Italian opera? A pair of fine Alfa
Romeos await. Forget the replicas; you can drive an authentic AC Shelby Cobra or Porsche Speedster. Feeling patriotic?
Jump in the ’65 Mustang convertible or the ’67 Chevelle. And for
the gangster in all of us, a pimped-out ’68 Lincoln Continental is
ready to roll through your neighborhood.
Classic Car Share, Illinois
The oldest and largest luxury car club in the U. S. and an international race resort…
While some of these clubs are new to the game, greater Chicago’s Classic Car Share identifies itself as the oldest and largest of its kind in the U. S., as it was established in 2000. To think
of a pioneer in a field less than 10 years old is a little unusual,
but remember that the luxury car club market is still emerging.
Classic Car Share fees are some of the most reasonable you
will encounter; it just takes $250 for a five-year membership.
Then, the price you pay depends on whether you have a car out
for a three-day weekend ($330 per day) or a week ($214 per
D
riving classic and exotic cars is sybaritic. When they are
in proper tune, a synergy is created between man and
machine. All feels right in the world. Nothing could possibly ruin
that feeling of… clunk. Well… except for the dissolution of that
synergy vis-à-vis the sudden resignation of essential bits and
pieces, punctuated by a cloud of smoke or a trail of fluid. We
may hold skilled auto technicians in high regard, but we still
don’t enjoy the presentation of the repair bills – especially when
they involve multiple pages and the inclusion of a comma in the
total figure.
«Never fight an inanimate object,» P. J. O’Rourke wisely advised. Fair enough. But how does one enjoy the otherworldly
experience of a great automobile without the weeping and
gnashing of teeth, whether your own or the car’s?
For a growing number of enthusiasts, the answer is membership in a luxury car club. Whether structured as time-sharing,
fractional ownership or glorified rental, these clubs afford members the privilege of experiencing fine cars without the requisite
downfalls of ownership. Although most members could easily
afford such vehicles, they would rather have someone else
shoulder the depreciation, insurance, maintenance, and storage.
Let us took a look at some of the best luxury car clubs:
Terminology:
Car Share Club
generic term for any club where membership enables
members to use cars.
Sign-Out Period
the amount of time a member can use a car per usage,
usually measured in days. Minimum sign-out periods
range from 1-7 days, while maximum sign-out periods
range from 1-2 weeks (depending on the club and plan).
Member-to-Car Ratio the number of members per car. Understand how a
club uses this ratio, as this ratio does not tell you much
about how available cars will be. Some clubs have
large percentage of inactive or less active members,
whereas other clubs have a higher percentage of active
or very active members. A better ratio to use is the
availability ratio.
Reservation Rate
the percentage of time that a member can reserve his or
her first-choice car. Some clubs do not track this rate.
Pay-per-Use
members pay each time they use cars, as opposed to
using pre-paid points or days to use cars. Clubs usually
have a minimum sign-out period (e. g. 3-day minimum).
Points-per-Use
members use pre-paid points for each use.
Fractional Ownership members own rights to usage and, in some cases, equity
in cars as well. Note: Most «fractional ownership»
clubs do not offer equity in cars.
Classic Car Club Manhattan, New York
«All the fun, none of the hassle» is the assertion of Classic
Car Club Manhattan. Born in London in 1995, the Classic Car
Club idea was a smash. Having parlayed its UK success into
the New York venture in 2005, the club is definitely in the passing lane; it even landed on VH1’s Fabulous 40 for 2006.
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Exotic Car Country Club, Florida
If you want to experience all the splendor of an automotive
buffet, your best bet is to head for Florida. However, if you simply want to sample the menu of cars from Florida’s Exotic Car
Country Club, you only need to be within the continental U. S.;
they deliver and pick up the cars themselves.
One of my favorites on this list, Exotic Car Country Club is
ideal for the enthusiast who has plenty of cash flow, and loves
to sample from new and classic luxury and exotic cars. Hardly the lowest-priced in our group, its refundable membership
fees range from $100,000 to $250,000 depending on the level.
Monthly – yes, monthly – membership dues run between $1,600
and $1,800. There is no minimum length of time to keep a car,
though the club’s patience wears thin if you keep a car for three
months (the limit for most models). While you pay for delivery,
Exotic Car Country Club pays the return shipping.
Platinum, the most inclusive membership level, allows access
to the cars you would expect in this price range, and like Classic
Car Club Manhattan, Exotic Car Country Club also has several
cool twists on the «typical» high-end car selection. Lamborghini
lovers can dust off their gold chains and fire up a Countach,
turn heads in an obscure Jalpa or head for the hills in a LM002
SUV. There are actually two Vectors on hand, which quite possibly represent a sizable fraction of the models still in existence.
Special edition 288 GTO, F40, F50, and 550 Barchetta Ferraris
are also on the menu. It is a tad more expensive than food from
a trough, but this all-you-can-drive buffet satisfies any automotive appetite.
day). Eyeing the Ferraris? To drive off in the red Mondial, 348
Spider or 355 Spider, it will take $480 per day for the three-day
scenario and $314 per day for the weeklong plan.
The rest of the stable is desirable, too. In contrast to some
clubs, Classic Car Share’s youngest cars may not be brand
new (save for the 2006 Corvette convertible), but they are all
in great shape and will not disappoint. Just keep in mind the
company name. The aforementioned Vette is in good company;
it shares space with a ’64 convertible and a ‘69 coupe. Other
classic muscle car options are a ’68 Pontiac GTO and ’69 Ford
Mustang Mach I. Contemporary road rockets include a Dodge
Viper Coupe and a Porsche Boxster S. LuxShare Auto Club, Indiana
Sometimes, you need to go off the beaten path. Evansville, Indiana is home to one of the newest clubs, LuxShare Auto Club.
Yes, Evansville, Indiana. Before you dismiss the idea, keep in
mind that the city already has an established Panoz dealership
in Buxton Motorsports. In fact, owner Brian Buxton is also the
man behind LuxShare.
To get on board, it takes $250 to enroll and annual fees of
$7,250 for a standard membership or $9,000 for premium status. A point system is also attached to each membership level.
Race Resort Ascari, Spain
If Race Resort Ascari’s location stands out among these other
hotspots, you will have to excuse me. Quite simply, it is an outstanding club. So while I made an exception and ventured outside the States for this one, you’ll see it is well worth the journey.
Inspired by and named after racing legend Alberto Ascari, this
members-only track and onsite resort began development in
2000. Today, its valley location in southern Spain is as great to
behold as it is to drive. The circuit consists of three configurable
subsections totaling a little over three miles. I hope you like G’s,
because the track has 26 corners in all, making up roughly 42 %
of the ride.
But to experience these lateral G’s, it will take a few G’s from
your wallet. Individual memberships require a one-time joining
fee of about $160,000 U. S. and about $6,400 U. S. annually.
You are then welcome to bring your own car to the track for 50
days per year.
If you would rather not put your own car through its paces on
Ascari’s track, the club has several track cars to choose from at
extra cost. Finally, if you’re worn from too much driving or celebrating at the clubhouse after your laps, you will take comfort
in knowing a hotel and spa are being planned.
Questions to Ask
Is insurance included in the usage fees?
What is the club’s rental guarantee policy?
What is the average price per day?
What is the reservation rate?
What is the member to car ratio?
How many members are in the club?
What is the club’s total member goal?
Are there any additional fees?
Can I let my friends, family, and/or colleagues use my membership?
Is car delivery provided?
Can I store my car at the club?
What kind of concierge or additional services, if any, does the club provide?
What is the nature of the club culture?
Does the club have plans to raise prices and policies in the future?
How safe is my membership fee and annual due?
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Nothing too complicated – just a bit of anticipation as LuxShare
builds its membership and fleet to target levels.
On the horizon, Buxton envisions members choosing from
Ferrari, Mercedes-Benz, Porsche, and Rolls-Royce keys. At the
moment, the roster is filled by Porsche Cayman S’s. And by that
we mean one. Obviously, this is the dicey part of establishing
a luxury car club: To gain members, you need cars. To gain
cars, you need members. Buxton has demonstrated solid per-
formance as a dealer, so we suspect he’ll gain momentum with
LuxShare as well.
http://www. askmen.com/
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EXPERIENCE
VERSUS
OWNERSHIP
For
the rich, ownership used to be everything. Ten years
ago, no self-respecting multi-millionaire or billionaire
would have been caught dead in a rented car, rented house or
rented boat. What was the point of being rich if you couldn’t own
your own status symbols?
Now, a sea change is sweeping through the luxury world in
the form of fractional ownership. It started with jets, then moved
to plush vacation homes (rented by destination clubs) and automobiles available from exotic-car clubs.
The next wave in fractional ownership? Yachts. YachtPlus,
the U. K. based company, is building a fleet of ten yachts to be
sold off in fractional pieces. Each of the 132-foot long boats will
be divided into eight shares sold for $2 million each. (For those
about to get out their calculators, that works out to $121,212.12 a
foot.) In an article, Han Verstraete, chief executive of YachtPlus,
says that the rich no longer prize ownership. They prize experiences.
«My typical customer will have three real-estate assets and
perhaps also do some sharing of jets,» he says. «The yacht
experience is the experience these people are seeking next.»
The article also quotes James Lawson, senior research director at Ledbury Research, saying that «many wealthy people are
looking for driving lessons organized by Ferrari, cooking lessons
by celebrity chefs, and exclusive travel and holiday experiences.
Experience is becoming more important than ownership.»
This is the common sales pitch from all fractional companies.
Why own when you can co-own? Why deal with the hassles of
finding a plumber for your house in Cabo, repairing the transmission on the Ferrari, and hiring your own pilots when you can
let someone else do it and still enjoy the ride?
It’s a reasonable argument – up to a point. Today’s wealthy do
indeed value experiences as much as things. But that doesn’t
necessarily mean they want to share the cost of their things.
Fractional ownership is likely to keep growing as the ranks of
wealthy and affluent explode. But the industry will have to overcome three major hurdles:
The Christmas-Vacation Effect
Tanner & Haley, the first destination club, went bankrupt in
part because all of its members wanted to be in the same vacation spots at the same times. So the company had to rent
homes to accommodate the unexpected demand. Fractional
ownership is based on the premise that all owners will want to
use the asset at different times. But, inevitably, they all want to
use their toys during peak holiday times – Christmas and New
Year, Easter break, and August. When all eight owners of the
YachtPlus yacht want to use the boat for the first two weeks in
August, what happens? (Even rigorous scheduling and point
systems leave people disappointed.)
The Wealthy Don’t Like to Share
These are people who have worked hard for their fortunes
and are used to getting top treatment. They like things their way.
Fractional yacht-ownership has run into trouble in the past because owners typically want their own kind of boat, crew service
and trip itineraries. Can you imagine eight multi-millionaires trying to agree on flatware?
Economics
In the end, fractional ownership is only as strong as the partners. What if you buy a boat with eight people and two end
up bankrupt? What if the company selling the shares suddenly
finds itself in dire straits? While fractional ownership may spread
the costs of ownership, it also expands the pool of risks.
And as renting and chartering becomes increasingly popular
for top cars, yachts, planes and mansions, co-owning starts to
look less attractive. Fractional ownership looks like it has the
potential to combine the worst of both worlds – the price of ownership combined with the personal costs of sharing.
http://www.exoticcarclubs.com/
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