Guaranteed luxury in Vail

VAIL — After 15 years, Tom Fulton thinks he’s gotten fractional ownership right.

Fulton, the President and Chief Executive Officer of Telluride-based Epiphany Clubs and Resorts, is selling memberships in The Club at Solaris. Epiphany has bought 19 of the 77 condominiums at Solaris, and is limiting the size of the club to just 95 buyers (at $1.9 million each).

The first 19 buyers get an unusual guarantee: With 30 days’ notice, those buyers can reserve time at Solaris whenever they want it, including New Year’s week. The remaining 76 members of the club get a “51-week” guarantee, meaning that any time other than New Year’s week, they, too, can stay at an Epiphany condo at Solaris with just 30 days’ notice.

How it works

Fulton’s company can make its guarantee for a simple reason: Only five members per condo. That, he said, is the magic number, especially when a company guarantees availability.

To cover the few weeks of the year when overbooking is expected, Epiphany will rent other units in Solaris. That expense is programmed into the club’s business plan. If there were more than five members per condo, though, the plan wouldn’t work.

“At five members, our rental costs are $350,000 to $380,000 per year,” Fulton said. “At seven members, it’s $3.5 million per year.”

This is just one of the useful facts Fulton and his team have used to put together the program at Solaris.

That database includes numbers about when and how people use vacation homes.
“Using the data, we believe that a five to one, we can accommodate 97 percent of all our requests,” Fulton said. “We’ll fail over Christmas, President’s Day week and one week in March.”

That’s when Epiphany will reserve other units in Solaris to take care of the overflow.

The genesis

Fulton started collecting that data years ago, after he and his partners opened the Franz Klammer Lodge at Mountain Village above Telluride.

The Klammer lodge was the first step into the fractional business for Fulton and his family. Before that, the family, led by Fulton’s stepfather, Ron Allred, had been involved in building some of the first projects in Avon as Benchmark Development Corporation. Allred’s company bought the Telluride ski area in 1978, and Fulton moved there in 1986.

As part of the early development of Mountain Village, the Klammer lodge was an early entrant into the fractional market, right on the plaza in the fledgling resort, opening in 1993. It was a difficult sale at first, Fulton said. Over the years, fractional sales have actually gotten harder, he added, as people discover the limitations of many of the variations on the theme.

As the database grew, Fulton kept thinking about how to solve the availability problem in a way that worked financially.

“Clubs have gone out of business by offering guaranteed availability,” he said.

The answer came from the aviation business.

“We started looking at the NetJets model,” Fulton said.

That company, which sells fractional use of private jets, guarantees customers it will provide a plane and a pilot within four hours of a call.

“They can relocate a jet where you need it 95 percent of the time,” Fulton said. “The other 5 percent they charter a jet. It’s built into the cost of memberships.”

Feels like home

The main point of the availability guarantee is to make club members feel they’re at home.

“This looks, feels, breathes and functions like you own the whole thing,” said Jeff Cerovich a broker with Vail Beaver Creek Luxury Properties, a company that specializes in selling all the valley’s fractional projects.

“The key here is not to look at Vail, but what they’ve done in Telluride,” Cerovich said. “They’ve sold about half their memberships there in about two years, and it’s working.”

While the availability guarantee only works for reservations make 30 days in advance, Cerovich said he knows of one member of the Tristant Club — Epiphany’s similar club in Telluride — who has called from his jet while flying to the resort.
“It hasn’t been peak times, and he’s gotten a unit every time,” Cerovich said.

The other key to a fractional project is putting more people into a specific project.
“It’s a delicate balance for a developer to find the right mix of whole ownership and fractional,” said Craig Cohn, sales and marketing director for the Solaris project. “You need to convince whole ownership buyers they want to be neighbors with club members.”

The small size of the club will do that, Cohn said, while still putting more people into Solaris than it would have just through whole ownership sales.

“The goal with this was to create an activity zone for Vail,” Cohn said. “You want it to get used. With the club, you’ll have more people using the facilities, using the staff. It’ll have a higher energy level.”

Prices for club memberships now are $1.9 million. That’s more — a lot more — than other fractional clubs around Vail. But Cerovich said there’s value.

“When you compare the price to the $7 million you’d spend on a whole ownership unit, then the price to decorate it, have a car here, have a golf membership at Cordillera and a ski pass, it’s a pretty good deal.”

Business Editor Scott N. Miller can be reached at 748-2930, or smiller@vaildaily.com.