1. Alternative Ownership and
Mixed Use Business Models for
Hotels & Resorts
Tapping New Potential in
Asia Pacific

2. Presentation Topics
I The Evolution of the Alternative Ownership Industry & Business Models
II Why alternative ownership models have big market potential in Asia
III Monetising underdeveloped and underutilised Developer real estate
IV Optimising Developer yield using alternative ownership structures

3. The Evolution of Alternative Ownership Industry
& Business Models
michael.kosmas@gmail.com

5. 1974 RCI Introduces Exchange Benefit for Single Site Developers

6. Enter the Brands and Usage Innovations…Marriott 1984

7. 2005 Hotel Online Headlines…

8. Luxury Brands in Asia…Focus on China

9. Today: Global Sales Estimate Q4 2015…$1,72 Bn USD

10. Hospitality Brands with AO / Mixed Use Business Models

11. • Purchase Fee = USD 22,200 (one time fee)
• Club Dues = USD 780/year * 30 yrs = USD 23,400
• Total Pay USD 45,600 for 30 year term.
• USD 45,600 / 30 years = USD 1520 a year
Member Pays
• 7 nights at Phuket 2BD Pool Villa
• Public rate is 500 USD/ night
• USD 500 *7 nights = USD 3500 a yearMember Gets
“Member” (Owner) Pays USD $1520 vs. USD 3500 Per Year
Saves 56% on rack rate + value added benefits** Holiday Lifestyle Greatly Enhanced
**Exchange, food and beverage discounts, low season getaway specials, spa, golf, tours,
discount weddings, loyalty benefits and even earn referral fees…
What is the Typical Value Proposition for the
Consumer…?

12. Compelling Value Proposition for Asian Consumers
• Cost Effective alternative to second home purchase—pay only for time needed
• Taxes and Insurance Expenses Shared with Numerous Other Owners
• Enhanced Vacation Experiences: Dollars saved on accommodations available for
more activities on holiday
• Quality Unit Type Guaranteed Every Year
• Annual Club Dues or Maintenance Fees Ensure FF&E Upkeep & Replacement
• Flexibility – Multiple choices for destinations, unit types, number of nights
and desirable seasons
• Fair Treatment: Generally have an Independent Trustee to Oversee the Real
Estate Trust and Represent Owner Members dealings with the developer

13. Business Model 1: Wyndham Vacation Ownership
World’s largest vacation ownership
business
 More than 813,000 owner families
 More than 160 resorts
Nearly $1.6 billion in annual VOI sales
In business for over 40 years
 Rebranded in 2006
Based in Orlando, Florida

14. WYNDHAM WORLDWIDE TODAY
Leading Positions in Leisure Industry
5
Major
Brands Include
Business
Segment
% of 2015
EBITDA
Market Position
Worldwide
Hotel Group
#1
Hotel franchisor
by hotels 26.16%
Exchange & Rentals
#1
Timeshare
exchange and rental
company
24.88%
Vacation Ownership
#1
Timeshare
developer
48.97%

15. Rental
16%
Development
$648m
48%
Resort
Manageme
nt
22% Financing
14%
2014 REVENUE
$1.289BN
1. Sell vacation ownership products
2. Rent vacation ownership inventory
3. Finance consumer purchases of vacation
ownership products
4. Manage resorts and provide services for
owners and members at a cost plus profit
 Revenues are derived from diverse sources
and nearly half is recurring and stable

16. How has Marriott Vacations Worldwide performed?
The graph compares the relative performance of MVW common stock, the S&P Small Cap
600 Index and the S&P Composite 1500 Hotels, Resorts & Cruise Lines Index.
The graph assumes that $100 was invested in MVW common stock and each index on
November 8, 2011, the date a “when-issued” trading market for MVW’s common stock began

17. Case Study: Anantara Vacation Club
Product Overview
Points Based Product
• Ownership ranges from 5,000 to 100,000 points (average 16,000 points).
• Units are deeded into a trust unencumbered.
• Points are created from those units and sold to the consumers.
• Points can be used for any unit at any time of the year.
• Internal Exchange benefits via Club Escapes Program
Use Most Anantara Hotels and Resorts worldwide via Points Pay
• External Exchange Access to Global Exchange Programs
RCI Registry Collection, Hilton HHonors
• Anantara Adventures, and other Loyalty Benefits
Price: $2.00 to $2.50 USD per point
Annual Sales: Approximately $75M USD+

18. Why do alternative ownership business models have
Big market potential in Asia Pacific…?
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19. Developer Benefits
• Selling units by a time interval increases total pricing by 4 to 5 times (vs.
whole ownership)
• Mark of Maturity: A natural extension of hotel/resort/residence business
• Utilize surplus land and Speed up Sales of slow moving units
• Accelerated payback and increased IRR
• Potential to turn a financially marginal project to a financially viable one
• Provide lower debt & equity requirements for new developments or
upgrading present facilities
• Generate consumer financing profit from 3, 5, 7 + Year Payment Plans
• Regain asset at end of ownership period

20. Quick Start for Developers
With extensive industry knowledge and proven marketing and sales techniques, Consultants or Vacation
Club affiliations can readily share a depth and breadth of expertise for a start up, turn around or purpose
built project with resort management, customer generation and sales solutions for resort developers.
Readily Available Services Include
Shared Ownership Business Plans
Product Design
Sales and Marketing
Brand Licensing
Resort Management & Operations
Exchange Affiliation
Inventory Management
Owner Services
Club resort reservation, resort exchange and travel services
Contract Compliance
Billing and Collections
Financial Reporting

21. Enhanced Sales, Marketing & Operational Synergies
Higher year-round occupancies. According to ARDA International Foundation (AIF), the
global Vacation Ownership occupancy registered 76% last year.
This compares favorably with the worldwide hotel industry whose occupancy
rates were substantially lower than vacation ownership properties.
 Longer stay and higher average on-site spending per guest
 Build customer loyalty through ‘ownership’
 Proven resilience during economic down cycles
 Operational synergy in mixed use environment
 Vacation Ownership marketing component providing bulk purchase of room nights
and F&B vouchers for marketing prospects
o Increased usage of F&B facilities
o Increased opportunities for renting Hotel rooms to increase occupancy
o Increased revenue for retail outlets
o Increase revenue for commercial tours & activities
o Broader scale promotion of the hotel at no cost to the owner (marketing
efforts funded through the vacation club division’s marketing budget)

22. Key Factors driving market potential in Asia Pacific…
1. Much of the product already built during the recent over supply phase in
some markets is well suited to alternative ownership specs—pool villas,
suites, kitchenettes, etc. Thus offering an AO product to new and
existing customers can (sometimes) be easily done, at a nice return
2. Adding AO product categories is a mark of a mature hotel & resort
development co (similar to pursuing ‘asset-light’ / management-heavy
strategy for maturing hotel portfolios)
3. Meeting Market Force Demand: Asian families enjoy traveling together,
cooking together, relaxing together and like saving money on higher
quality accommodations (the value prop).
4. AO Product Hallmarks: Kitchens, Living Rooms, Separate Bedrooms;
Wherever Consumers are essentially Spending Less Money for Better
Accommodations

23. A Few Notes on Fractional Interests and PRC’s
• Purchase = Ownership Interest
• Usually Highly Prized Real Estate
• Usually High Demand Destinations
• Usually Homes, Villas, Residences
• Shares range from a 1/25th to a ¼ share (3
months annual use)
• Prices vary depending on quality of
product, degree of services and amenities
• Popular with St Regis, Four Seasons, &
Luxury Regional Developers

24. What do these luxury brands have in common?

25. III Monetising underdeveloped and / or
underutilised resort real estate
michael.kosmas@gmail.com

26. Is Your Existing or Planned Project
A Good Vacation Club or Fractional…?
Ask a Consultant
 Feasibility Analysis
 Sales and Marketing Analysis
 Destination Assessment
 Infrastructure Assessment
Finance
IT
Operations
Sales
Marketing
 Establish Proper Legal Structure (RET)
 Develop a Critical Path, P&L, Cash Flows
 Sales & Marketing Strategies
 Exchange Program Implementation

27. What is ‘Mixed Use’…?
Mixed Use typically refers to a destination, hotel or resort with mixed offerings:
1. Whole Ownership
2. Fractional Units
3. Timeshare or Vacation Clubs
4. Transient Rentals (Hotel Rooms)
Mixed Use can refer to either a ‘Campus’ with multiple buildings clustered in a
destination or a single building (perhaps with multiple wings, floors, towers)
Why is Mixed Use so desirable…?
 Vertical Product Offerings to reach and capture greater market share
 Recurring revenue streams (financing, property management, sales)
 Ancillary revenue Streams (upgrades, tours, marketing room night sales)
 Increased On Site Spend from Longer Stay Guests
 Gain Operational Efficiencies through Shared Resources
Seem Challenging? Other real life applications…?
• The Concierge Lounge and Club Level Rooms in Hotels
• First Class, Business Class, Preferred Seating, Coach…
• Discounted or Free amenities and / or upgraded service levels for hotel
loyalty program members under the same roof (free Wi-Fi, breakfast, etc.)

28. Product Differentiations: AO Categories
Product Type Buyer Motivation Typical Usage Predominant Product
Type
• Vacation Ownership
• Timeshare
• Vacation Clubs
A quality holiday or leisure
product and a way of fixing
future holiday accommodation
costs
One or two week annual
vacations
Studio, 1, 2 or 3 bed
Fractional Interests Cost Effective alternative to
vacation home; a lifestyle
enhancement
3 weeks to 13 weeks 2, 3, 4 bed villa, townhouses
and apartments (urban or
resort setting)
Private Residence Clubs Second Home alternative;
Lifestyle commitment, often
with branded service overlay
1/7th to 1/12th fractional
interests
luxury villas, detached
vacation residences and
apartments w services
Destination Clubs Money-rich/time poor who
need to escape to luxury
environments
Basic 30 days but with
extra time available if
desired
4/5 bed super luxury
properties in outstanding
locations
Buy-to-Use-and-Let Part enjoyment and part
financial
At buyer’s option – 30 to
60 days + space
available
600f2 to 1,500f2 apartments,
sometimes with lock-offs
Branded Residences Primary or secondary
residence
Full ownership but
sometimes with rental
opportunities
Luxury accommodations with
high specifications +services

29. Product Comparisons
Range of Consumer Options
Hotel
Private
Rental
Vac Club FI/PRC 2nd Home
Advantages Easy to
book,
Choice of
brands,
choice of
services
Flexible,
Private, larger
living space
Pre-paid
vacation,
exchange,
larger living
spaces
Premium
Lifestyle,
High Level
of Service
Equity Investment
Potential, always
available,
privacy
Disadvantages
Small
rooms,
expensive
for high
season and
suites
Unknown
quality, less
services, more
expensive
No resale
value for
purchaser,
Service
levels vary
by resort
Premium
Prices for
fixing
desirable
usage
periods
Expensive,
absentee
responsibilities
for maintenance,
lack of services &
amenities

30. The Typical Project Lifecycle

31. Qualifying Questions…?
New or Existing Project(s)…
Luxury Residences: Current sales pace too slow for whole ownership?
(Good for Fractional Need to expand your market reach?
or PRC?) Would Lower Fractional/PRC Prices Appeal to Target?
Hotels: What is Current / Projected Guest Occupancy and Mix?
(Vacation Club?) What is Current / Projected ADR?
Mix of Suites, Villas or Adjacent Land Available?
Would having a Vacation Club stabilize occupancy?
Destination Resorts: Abundance of Villas in the product mix?
(Mixed Use?) Goal of Maintaining High ADR?
(strategically would you sacrifice occupancy for ADR?)
Good Project for Affiliation Deal with a Brand?
(example: Wyndham Sea Pearl Phuket)

32. IV Optimising financial yield using
alternative ownership structures
michael.kosmas@gmail.com

33. Timeshare, Vacation Ownership, Vacation Clubs:
Selling your units in intervals or points increases total pricing by 4.8 times
(compared to whole ownership sales pricing)
Example:
Whole Ownership Price 2BR Condo Phuket: $375,000 USD
Vacation Club: 52 x $25,000 USD = $1,300,000 USD
Multiple: 3.46
After Consumer Financing & Upgrades: Increase to 4.8 x
Private Residence Clubs,Fractionals:
1.75to2xMultiple
Plus Broader MarketReach
Typical Yields Applying AO Business Models

34. Indicative Costs and Profits for AO Business Models
30%
50%
65%
75%
9%
5%
4%
5%
45%
22%
13%
10%
16 %
23%
16%
10%
Vac Ownership Fractional Condo hotel Branded
Residence
Product Cost
Land, Construction
FF & E and soft costs
General & Admin
Sales & Marketing
Indicative Profit

36. STARWOOD VACATION OWNERSHIP
ANALYSIS OF TIMESHARE RESORT OPERATIONS
1 2 3 4 5 6 7 8 9 10
YEAR OF OPERATION
PROFITLOSS
Analysis of Resort Operational Costs for AO Projects
• New Projects tend to operate in the red until a critical mass of owners is achieved
• ‘Developer Subsidies’ are common until owner occupancy and maintenance fees received
• However, Operating costs can be mitigated with good marketing strategies
• Utilize vacant rooms for prospects touring the resort (promotional package guests
considering purchasing your AO products)
• Create upward pricing pressure on premium rooms; made possible by displacing lowest tier
with marketing guests (‘Below the Line” Preview Packages which cause value rooms ‘Sold Out’
online without compromising the perceived value of the room nights. Discount = Tour.)

37. A few thoughts regarding the Asian Markets…

38. Target Marketing = AO Ownership Demographics
International Marketing Benefits: Since 2010 multiple key feeder markets have been developed
including Thailand, Singapore, Malaysia, Indonesia and Hong Kong…call centers in Hong Kong & China

39. Demographic Comparisons
• US Market
• Mature Middle Class
• Timeshare is a mature product in the US – Over 7.2 Million Owners
• Asia Market
• Asia has a rapidly growing Middle Class
• Timeshare has minimal presence in Asia - Less than 500,000 Owners
(est.)
• Defining what "Middle Class" means in Asia
• Q: How to Define and Quantify Middle Class in Asia?
• A: Look at Middle Class Propensity

40. Asia Market Analysis: MC Propensity
• If 7.2 M Timeshare owners in the U.S. = 8% market capture, then…
• Some Key Observations by Country in Asia:
• US & Japan are similar markets due to 85%+ Middle Class Propensity
(MCP)
• Australia, Hong Kong and Singapore similar with 80%+ MCP
• South Korea and Taiwan +/- 70% MCP
• China Lower MCP% but offers Largest Middle Class Globally due to
gross population size
• India similar to China but smaller MCP and higher persons per
household

41. Asia Potential for AO Sales Growth
US Asia
Total Population 307 M 3,400 M
Middle Class Propensity 88 % 17 %
Middle Class Population 270 M 650 M
Average Household size 3 4
Middle Class Households 90 M 211 M
Current Timeshare Owners 7.2 M 500,000
Current Market Capture 8.0 % 0.00236 %
Asia Potential Timeshare Buyers
(at 8% Market Capture)
16.88 M
Asia Potential Timeshare Revenue
(at USD $20,000 average)
USD $337.6 Billion

42. US Learnings Applied to Asia

43. $337.6 Billion USD Market Potential for Asian Alternative Ownership Developers
Less than One Percent Asian Timeshare Owners (500,000 / 211M MC Households)
Opportunity to Monetize Developer Assets in Overbuilt Markets
Generate Recurring Revenue Streams
Experienced Consultants Readily Available to Reduce Learning Curves
Brand Affiliation Deals Available
100M Outbound Chinese Tourists 2016-17 (Starting to Venture Away from Groups)
Summary Take Away(s): Asian Developer Potential

44. 44
ThankYou
Questions…
michael.kosmas@gmail.com