Yeoh Siew Hoon talks to RCI's John Paul Nichols about the growing leisure real estate market in Asia.

There was a time when I recall that hospitality folks would frown on "those real estate types", arguing that the two businesses were different, and ne'er the twain shall meet.

Hoteliers, they said, were in it to please the guest and "real estate types" were in it to maximize the physical asset and make money.

Well, these days, you can hardly tell the difference between hospitality and real estate as players from both sides of the fence cross into each other's territory to slug it out for a slice of the "branded real estate" market.

It started, I suppose, with timeshare, which garnered such a bad reputation along the way with their aggressive sales tactics and unproven business model that no self-respecting hotel company wanted to be associated with it in the early days.

Today, you can invest in hotel rooms, timeshare, fractional ownership, Private Residence Clubs, Destination Clubs, vacation rental, condo-hotels and whole ownership.

In Britain, for instance, a new model introduced by Guestinvest lets you buy a luxury hotel room in Central London, stay for up to 52 nights a year free of charge and receive a rental income from its use for the rest of the time.

The business model promises that you "earn money while others sleep". The first Guesthouse West in Notting Hill sold out within weeks, according to its website, and since its launch, owners are seeing returns of more than 6.8%. It has two other hotels – Nest in Bayswater and Chiswell Street Hotel with rooms in the latter available for sale from £240,000 on a 999-year lease.

In Asia, more of the big hotel brands are putting down their stakes in the sector. While global brands like Marriott have been long active in the vacation ownership model, we are now seeing Asian players like Shangri-La Hotels and Resorts embrace the model. Its latest entry into Phuket, for instance, will offer 50 pool villas for private sale.

John Paul Nichols, president, international markets for RCI Global Vacation Ownership (pictured right), said three factors would drive an explosion in the leisure real estate market in Asia – high growth markets such as China, Taiwan, Macau and India, untapped development potential and innovative product models.

"We see Asia as an emerging market and one that is poised for a quantum leap."

While similar predictions about timeshare were more hype than substance in the past, Nichols said that what had changed the game today was the entry of well-known brands into the sector.

"The brands will bring credibility to private equity, developers and customers. This will have a cascade effect. We will see traditional hospitality players in Asia come up with more flexible product models to compete with the global players."

RCI Global Vacation Network (renamed from Cendant Vacation Network Group in 2005), which has nearly 55,000 vacation properties, is also taking an active interest in Asia, seeing particular potential in China, Macau, Taiwan, Hong Kong and India.

Nichols said the market was also evolving from the traditional villa-oriented play in Bali and Thailand to urban developments in markets like China, Macau and Hong Kong which was seeing condo hotels as well as fractional and vacation ownership.

"India is the fastest growing vacation ownership market in the world with a strong middle class emerging and the latent demand for all leisure real estate models in China is tremendously high.

"Interest in non-hotel models in China, Taiwan and Hong Kong is significantly higher than Europe or North America."

Worldwide, he said, fractional interest sales had grown from US$513.3 million to US$1.5 billion with more than 54.2% of sales volume generated by private development and 32.5% sales at resorts by hotel companies.

Traditional vacation ownership is projected to grow at 12% a year over 10 years. Nichols said 69% of owners were spending more time on holidays than before, owners had become more resilient to world events and the sector was seeing 91% occupancy rates.

The number of players in traditional vacation ownership was also expanding globally with names like Sol Melia Vacation Club, Occidental Hotels & Resorts, Hyatt Vacation Club, Hilton Grand Vacations Company, Postana Hotels & Resorts, Grecotel, Disney Vacation Club, Starwood Hotels & Resorts, Marriott Vacation Club, McDonald Hotels & Resorts and Wyndham Worldwide in addition to RCI Global Vacation Network.

In the area of fractionals, global players included Fairmont Heritage Place, Marriott Grand Residence Club, The Ritz-Carlton Club, The Registry Collection, Four Seasons Hotels & Resorts and Club Intrawest.

"The growth in branded real estate is being driven by customer demand," said Nichols. "There is pent-up demand, there is availability of capital, we have emerging middle classes and we have the low cost airlines – a lot of things are happening that are leading to an explosion in travel.

"Leisure time is now a right in Asia and a tourism boom leads to a real estate development boom."

Is there a downside amid all the good news? Said Nichols, "We have to ensure we introduce new leisure real estate opportunities. There is usually a herd mentality on the product and if everyone starts doing the same thing, we could see an oversupply, say, in villa developments."

He also cautioned on the need for good industry self-regulation. "Leisure real estate works best when the rules of the game are clear to investors and government. If this sector gets a bad name, it's not good for everyone."

Siew Hoon, who has covered the tourism industry in Asia/Pacific for the past 20 years, runs SHY Ventures Pte Ltd. Her company's mission is "Content, Communication, Connection". She is a writer, speaker, facilitator, trainer and events producer. She is also an author, having published "Around Asia In 1 Hr: Tales of Condoms, Chillies & Curries". Her motto is ‘free to do, and be'. Contacts: Tel: 65-63424934, Mobile: 65-96801460

Yeoh Siew Hoon's other writings can be found at www.thetransitcafe.com . Get your weekly cuppa of news, gossip, humour and opinion at the cafe for travel insiders.