Dispatch: Come for the Beaches, Stay for the Blizzards

Cape Cod isn't supposed to be this cold. The temperature hovers in the 20s on this Monday morning. Snow dusts the scrub pines. In front of the Cape Codder Resort, a hotel complex on a commercial strip in Hyannis, icicles hang from the decorative fountain. Inside, only about 20 of the 257 rooms are occupied. But in a small office near the back of the building, Debbie Rutland is ready for business.

Rutland has spent most of the past 20 years selling time-shares in places like Jamaica, Bermuda, and Grand Cayman. Today she's the sales director at a new venture called the Cape Codder Residence Club. On the walls of Rutland's office hang artist's depictions of the 15 luxury condominiums that the hotel is building, each of which will have granite counters and custom furnishings. An overhead drawing of the property shows plans for a spa complex and a large indoor water park—year-round amenities that, Rutland hopes, will make more people want to visit even on days like this one, when the nearby beaches resemble Arctic tundra.

Rutland isn't selling the condos, exactly—she's selling slices of them. The Cape Codder Residence Club is a fractional resort, one of the first in this part of the country. Buyers pay $159,900 and up for a one-tenth share of these two- and three-bedroom units, a purchase that entitles them to at least 35 nights of occupancy a year. Bill Catania, whose family business, Catania Hospitality Group, is spending $20 million on the project, calls it "a new vacationing lifestyle." It's also one that at first blush seems decidedly out of place on Cape Cod.

As anyone who's visited a high-end resort destination like Cabo San Lucas (or paged through the ads in an upscale magazine) is aware, developers have been pitching fractionals as a smart real estate play for more than a decade. Most buyers who choose them do so because they hate the thought of owning a vacation home that sits empty 10 months a year, or they want to avoid the maintenance headaches of leaky roofs and broken thermostats. In high-priced markets, fractionals offer a (relatively) affordable alternative for those who can't or won't spend a million bucks for a oceanside retreat or ski chalet.

Cape Cod hasn't been one of those markets for a simple reason: Nice as it is, most people want to be there only during the summer, which is a pretty short summer at that. Limiting the number of days when an owner can use a property, and then sprinkling those blocks of time throughout the year, only makes sense if people are eager to visit year round. "Fractionals work best where there are two high seasons, like in Colorado," says Richard Ragatz, an Oregon-based resort consultant who studies the vacation-home market. "I'm not saying the Cape Codder is not going to work, but it's a little unusual...for such a seasonal market."

For the Catania family's gambit to pay off, they'll have to help change the perception of the Cape itself and start attracting vacationers just as content to wear parkas as bikinis. Their plan is part of a larger effort to rebrand the Cape. "We've been working for years to try to get rid of this image of Cape Cod as a summer destination," says Kristen Mitchell, director of marketing at the Cape Cod Chamber of Commerce. She points to events—the Bourne Scallop Festival, the Wellfleet OysterFest, Oktoberfest in Mashpee, the Provincetown Portuguese Festival—that now lure thousands of visitors during the spring and fall. In a down economy, off-season lodging rates (and, for New Yorkers and New Englanders, the ability to take a vacation without paying airfare) are a big attraction, too.

It's the same economy, however, that's turned this into an inauspicious time to make a real estate gamble, whatever the underlying strategy. The Catanias are convinced their project makes sense, but sales have been agonizingly slow. According to their projections, they should have sold 30 of the 150 units (that's 10 shares in each of the 15 condos) by late January. So far, they've sold just 10.