Wednesday, June 30, 2010

The Laws of Attraction: fractional developments having positive impact on tourism in Muskoka

Although fractional resort developments have been around for a few years now, the perception lingers that the “story” around this approach to vacation property ownership is more about real estate than tourism; that fractional developments are just another way to own a cottage. Truth is, fractional developments are helping to drive the tourism industry in Muskoka at a time when attracting people to the area is as challenging as it’s ever been.

Since 2007, a number of economic events have conspired to drag down tourism numbers in Muskoka; the recession has pared back travel by Canadians, a strengthened dollar has meant fewer U.S. visitors and competition from other markets for those that are still travelling is stronger than ever. This has translated into fewer rooms booked at long-established resorts and less money in the local economy.

However, it could have been worse. Just prior to the economic downturn, the concept of fractional developments was coming on-line in the area, providing an alternative to traditional cottage ownership. Many multi-generation lakefront resorts began to see that the future lay in redevelopment of their property, offering fractional intervals while simultaneously operating the resort component. The result has had a big impact on tourism in the area.

“There’s no doubt it’s been a positive for tourism in Muskoka,” says industry leader Bill Van Gelder of Blue Water Acres (BWA) on the popular Lake of Bays. “Our new cottage-style fractional units are in use year-round, so we’re drawing people to the area during the shoulder seasons when traditionally it’s been very hard to attract anyone.”

Van Gelder knows the Muskoka cycle of tourism well. Operating for decades as a traditional resort, BWA has seen the yearly peak from May 24 to Thanksgiving and then the long lull in between, save for a few weeks in the winter during snowmobile season.

Finding a solution to this problem has been the Holy Grail of tourism operators since the area first became popular. Fractional ownership gives people time in all four seasons, time that is most often used by the owner but if not, gets turned back into a pool for BWA to rent out as part of their regular resort operations.

“There is a misconception that once you’re a fractional resort, it’s for the owners and only the owners but that isn’t necessarily true,” says Van Gelder. “We have inventory for rent on behalf of owners that for whatever reason can’t use their time, meaning the travelling public can rent a stunning new cottage just about any time of year. It’s a great deal that people don’t know about and of course we’re still renting our traditional resort units too.”

This multi-front approach has been good for the local economy around BWA. The village of Dwight, a few kilometres down the road, now sees more people coming in throughout the year to stock up on necessities for a week at the cottage, and Huntsville, the nearby major town benefits by having more people grace its restaurants and night-spots.

While still one of the most popular areas in Canada for people to vacation, Muskoka continues to seek ways to be more than just a summer destination. It’s a goal that has drawn the attention of local government and tourism officials and continues to be a topic of debate among local operators. While it won’t happen overnight, the transformation has begun in part due to this private-sector initiative offering a new way to travel.

Owning Paradise: Muskoka is becoming surprisingly affordable again...thanks to an invention for the rich

Muskoka. This iconic cottage destination has been the place that allows imaginations to wander: lazy days reading on the dock, kids swimming to their hearts content, a barbecue while the sun sets over the lake after another perfect day.

For years, this dream was a reality within reach for most. Post-war Muskoka saw an explosion in new cottage construction. Transport to the area became easier and the burgeoning Canadian economy allowed those who worked hard no matter what their vocation to save a few extra dollars and buy a slice of paradise. Their cottage was a place for the kids in the summertime and a retreat after working in the sweltering city.

Fast-forward to today and that scenario is all but gone for the average family. As the reputation and popularity of Muskoka grew, so did the prices for even a small cottage, and as land became scarce on the major lakes families were forced to adjust, settling for a smaller lake, smaller cottage or more likely, abandoning the prospect of Muskoka and cottage ownership all together.

So how does the average family afford any cottage in Muskoka today? Surprisingly, the answer has come from an ownership model developed for the rich to efficiently share private jets and luxury yachts. Fractional ownership has reinvigorated the marketplace for those who previously saw themselves as excluded from Muskoka (especially the major lakes), significantly altering price-points and availability. But even as this alternative is letting more people into the marketplace, one problem remains: many recreational properties in the region are condos, or high density fractional-ownership resorts, not cottages.

For those that want the real Muskoka experience, “high density” just won’t do. Hear the word “Muskoka” and the mind’s eye does not conjure images of townhouse-style developments or a place bearing more than a passing resemblance to urban culture. It sees discrete cottages, green grass, and the water’s edge shimmering against a sandy shoreline.

That mind’s eye image comes to life at a few select Muskoka developments, but none more so than at Blue Water Acres, a fractional resort on Lake of Bays whose mandate is to provide an option for those disenfranchised cottage-seekers. The property is stunning, with over 50 acres of prime waterfront property boasting traditional Muskoka geography leading to a shore area custom designed by Mother Nature for fun in the water; however, what has people talking, and buying, is the price.

“We’ve consciously priced our units to attract those who figured Muskoka was off the table; that they would have to look somewhere else or settle for what they really didn’t want” says BWA’s developer and industry leader, Bill Van Gelder. “The response to this approach, offering the real cottage lifestyle on a major lake has been overwhelmingly positive.”

The fractional approach may differ slightly from owning a cottage outright, but according to Van Gelder, the differences are all positive.

“With fractional intervals you aren’t concerning yourself with maintenance issues, there are great amenities included and you can just show up and start having a good time. Even if you can afford to buy a cottage the old-way, there’s a lot of upkeep, like any home, which this type of ownership eliminates.”

That said it is clear the market for stand-alone cottages in Muskoka isn’t going away. Rather, it’s now the domain of a select few who can afford prices starting on major lakes that are equivalent to purchasing a luxury home, even for a “fixer-upper”.

“We’re literally allowing people to buy into a cottage for what prices were like in the 60’s and 70’s” says Van Gelder. “For that, you get five weeks per year in the location you want, in the style you want and we’ll even look after renting it out if you can’t make it. Hassle-free cottage living doesn’t begin to describe it.”

Necessity being the mother of invention, it seems once again Muskoka is open for business to everyone now that fractional ownership is here to stay.

Dream of cottage ownership found “alive, well and affordable” in Muskoka

Despite the recent economic downturn, the dream of cottage ownership is very much alive and doing fine at Blue Water Acres (BWA) on Lake of Bays in Muskoka.

In fact, it’s been doing more than fine since the fractional resort’s inception in 2007. A popular choice for savvy cottage-seekers, BWA is now offers five-week fractional intervals in two and three bedroom fully-detached cottages starting at only $34,900; decidedly more reasonable than other offerings in the Muskoka marketplace. But it’s not just a price-point that has made BWA such a success despite tumultuous markets in recent years.

“Having a cottage is a goal for so many people,” says resort developer and industry leader Bill Van Gelder. “People saw that with fractionals, and BWA in particular, their dream was alive, well and affordable despite any problems with the larger economy. Now that things are turning around, we will attract a whole new set of those dreamers.”

The growing demand isn’t only tied to an economy on the upswing. An equally important driver is the business model at BWA. Offering the full cottage experience plus amenities that most traditional property owners could only dream of, it’s perfect for people whose busy lifestyle demands a hassle-free, experience-rich escape.

“It truly is the best of both worlds when you can walk out your front door and head to the beach, the nature trails or the tennis court and they’re only steps away,” remarks Van Gelder.
The sought-after location, popular amenities and attractive price have resulted in 95% of phase one sold and 75% of phase two.

Put another way, BWA has more sales than any other fractional development in Ontario with more than 145 intervals sold to date and more to come.