The following series of questions are really helpful in planning the development of a successful Fractional Ownership or Private Residence Club vacation property.The questions have been developed from deep experience in the fractional sector. Use the questions and the ensuing answers to guide your development plans.

1. How easy is it for vacationers to access to the resort?
2. How much competitive vacation development is there in the resort? Is more needed?
3. Can the resort's existing infrastructure accommodate current vacationers or are more beds needed?
4. How much Fractional development already exists in the resort? How many new and resale properties are already on the market?
5. What is the market level of the resort-upscale, mid-scale, value-conscious, etc.?
6. Is the resort a destination or a regional resort?
7. What are the income levels and demographics of the owners of vacation property in the resort?
8. What are the usage patterns of vacation property owners in the resort in terms of:
1. Amount of owner use by season?
2. Extent of multi-week owner use? Weekend use? Weekday use?
3. How far in advance do owners in the resort generally make reservations?
4. To what degree do owners in the resort make last-minute reservations? How last-minute are they?

9. What is the location of the club within the resort relative to accessing beach, golf, skiing and other facilities?
10. Does the club conform to zoning laws? Is fractional ownership permissible?
11. Will the club be newly constructed or will it convert whole ownership properties to fractional ownership? Will converted properties be condominiums, single-family detached homes or other?
12. Is the quality level of the proposed club consistent with that of the resort and the expectations of its target purchasers?
13. What is the nature and extent of amenities offered by the club?
14. What are proposed unit sizes and configurations? How do they compare to existing vacation properties and to the needs of the target purchasers?
15. Is the scale of the club appropriate relative to competition from new and existing resale properties? Does the resort have sufficient infrastructure to accommodate additional vacationers?
16. What is the type of construction proposed-high-rise, townhouse, single-family home, other? Is it suitable to the demographic profile of target purchasers?
17. Will members be allowed to rent out their units? What are the advantages and disadvantages of including lockouts in some or all units?
18. What is the architectural style of the proposed club and how does it compare to existing resort development?
19. What is the interior design style of the proposed club and how does it compare to competing new and existing properties?

20. Have these items been addressed in the Business Plan?
    1. Executive Summary including an overview of the proposed development, proposed financing and projected returns; historic growth of the fractional industry; and future growth potential,
    2. The market opportunity offered to investors and to purchasers
    3. Operating Pro Formas; Phase-by-Phase and Monthly Cash Flows; and assumptions for all line items
    4. Project Status including amounts invested to date, how the development land or whole ownership properties are being controlled, status of permits and proposed time schedule
    5. The proposed investment; returns of and on capital; projected timing of returns; and the proposed use of funds
    6. Market analysis including numbers and nature of vacation visitors to the resort, the area's real estate market, overall current market trends, market depth, competition, pricing trends, and sales velocity statistics,
    7. The proposed fractional property including:
    1. Comparison to local and national competition;
    2. Comparison to local competition in terms of amenities, architecture, décor, etc.;
    3. Owner privileges and services;
    4. Offering program-unit mix; membership structure; usage rights and member benefits;
    5. Feasibility analysis for the fractional ownership development
    8. Marketing and Sales Plan overview, including market positioning and strategy and specific marketing and sales programs
    9. Description of the background and experience of company management and associated professionals
    10. Summary of relevant risk factors applicable to the fractional ownership development and steps taken to mitigate risk

21. What type financing is needed (equity, debt, mortgage.)? How much is needed?
22. What sources of whole ownership or fractional financing are available for new construction or for acquisition of existing property for conversion to fractionals?
23. How can presentations to these sources be made convincing? What are some sources for each type of financing?
24. What is the typical cost range of each type of financing?
25. What are the criteria applied by debt and equity sources in considering club financing?
26. What are the ranges of return generally required by debt and equity sources?
27. What percentage of financing will be equity and what percentage debt?
28. Specifically what financing sources are available to cover development soft costs?
29. How can prospective financing sources be educated on the fractional ownership market segment?
30. What reliable statistics can be presented for the growth and performance of this segment?
31. What has been the performance of the Fractional/Private Residence Club market segment to date?
32. What are some ways of negotiating with potential financing sources?
33. What are some advantages and disadvantages of having representatives negotiate the financing rather than doing so oneself?
34. What areas can typically be negotiated with financing sources?
35. What pre-sale thresholds will generally be required prior to funding?
36. How can a developer create investor confidence in his ability to meet these thresholds?
37. What are the projected Sources and Uses of Funds and Cash Flows for the project?
1. Phase by phase
2. Consolidated for all phases
3. Monthly for each line item
38. What are the assumptions for each line item in the pro forma?
39. How do line item ratios compare to generally accepted industry standards?
40. What is a conservative pro forma; a downside pro forma; and an optimistic pro forma? How does each impact the returns presented to prospective investors?
41. Do pro formas accurately reflect all occurrences that might impact the project such as cost overruns, slower sales velocity than projected and lower price increases than projected?
42. How can the developer deal with these situations should they arise?
43. What are some available sources of mortgage financing for fractional owners?
44. What criteria do funding sources apply in considering commitment to a development?
45. How can these sources be educated on this new market segment and the opportunities it presents to takeout financing sources?
46. What is the performance history of takeout financing in other Fractional/Private Residence Club developments?
47. How does one negotiate with mortgage money sources?
48. What are some advantages and disadvantages of negotiating oneself or having representatives do so?
49. Typically, what potential areas of negotiability are there with mortgage financing sources?
50. What takeout mortgage financing is available for fractional owners in terms of rates, amount down, amortization period and points?
51. What due diligence questions may one reasonably expect from funding sources, and how does one answer these questions?

52. What are some criteria for selecting team members in these areas?:
1. Architecture
2. Engineering
3. Interior design
4. General contractor
5. Landscape architecture
6. Appraiser
7. Construction Manager
8. Project Manager
9. Attorneys (local, tax, registration, etc.)
10. Accountant/auditor
11. Director of Marketing/Marketing Manager
12. Ad agency or in-house personnel (or both)
13. Direct mail agency
14. Public Relations agency or in-house personnel (or both)
15. Director of Sales/Sales Manager
16. Support personnel such as IT personnel, sales contract administrator, sales center receptionist, etc.
53. Which of these consultants, if any, will be employed? Who are among the known leaders in the industry?
1. Feasibility analyst
2. Development consultant
3. Marketing consultant
4. Sales training consultant
54. Who will fill the above roles and what is their experience and reputation?
55. What is the compensation range for each of the above positions?

56. What permits are necessary to move forward with the development?
57. Has the land under consideration already received any permits, and if so, which ones?
58. What is the timing estimated for each of the permits remaining?
59. What remains to be accomplished for each?
60. Are these requirements objective or subjective and thus subject to political whim?
61. What costs can be expected in obtaining the remaining permits?

62. What type of usage rights should be incorporated in the club?
63. What are the possible usage structures to be considered?
64. What are the advantages and disadvantages of the following systems?:
1. Rotation system
2. First-come, first-served system
3. Preferred Reserved Week system
4. Unlimited use subject to availability
65. How can the reservation system provide for early and last-minute reservations?
66. Should back-to-back weekly reservations be permitted? If so, how can the reservation system accommodate them?
67. Should there be split-week use? If so, how can that be accommodated?
68. Should there be provisions for Space Available reservations? If so, how?
69. How many memberships should be sold for each residence?
70. How does the proposed reservation system compare to the use of patterns of whole owners in the resort; and reservation systems in other Fractionals?

71. What should the form of the membership be?
1. Fractional fee simple, deeded ownership
2. Undivided pooled ownership
72. What are the advantages and disadvantages of the above forms of ownership-from the legal point of view as well as from the perspectives of marketability and potential availability of takeout mortgage financing?
73. In which state or states will the offering be registered?
    1. What are the projected legal fees associated with registrations?
    2. What are the time frames in each state for approval of the registration?
    3. Which states provide for an initial approval allowing refundable reservations prior to complete effectiveness of the registration?
    4. What is the time frame for such initial approvals?
74. What is the advisability of requiring all resales to be made through the developer's sales agents?
75. What provisions should be made for the extent and duration of developer control of the club?
76. What is the advisability of permitting owners to rent out their property on their own? Through on-site management?
77. Should there be a rental program? If a rental program is advisable, how can it be structured to maintain the feeling of clubbiness and exclusivity?
78. What tax structuring techniques are available to developers?
79. Which tax techniques are appropriate to one's personal circumstances and why?
80. What, if any, tax considerations should be addressed from the perspective of club members?

81. Which of these services and amenities will be provided?:
1. 24-hour bell staff
2. Concierge services arranging travel and reservations to and from the resort and within the resort
3. Spa services
4. Restaurant
5. Central club room
6. Changing room for early arrivals and late departures
7. Entertainment center-DVD, VCR, etc.
8. Private internet and email access
9. Business support services
10. Transportation arrangements to and from nearby airports
11. Complimentary transportation within the resort
12. Pre-arrival grocery service
13. Other
82. What is the projected cost of these services?

83. How will the Club or individual home be staffed?
84. How will property management be handled?
85. How much maid service will be offered? Who will provide it?
86. What is the projected annual budget for the property?
87. What will the annual maintenance fees be per member?
88. Will the developer subsidize maintenance fees? For how long?

89. What are the advantages and disadvantages of a hotel brand?
90. What hotel branding relationships are appropriate and available???
91. What is the possibility of joint marketing with a hotel brand, with existing hotels in the resort or with a strategic marketing partner?
92. What are the advantages and disadvantages of an exchange network?
93. What exchange network relationships may be available?
94. What are the advantages and disadvantages of affiliation with city and country clubs in appropriate locales?
95. What city and country clubs are available for that type of affiliation?
96. In what professional organizations is membership advisable?
97. To which relevant publications are subscriptions advisable?
98. What conferences and seminars should one consider attending?

99. What will the name of the club be? Why?
100. What is the overall market positioning and slogan for the club?
101. What are the specific marketing programs planned at each stage of the development?
102. What cities and states will be targeted? What is the basis of this decision?
103. What specific demographic groups will be targeted?
104. How can one obtain lists of qualified purchasers in the major feeder cities and states?
105. What are the marketing messages that will likely succeed with the target market?
106. What are some of the latest state-of-the art web-based programs and digital materials that can maximize results and minimize costs?
107. What programs may one use for updating the initial data base?
108. What items can be included in questionnaires to prospective members?
109. Will there be a Membership Preview Center? Where will it be?
110. How may it be designed for maximum effectiveness?
111. How does one encourage visitors at the resort to visit the Preview Center?
112. What provisions have been made for site and building models?
113. Which of the following marketing programs are appropriate and what are the details of each?
1. Focus groups
2. Pre-marketing questionnaire
3. Pre-marketing teaser campaign
4. Selection event marketing
5. Website and internet marketing program
6. Direct mail and email program
7. Broker referral program
8. Founding Member Program
9. Member Referral Program
10. Member testimonials
11. Mini-vacations
12. Off-site events
13. Satellite offices
14. Strategic alliances (with local transportation, restaurants, shops, etc.)
15. Newsletters
16. Promotions and special events
17. Advertising-local, state, national
18. Public relations-local, state, national
19. Anti-rescission programs
20. Other
114. Which of these collateral materials will be used in the marketing program?
1. "Teaser mailings"
2. Handout property brochures or rack brochures
3. "Discovery Kits" including "Beauty Brochure," area maps, site map, building and unit plans, summary of HOA and other important documents, Frequently Asked Questions, explanation of reservation and purchase procedures, reservation form, purchase agreement, etc.
115. If there is no major hotel brand, how can one generate the national marketing scope, lists, credibility and quality assurance of a brand?
116. How do the marketing materials effectively cover these areas?:
1. Correctly positioning the club and conveying the company's mission
2. Describing the points of difference of the club vs. other developments in the resort and vs. other Fractionals generally
3. Communicating the basic club elements-i.e. exclusivity, prestige, affinity group relationships, service and value
4. Clearly and simply explaining the advantages of fractional ownership
5. Conveying the nature of the club and the "connective tissue" to country and city clubs
6. Effectively communicating the experiential nature of a club, contrasting it with traditional resort real estate investments
7. Effectively comparing the economics of fractional vs. whole ownership and fractionals vs. vacation rentals
8. Describing the track record of the development and management team
117. What are some strategies for public relations to local brokers, to the local community and to state and national audiences?
118. What some programs and materials that can be used to motivate local brokers to refer their clients as prospective members?

119. What are the specific sales programs contemplated at each stage of the development?
120. What is the initial pricing and price increase strategy?
121. How do the prices compare to:
1. Fractional pricing in the resort on a price per guaranteed week basis and a price per square foot basis?
2. Fractional pricing nationally on a price per guaranteed week basis and a price per square foot basis?
3. Whole ownership pricing in the resort on a price per square foot basis?
122. What is the projected sales velocity?
123. How has the projected sales velocity been calculated?
124. How does the projected sales velocity compare to local and national experience?
125. What provisions have been made for positive relations with local brokers so they are willing to refer their clients?
126. What referral fee will be offered to local brokers?
127. What provisions are there for training the membership executives?
128. What is the structure of the "sales tour" and the basic script for each part?
129. How does one make sure that all membership executives know the correct facts regarding the club and that all representations are correct?
130. What techniques can be employed to convey urgency to prospective members?
131. What incentives will be offered to prospective members for a timely decision to purchase?
132. How does one control the release of club inventory?
133. What programs, if any, will support membership resales?

134. What procedures can be established for creating and maintaining a database on member usage, expectations, preferences, etc.?
135. What systems can be employed for evaluating the cost effectiveness of each marketing and sales program and each marketing and sales person?
136. How can one effectively communicate marketing and sales goals to all team members and motivate them to achieve these goals?
137. How does one determine an appropriate number of membership executives?
138. Will the membership executives be independent contractors or employees?
139. What are the advantages and disadvantages of each relationship?
140. If independent contractors, will there be a draw against commission? If so, what will it be?
141. What will be the sales commission and incentive structure for membership executives?
142. What techniques will be employed for sales training?

143. What is the company's "Mission Statement"?
144. How will the Mission Statement be communicated inside and outside the company?
145. What systems will be employed to measure performance in all areas?
146. What is the optimum style of team leadership-e.g., visionary, supportive, commanding etc.?
147. What techniques can be employed to prevent a dissonant corporate culture?
148. How can senior management and employees take part in the financial success of the development?
149. What employee benefits will be offered?

150. How does one determine HOA dues and their relation to the services offered?
151. How do the projected HOA dues and services compare to dues and services at comparable developments in the resort and in the industry generally?
152. How do the HOA dues per guaranteed week of use compare to industry statistics?
153. What are the advantages and disadvantages of having members pay a reduced rack rate when in residence, with the amounts paid used to fund club operating costs and thereby reduce maintenance costs?
154. What steps can be taken to assure that club management will meet the expectations engendered in the sales and marketing process?
155. What management techniques can be employed to reinforce the message of "clubbiness"?