{"id":91,"date":"2013-04-11T14:57:00","date_gmt":"2013-04-11T18:57:00","guid":{"rendered":"http:\/\/cusjc.ca\/muskoka\/?p=91"},"modified":"2013-04-20T18:56:13","modified_gmt":"2013-04-20T22:56:13","slug":"change-is-a-coming-the-rise-of-the-fractional","status":"publish","type":"post","link":"https:\/\/cusjc.ca\/muskoka\/?p=91","title":{"rendered":"Part 3: The rise of the fractional"},"content":{"rendered":"

In the early 1990s, Club Link Corporation, a golf club and hotel company, bought Elgin House, a resort which stood across the lake from Pinelands Resort. It wasted no time tearing the old resort down and building the Lake Joseph Club, a condominium style resort and golf course, and set its sights on Pinelands next.<\/strong><\/p>\n

\"Aerial<\/a>

Aerial view of the Lake Joseph Club, one of the first condominium developments in Muskoka.
Photo courtesy of Alf Mortimer<\/em><\/p><\/div>\n

By 1998, Bruce Reville and his family, who had resisted Club Link\u2019s offer to buy for several years, finally sold the Pinelands property, though they leased it back for several years and continued to run the resort.<\/p>\n

But Reville knew it wouldn\u2019t be long until Pinelands was gone.<\/p>\n

\u201cYou could see the changes in Muskoka. We knew something was going to happen,\u201d he says. <\/b><\/p>\n

Indeed, the 1980s and 1990s saw a surge of condominiums built in Muskoka, a response to consumer demand with which Reville says he had been fighting to keep up. But as a family-run operation, Pinelands just didn\u2019t have the cash to keep up with the new form of lodging in Muskoka.<\/p>\n

Developer Walter Prychidny bought the Pinelands property from Club Link in 2002. He ran the hotel as it was for a couple years, but says it was never his intention to preserve the historic resort.<\/p>\n

\u201cThe vision was to acquire the real estate and keep it in a holding pattern and determine whether it made sense to redevelop,\u201d he says. \u201cIt didn\u2019t make any money. The resort was obsolete.\u201d<\/p>\n

According to Prychidny, this was largely because of the greater trend that resorts in Muskoka were too expensive for what people were getting.<\/p>\n

\u201cYou\u2019re in Haliburton at Wigama or you\u2019re at Pinelands in Muskoka, and all of a sudden your families are going to Disney World for the same cost or less, or Dominican or Cuba,\u201d says Prychidny. \u201cAll of a sudden that whole little marketplace is in your face and it\u2019s cheaper for families to go away.\u201d<\/p>\n

To Reville, this was not something new.<\/p>\n

\u201cYou could see the changes in Muskoka… We knew something was going to happen.”<\/p><\/blockquote>\n

\u201cPeople used to stand at our front desk and say I could go to Mexico or the Caribbean for cheaper and I\u2019d say I know. We go there. We go there in the winter and we can\u2019t believe it,\u201d he says.<\/p>\n

\u201cFor a family of four, it would be four or five thousand dollars and they could probably do it for half that (price). That was always tough. You\u2019re always trying to add more value for them to stay here. They\u2019re not guaranteed the weather. Down south you\u2019re more guaranteed. You\u2019re fighting that. Before, when you talk to the old hoteliers, their clients just had to get out of the city, drive north to somewhere cooler. Now you can go to Dominican and everything is air conditioned.\u201d<\/p>\n

\"A<\/a>

A typical cabin at Pinelands before the resort was redeveloped as the Muskokan Resort Club. According to developer Walter Prychidny, the resort was “obsolete.”
Photo courtesy of Judy Embleton<\/em><\/p><\/div>\n

Reville says the high costs of wages, food, and liquor made it difficult to be competitive, not to mention the short summer season.<\/p>\n

Prychidny agrees, noting that Muskoka resorts can\u2019t afford to cut costs to undercut these discount southern holidays.<\/p>\n

\u201cIt\u2019s a high operating cost, high utility bills and high overhead,\u201d he says. \u201cIt\u2019s a seasonal operation.\u201d<\/p>\n

Prychidny notes that as property values\u2014and thus property taxes\u2014have increased in Muskoka, especially on big lakeshore properties, it has become near impossible for resorts to be successful anymore.<\/p>\n

\u201cNone of the resorts are really making substantial money on a cash flow basis, not like it was in the past,\u201d he says.<\/p>\n

And Prychidny says it\u2019s really only developers looking to operate fractional ownership models who can afford to buy resort properties now. The fractional model, where people buy a \u201cfraction\u201d of the year at a resort so during their fraction it’s as if it’s their own cottage, unloads the burden from owners and developers because the onus is no longer on them to pay all maintenance fees and property taxes.<\/p>\n

\u201cMuskoka\u2019s just a market niche where it\u2019s too big for a general manager of a hotel looking to buy a property,\u201d Prychidny says.<\/p>\n

It\u2019s something Reville knows all too well. He says he can see why resort commercial property owners find this type of model appealing.<\/p>\n

\u201cThat (traditional model) of ownership, where people are buying and paying the maintenance fees as a single owner, owing the land and the buildings and paying the upgrades, it was just getting too costly,\u201d he says. \u201cIt made more sense with the condominium or the fractional or the timeshare.\u201d<\/p>\n

\u201cIt\u2019s a high operating cost, high utility bills and high overhead… It\u2019s a seasonal operation.”<\/p><\/blockquote>\n

Prychidny tore down the Pinelands hotel and built the Muskokan Resort Club, a series of cottages that each have their own deck, barbeque, and screened-in porch: a \u201cMuskoka Room.\u201d He says not only is this easier for him as a resort developer, but it\u2019s more in line with what people want.<\/p>\n

\u201cThe consumer demand has changed,\u201d he says. \u201cAt Pinelands, our hotel rooms were 400 square feet. (People) don\u2019t want that anymore. They want their own space. They want the cottage feel, the cottage life.\u201d<\/p>\n

\"A<\/a>

A typical cottage at the Muskokan during the wintertime. Each home has its own screened-in porch, deck, and barbecue to allow for privacy and the true “cottage feel.”
Photo by Erin Morawetz<\/p><\/div>\n

Ownership models became the new norm in the late 1990s into the 2000s. The main hotel of the Red Leaves development, now owned by Canadian Niagara Hotels and run as The Rosseau, a JW Marriott hotel, began as a condominium hotel development. Other resorts, including Windermere, have expanded to include an ownership model along with their traditional hotel. In fact, at least eight resorts in Muskoka have been converted in some way to include a fractional ownership component, albeit all slightly different, decreasing the number of rooms available to the free and travelling public.<\/p>\n

Some people have embraced the fractional model, like\u00a0Barb Mann, a longtime Muskoka cottager. She and her husband became interested in the Muskokan when they were looking to get a piece of property as an investment.<\/p>\n

\u201cIt was something we thought was a wise investment opportunity,\u201d she says. \u00a0\u201cWe started going around to see what all these developments were. We were very impressed when we saw the Muskokan.\u201d<\/p>\n

Mann and her husband bought a fraction at the Muskokan, which means they get five weeks out of the year. The catch? Of the five weeks, four have to be in different seasons: one each in Spring, Summer, Fall and Winter, with a floating holiday week, meaning it changes each year and can land on Thanksgiving, Christmas, or March Break.<\/p>\n

For Mann, this works out well.<\/p>\n

\u201cWe love (the Muskokan) for the off season because our cottage is really a cottage<\/i>,\u201d she says. \u201cIt takes forever to warm up and the plumbing (in the winter) is always an issue, so we really enjoy the opportunity to be up here in the colder times of the year.\u201d<\/p>\n

Mann and her husband have consistently put their summer week into the \u201crental pool\u201d at the Muskokan, a necessary element for a property such as the Muskokan to still be considered resort commercial, and as such, open to the free and travelling public.<\/p>\n

But while the fractional model works for some, it has its drawbacks.<\/p>\n

When Prychidny was building the first phase of fractional cottages at the Muskokan, the first people he pitched them to were former Pinelands regulars. Two families did indeed buy fractions, but Embleton wasn\u2019t one of them. For her, the idea of spending over $100,000 and only having one week in the summer was not good value\u2014and just not something she wanted.<\/p>\n

\"Unlike<\/a>

Unlike Pinelands, the Muskokan is open all year round. Good news for developer Prychidny is it’s not his responsibility to make sure people come in the cold weather.
Photo by Erin Morawetz<\/em><\/p><\/div>\n

\u201cThe last year we were there, they tried to pitch us the condo,\u201d she says. \u201cBut you only get to come for several weeks, one in each season, and you can\u2019t lock in a second week in the summer if you want.\u201d<\/p>\n

And for Embleton, who always enjoyed the interaction with other vacationing families at Pinelands, the loss of the traditional-style resort was devastating.<\/p>\n

\u201cWhen I heard Pinelands was sold, my heart sank,\u201d she says. \u201cI knew what it meant.\u201d<\/p>\n

But for Prychidny, another benefit of the fractional ownership model is that it\u2019s not his responsibility to encourage people to come to Muskoka in the off seasons, something that has become an issue for resorts which are keeping their doors open in the winter, trying to generate more capital.<\/p>\n

\u201cThey\u2019re owners so it\u2019s up to them,\u201d he says of the people who own fractions at the Muskokan. \u201cThey could come and use it or not, it\u2019s not up to me to get them there.\u201d<\/p>\n

While the Muskokan has had success, other similar developments have run into problems selling their units. The Red Leaves development in Minett, marketed to became a four-season community resort similar to developments in Collingwood and Whistler, went into receivership less than a year after opening, having sold very few of its condo units. Canadian Niagara Hotels, which bought the hotel portion of Red Leaves and is running it as The Rosseau, a JW Marriott hotel, has abandoned the ownership model and is finding success as a traditional hotel. Touchstone Resort, another fractional ownership development, appears to have stopped its planned expansion of fractional units for the time being.<\/p>\n

Muskoka real estate agent Brian McElwain says the real problem with fractional ownership units is they do not hold their value in resale, and average 30 to 45 per cent lower resale prices than their original price. And even at that rate, McElwain says, they are not selling. In fact, there were only two fractional units resold in all of Muskoka last year.<\/p>\n

Anne McCauley, a land use planner, says a lot of the lack of resale has to do with the fact that in a fractional ownership agreement, owners are not required to maintain the property. In addition, many of those who buy these units do so through a line of credit, as it is not possible to get a mortgage on a fractionally-owned property.<\/p>\n

\u201cYou don\u2019t have real property,\u201d she explains. \u201cYou have a unit you can use, but you own it with many other people. Banks can\u2019t determine the mortgage risk of all the other people you\u2019re sharing with.\u201d<\/p>\n

And for many people, owning a condominium or a fraction of time at a resort development is not the Muskoka experience they want\u2014or can afford.<\/p>\n

For Embleton, the loss of traditional resorts in Muskoka means the lakes are becoming less and less accessible for middle-income families. While some resorts, like Shamrock Lodge, still offer all-inclusive packages, they are few and far between. Embleton says she has spent time at The Rosseau and loved it, but it\u2019s not a place she can afford to spend a week\u2019s holiday, as she used to at Pinelands.<\/p>\n

\u201cIt\u2019s pay as you go,\u201d she explains. \u201cWe go for one or two nights and that pretty much breaks the bank.\u201d<\/p>\n

And at the end of the day, what is more important\u2014spending time by the lake with family, or having a luxury condominium? In the past, people may have said the former. But now, the tranquility of the lakes and the rocks and the trees just doesn\u2019t seem like enough.<\/p>\n","protected":false},"excerpt":{"rendered":"

In the early 1990s, Club Link Corporation, a golf club and hotel company, bought Elgin House, a resort which stood across the lake from Pinelands Resort. It wasted no time tearing the old resort down and building the Lake Joseph… <\/p>\n","protected":false},"author":2,"featured_media":195,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1],"tags":[],"class_list":["post-91","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-uncategorized"],"_links":{"self":[{"href":"https:\/\/cusjc.ca\/muskoka\/index.php?rest_route=\/wp\/v2\/posts\/91","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/cusjc.ca\/muskoka\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/cusjc.ca\/muskoka\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/cusjc.ca\/muskoka\/index.php?rest_route=\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/cusjc.ca\/muskoka\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=91"}],"version-history":[{"count":49,"href":"https:\/\/cusjc.ca\/muskoka\/index.php?rest_route=\/wp\/v2\/posts\/91\/revisions"}],"predecessor-version":[{"id":600,"href":"https:\/\/cusjc.ca\/muskoka\/index.php?rest_route=\/wp\/v2\/posts\/91\/revisions\/600"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/cusjc.ca\/muskoka\/index.php?rest_route=\/wp\/v2\/media\/195"}],"wp:attachment":[{"href":"https:\/\/cusjc.ca\/muskoka\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=91"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/cusjc.ca\/muskoka\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=91"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/cusjc.ca\/muskoka\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=91"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}