The fractional ownership concept continues to gain ground in the recreational vehicle industry, although the number of providers remains limited and overall business strategies are still evolving.
“We incorporated in 2002 and started our sales effort in January 2003,” reports Greg Allen, president of American QuarterCoach Inc., a fledgling company based in Burr Ridge, Ill. “My background has been in corporate aviation, and I saw the impact that fractional ownership has had in that industry. It made a lot of sense in that industry, and there are a lot of parallels with high-end RVs.”
Most notably, both involve expensive assets that are generally underutilized.
“It’s really a brand new field,” said Jim Palmer, CEO and founder of CoachShare Inc., San Diego, another provider of fractional-ownership services for RVs that became incorporated in 2004. “It’s a new, emerging industry.”
QuarterCoach buyers may choose between purchasing a one-eighth, one-quarter or one-half share of a coach. The “Four Star” service level puts buyers into a Monaco Camelot, while the “Five Star” level splits ownership of a Monaco Signature. The high-end offering is called “Five Star Premium” and offers a piece of a high-end Prevost XLII bus conversion.
Current pricing for a one-eighth share in the popular “Four Star” plan is $36,000, plus a set-up fee of $950 that covers all incidental furnishings, including dishes, cookware, utensils and personal, monogrammed linens. The $250 monthly fee covers maintenance, storage, insurance and the cost of delivering the coach from owner to owner. The MSRP of a similarly equipped Camelot, according to Allen, is $288,000.
American QuarterCoach is still looking for owners in its top-of-the-line Prevost, which carries a retail price of $1.45 million. Fractional ownership would run $184,500 for a one-eighth share of the coach plus a $585 monthly fee.
The CoachShare program offers seasonal options, which Palmer said targets “different segments of the market.”
The winter plan allows for five consecutive weeks of usage between November and mid-April while the summer option provides three two-week time slots between mid-April and the end of October. There also is a full-year plan, which allows weekly or multiweek time slots at different points throughout the year.
Palmer said a typical plan will run $31,200 per one-eighth share of a Monaco Diplomat retailing for about $250,000. The $230 monthly maintenance fee includes upkeep, storage, insurance and such amenities as satellite radio and TV.
Both companies sell the unit at the end of three years. Palmer predicted that the residual value returned to shareholders will be between 40% and 50% percent of the original purchase price.
Allen noted, “At the end of three years we liquidate the coach and the remaining equity goes back to the buyers.”
Allen said his company also has taken lengthy steps to ensure that fractional ownership is a safe arrangement. A limited-liability corporation is established to hold the title of the coach, which “protects everybody’s interest.”
Another entry into the arena is Riverside, Cal.-based Fleetwood Enterprises Inc., which announced the introduction of its Fleetwood Vacation Club this spring. Customers can purchase the right to use a Fleetwood Class A or Class C vehicle from one to several weeks per year over a 10-year period. Typical up-front costs range from $15,000 to $25,000 in addition to an annual membership fee of about $650.
Though it achieves similar goals of low cost and high flexibility, the Fleetwood program is not a true fractional-ownership arrangement. The Fleetwood Vacation Club maintains ownership of the vehicles, which means buyers may pay a smaller up-front fee but don’t receive residual equity at the end of the arrangement.