Mammoth Real Estate Q&A –– Has the Time Come? The 4 Timeshare Necessities For Mammoth

This Real Estate Q & A appears in the Easter Weekend issue of the The Sheet

“Don’t tell my mother I sell timeshare, she thinks I play piano in a whore house”

– infamous Cabo San Lucas t-shirt in the 1990’s

Q: We hear all the rumors about new potential hotels and timeshares coming to Mammoth but we know timeshares have not been successful in Mammoth in the past. So what do you think a developer needs to do to make them successful?

A: I’m no timeshare expert, especially since I don’t consider them to be “real estate,” but this looks to be on the horizon, and it is a good question that deserves some analysis.

The hotel and timeshare development business has evolved. What is likely to be proposed is known as a “mixed use” project.  It is sort of like having 3 or 4 jobs in Mammoth. You do what you have to do to make it work financially. For these potential developers there has to be multiple revenue drivers and serious risk management. These developments become complex operations. It takes plenty of sharp pencils to make these projects work financially. And new Rules signed but the Securities and Exchange Commission last Fall that change the face of the condo hotel business may make all of this more viable.

Here in Mammoth the whole project would have the appearance of nice luxury hotel but could include condo hotel units, timeshare units, maybe some true “hotel” units, various commercial spaces accommodating retails shops, restaurants and bars, and various “resort” services. All will likely have separate ownerships. This mixed-use property would be essentially a mini-Village all in the confines of one property. And don’t forget the timeshare sales office.

But before we delve into why this is bound to happen, let’s review some history and market economics. Despite the hotel and hospitality industry having banner years around the world, resort hotels are notorious for below market occupancy rates. It is simply the seasonality of resorts (as opposed to places like New York City or Paris). Mountain resort communities are even more infamous for lower-than-industry occupancies. Because of the lower occupancies the  lenders shy away from investments in these areas. If a pure hotel doesn’t make economic sense, it won’t get financing. This is why we ended up with condo hotel properties at Eagle and the Village. It was the only way it could happen. The individual unit owners (and their lenders) shoulder the financial risk.

But in today’s economic environment, pure condo hotel development can even be dicey. The developers simply need more owners to shoulder the economic risk. And more revenue from sales and rental. So the increasingly popular method to make the projects work financially is to “mix” the ownership between 100% ownership condo hotel units and timeshare units. One of the challenges to a viable venture is to make the whole project work seamlessly; owners, paying guests, and timeshare owners all happily intermingling and having great time. And the underlying strategy (hope) is that the paying guests have such an excellent time that they want to become “owners.”

This formula has worked in many resorts (been to Mexico lately?). It may be the only formula by which any hotel-type facility will be built in Mammoth’s future. But the question is how to make this work in our quirky little resort? So here is what I see as four necessities;

1.) The overall mixed use/hotel/timeshare property will need a brand or “flag.” One of the successes of the Westin Monache is no doubt the Westin and Starwood Hotels brand and all that it brings to the property. It is simply modern brand awareness and recognition. Some people wouldn’t stay anywhere else. Today these brands are usually a “license” to operate under the name and system. But the brands come with an additional cost to all of the owners and the front desk operators.

The 80/50 property adjacent to the Village gondola is the most similar property in Mammoth to this sort of development we are talking about. The lack of branding could certainly be a downfall. It is an excellent property but nobody knows what 80/50 means (it is the elevation of the property—8,050’—that was some great marketing!). The old joke was “we’ll split it with you, 80/50.”   Interestingly, after falling into receivership in the late 2000s, the 80/50 project connected with the popular Auberge Resorts network in 2011. This eventually didn’t work out; the mixing of owners and renters failed in this premier project. Developers should take note. But ultimately, the success of the Westin Monache clearly defines the need for a branded project.

2.) Real estate success in Mammoth is greatly centered in flexibility. It is the nature of this resort; a result of the close proximity to the majority of the visitor and second homeowner base. But Mammoth operates very differently today. Years ago people booked their Mammoth trips months in advance. Today we experience the “powder mentality” of our visitor/customer base. The internet and air service has helped further it. It is all about the impromptu-ness of coming when conditions are right and time is available (or can be made available).

So timeshare style “set” weeks aren’t going to cut it. A proposed timeshare component needs to incorporate “floating-time” options. With this concept owners wouldn’t likely get to stay in a specific unit let alone at a specific week. Developers may even have to carve the floating-time into 7 or 4 or 3-day increments. Or owners who stay longer than their allotment can just pay for extra nights at a special rate (like using Starwood point at the Westin). There could also be “banked usage” so if an owner doesn’t come one year they could accrue time at some other point. They could even sell winter timeshares and summer timeshares at different values. Or maybe premium holiday timeshares.

If a developer doesn’t grasp this they will fail. This is fundamental. Years ago I started using the term “crashpad” for certain Mammoth condos. This came on the heels of the Mammoth Value Pass (MVP). Now that discounted season passes are the industry standard, the crashpad concept looms even larger. The flexibility of coming and staying is the ultimate amenity. In Mammoth, where owners or guests can be here in a 5-6 hour drive, this flexibility is paramount.

And if a potential developer is counting on Mammoth’s “destination” status to sell timeshares, they better look closely.

3.) Affordability will be a critical component. The developer must find the market gap in the spectrum of who wants to be here. Today, plenty of people own their own crashpads  ranging from (mostly) cheap condos all the way to trophy homes. Conversely, a whole crowd of the spur-of-the-moment types now utilize online resources like and This is new and very real competition for the timeshare industry. It gives the flexibility seekers even more flexibility, and often at a low cost.

One place the developer could save; the industry estimates that 30 to 70 percent of the timeshare’s expense is in marketing. So reduce marketing costs by more online selling, eliminating the “tours” and breakfasts, etc. The buyers are already sold on Mammoth, and hopefully sold on the project. They have to want the affinity relationship with the property. And that comes with a great facility and superior service and experience. All of that will sell timeshares here, not high pressure sales. But this may be a bigger challenge.

There may even have to be real “deals.” Spend any time poking around the timeshare industry and you will see people buying resale timeshares for practically nothing. There is even a cult following for people who purchase one for only $1 (they still have to pay the annual maintenance fees). In Mammoth, there may even have to be some type of buy-back guarantee program. Or attractive discounts or perks to the onsite services. Or something….only fully leveraged people are willing to pay full retail prices these days. And I haven’t seen any 100% financing for timeshares. And the fractional shares at 80/50 are finally (but slowly) selling after years of discounting. The market has its way of discovering the “price.”

4.) Finally, the project will have to appeal to different generations, from Boomers to Millennials to everybody in between. This will be a challenge. But the market will demand it. There will be a vast number of timeshares needed to be sold to make a project viable (just do some math). This has yet to happen in Mammoth’s history. A developer cannot rely on sales to just one or two generations in this market. It could take years (maybe decades) to complete all of the timeshare sales in a large facility. The units may have to be spacious and comfortable (for Boomers? and their grandchildren?) but the common spaces may have to be more expansive (for Millennials? so they can be “social”?). This is all different from the past thinking. It will be a design and operational challenge.

Meanwhile, construction costs remain especially high here in Mammoth, and not just the permits and other “soft” development costs, but materials and their delivery, and labor. These high costs will remain an impediment to all future development until resale values and/or demand rises.

Ten years ago I was told by a Town Councilman that I “better get on board” with the fractional properties selling at Tallus and 80/50. “It is the future,” he said.  I was skeptical back then and wasn’t afraid to express it. Both projects went to receivership rather quickly. But was it just the macro economic downturn or the fractional concepts themselves? We’ll never know for sure. Maybe these new developers will have the right formula.

And hopefully, the Town Council will be wise enough to not allow the timeshare salesman at the Mammoth airport….

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