Timeshare Upgrades Drive 57% Jump in Bluegreen's Q2 Income

Sales in Bluegreen communities for the second quarter were $62.2 million, an increase of 49.2% over the same quarter a year ago. And, although sales in the company's timeshare resorts sector rose just 12%, they reached $97 million and represented a particularly profitable segment of total sales, according to George F. Donovan, president and CEO.

"We continue to benefit from the critical mass we have achieved in our resorts segment," Donovan said during a conference call. Upgraded sales to existing customers in this segment rose 34% in the second quarter compared with the same quarter last year. "These higher margin sales lower marketing costs," he said. Sales to new resort customers also rose, he said, and he estimated that upgrade-sales represent about a 20%-share of total sales. These, combined with referrals, account for about 30% of all timeshare resorts sales, he said.

The sharp rise in sales in the communities segment of the business was due primarily to strong same-site sales at Sanctuary Cove at St. Andrews Sound and Traditions at Brazleton, which are golf communities in Georgia, along with properties in Texas. Bluegreen acquired two communities aggregating 2,567 acres in Texas. Inventory in one property will come on line by the end of this summer and inventory in the other by early 2006.

Donovan acknowledged that maintaining sales velocity in the communities segment of the business "creates pressure to increase inventory. I can't say what properties will fall into the 'buy' category," he said, "but we have a robust pipeline and a staff devoted to evaluating acquisitions every day."

He also acknowledged that real estate prices are rising. "No doubt we're paying more than in prior years, but I don't think we're over-paying as long as the market is willing to accept our price increases."