During our work the past years in serving Buyers interested in owning a Caribbean fractional  as their way of owning a piece of Paradise, Marriott International  has been a major player.  They recently announced that they are closing down their development of Caribbean fractionals and residence-club products.  Their decision to pull back from this very attractive real estate product is not a surprise.  All of Marriott International’s fractional, residence club and time-share business earned only $632 million in the first six months of 2009, compared to $863 million in the same period last year for the same division of the company.  

The other two major players in this division of worldwide real estate product, Wyndham Worldwide Corporation  and Starwood Hotes & Resorts Worldwide, are now being watched to see if they will scale back their Caribbean fractional projects because of falling sales and the loan products drying up for this type real estate.  ( You may recall from earlier articles that almost half of the fractionals purchased in the Caribbean were all-cash purchases.)  I do expect announcements soon from Wyndham and Starwood.

This news should alert the discerning second and third home buyers that it is the time to BUY!  Prices for Caribbean fractionals have fallen  the past year so there is lots of room for the bargain hunters.  Analysts are even predicting that the fractional products in Paradise could be in for a long recovery.  Joseph Greff from J.P. Morgan Securities  recently said, “This business, at least for the next 10 years, is going to remain permanently shrunk.”  I personally don’t share this pessimism, but Mr. Greff may be looking at data from afar that I don’t have given that I am right in the middle of the action in the Caribbean markets.

One of the best fractional/residence club products that Marriott has produced in the Caribbean is at the Ritz Carlton in Red Hook, St. Thomas.  This was one of their first entries into the fractional product over ten years ago.  Because of the success in the U.S. Virgin Islands  it sparked similar developments around the world under the Ritz Carlton brand.  With this news Marriott is still continuing to manage properties built by other developers and will continue to license its brands to luxury developer.  Plus, the Marriott will complete its luxury-fractionals and residence projects that are currently under construction.

They are not permanently exiting fractional-ownership project development.  The Marriott has said it will start building new luxury fractional and residence projects when those specific markets recover from the world economic meltdown the past two years.  One of the issues that is still facing consumers is the ability to find mortgage money for these second home products.  Lenders have not had this type of credit available for over a year because of lowering risk in their lending portfolios anyway they can.

Surprisingly, Marriott has done better with time-shares the past two years with over half of their revenue the first half of 2009 coming from this product – $338 million!  With the Marriott writing off a $760 million non-cash charge against third-quarter profits it will almost cancel out any gains from the luxury fractional and residence products Europe, Asia and all of North America.  CLICK HERE   if you would like more information about the Caribbean Franctionals as a way for you to buy your slice of Paradise.  Until next time…your Caribbean lifestyle detective remains on duty.