Timeshare

A timeshare is a property or the right to use a property, typically a resort condominium unit, in which multiple parties have rights, such as the right-to-use.

The notion of a timeshare was originally created in Europe in the 1960s. A ski resort developer in the French Alps marketed his resort by encouraging guests to "stop renting a room" and instead "buy the hotel". The timeshare concept was quickly embraced by developers worldwide, boosting sales of surplus condominium units at a time when the resort industry was depressed. Due to the potential for large profits, the timeshare industry has become a magnet for attracting illegal and questionably legal methods for the sale and resale of property. Critics contend timeshare products are often overpriced, with sales and marketing expenses accounting for more than 40 percent of the purchase price. As such, timeshares are unique among real estate asset classes in that buyers are almost certain to lose money.

Re-Sales

Time share ownership is not the same as real estate ownership, and real estate brokers do not typically handle timeshares. There are many companies and websites which specialize in reselling time-shares. Some resell services prey on desperate owners and charge outlandish listing fees.

Industry

The timeshare concept has in recent years been embraced by many lodging companies, including category leaders Starwood, Hyatt, Marriott, and Walt Disney Parks & Resorts. Timeshares are an extremely profitable segment for such companies. The timeshare segment is expected to provide continued revenue and profit growth through 2008, despite an expected slowdown in traditional hotel operations.

The first hotel timeshare in the US was the Hilton Hale Kaanapali on the Island of Maui in Hawaii.

Methods of use

Timeshare is a business model whereby a company owning property, typically resort condominiums, sells small timeslices of property to customers. Timeshare buyers can:

• Use their usage time
• Rent out their owned usage
• Give it as a gift
• Exchange internally within the same resort or resort group
• Exchange externally into thousands of other timeshare resorts
• Sell it either through traditional advertising, online advertising or by using a licensed broker

Recently, with most point systems, owners may elect to:

• Assign their usage time to the point system to be exchanged for airline tickets, hotels, travel packages, cruises, amusement park tickets;
• Instead of renting all their actual usage time, rent part of their points without actually getting any usage time and use the rest of the points;
• Rent more points from either the internal exchange entity or another owner to get a larger unit or more vacation time or at a better location;
• Save or move points from one year to another.

Some developers, however, may limit which of these options are available at their properties.

Timeshare owners can elect to stay at their resort during the prescribed period, which varies depending on the nature of their ownership. In many resorts, they can rent out their week or give it as a gift to friends and family.

Timeshares offer owners the possibility of exchanging their week, either independently or through several exchange agencies, to stay at one of the thousands of other resorts worldwide. There are many exchange agencies, of which the two largest are Resort Condominiums International and Interval International. They have resort affiliate programs and members can only exchange to affiliate resorts. It is most common for a resort to be affiliated with only one of the larger exchange agencies, but it isn't rare to find a dual affiliate resort. Together they have over 7,000 resorts. The timeshare resort one purchases determines which of the major exchange companies can be used to make exchanges. RCI and II charge a yearly membership fee and fees for when they find an exchange. They also bar members from renting weeks for which they already have exchanged.

Timeshare owners can also exchange their timeshare through independent timeshare exchange companies. Dial an Exchange, Trading Places, Hawaii Timeshare Exchange, Platinum Interchange, The San Francisco Exchange, Timex and Redweek.com are the main independent exchange companies. Owners can exchange with these independent exchange without needing the resort to have a formal affiliation agreement with the companies.

Timeshare owners may also arrange a direct exchange. This requires locating a timeshare owner with the location and weeks both mutually desire. This form of exchange is rare but since it can save in exchange fees it is often sought after. Several bulletin boards have been created to help timeshare owners meet others and swap.

Timeshares take different forms depending on the seller. The vast majority consist of one week of ownership, i.e. 1/52 year, but some developers sell point based systems that are a different form of vacation currency that allow hotel stays, car rentals, and stays at large networks of resorts.

Kinds of Time Shares

Deeded vs. Right to Use

A major difference in types of timeshare ownership is that between deeded and right to use contracts.

With deeded contracts the use of the timeshare resort is usually divided into week long increments and these are sold as fractional ownership and are real property. As with any other piece of real estate the owner may use his or her week, rent his or her week, give it away, leave it to his or her heirs or sell the week to another prospective buyer. While this form of ownership can offer additional security to the owner as a form of physical ownership, deeded timeshare ownership can be as complex as outright property ownership in that the structure of deeds varies according to local property laws. Leasehold deeds are common and offer ownership for a fixed period of time after which the ownership reverts to the Freeholder. Occasionally, leasehold deeds are offered in perpetuity however many do not convey ownership of the land but merely the apartment or 'unit' of accommodation.

With right to use, the timeshare purchaser has the right to use the property in accordance with the contract but at some point the contract ends and all rights revert to the property owner. In other words, the right to use contract grants the right to use the resort for a specific number of years. In many countries there are severe limits on foreign property ownership, so this is a common method for developing timeshare resorts in countries such as Mexico. Disney Vacation Club is also sold as a right to use. Care should be taken with this form of ownership as the right to use often takes the form of 'club membership' or right to use the reservation system. Where the reservation system is owned by a Company not in the control of the owners, the right of use may be lost with the demise of the controlling Company.

Fixed Week Ownership

The most basic timeshare unit is a fixed week; the resort will have a calendar enumerating the weeks roughly starting with the first calendar week of the year. An owner may own a deed to use a unit for a single specified week. For example, week 26 normally includes the Fourth of July Holiday. If an owner owned Week 26 at a resort he or she could use that week every year.

Floating

Sometimes a timeshare is sold as floating weeks. The ownership will be specific on how many weeks the owner owns and from which weeks the owner may select for the owner's stay. An example of this, a timeshare may be a floating summer week where the owner may request any week during the summer season generally weeks 22 through 36. In this example there would be competition for prime holidays such as the weeks of Memorial Day, Fourth of July and Labor Day. The weeks when schools may still be in session would not be so high in demand. Some floating contracts exclude major holidays so they may be sold as fixed weeks.

Rotating

Some timeshares are sold as rotating weeks. In an attempt to give all owners a chance for the best weeks, the weeks are rotated forward or backward through the calendar, so one year the owner may have use of week 25, then week 26 the next year and then week 27 the year after that. This method does give each owner a fair opportunity for prime weeks but it is not flexible.

Vacation Clubs

Vacation clubs are organizations that may own timeshare units in multiple resorts in different locations. Some clubs consist only of individual weeks at other developer's resorts. They are sold both as deeded or right to use and club members may reserve vacation time at any of the owned resort units based on availability. Vacation clubs cater to a wide range of economic backgrounds and income levels.

Points Programs

Resort based points programs are also sold as deeded and as right to use. Points programs annually give the owner an amount of points equal to the level of ownership. The timeshare owner in a points program can then use these points to make travel arrangements within the resort group. Many points programs are affiliated with large resort groups offering a large selection of options for destination. Many resort point programs provide flexibility from the traditional week stay. Resort point program members, such as Worldmark, may request from the entire available inventory of the resort group.

Exchange company point programs are not a method of ownership nor are specifically associated with one resort or resort group. With the exchange company points programs the members may be limited to exchanging for weeks deposited by other members.

A points program member may often request fractional weeks as well as full or multiple weeks stays. The number of points required to stay at the resort will vary based on a points chart. The points chart will allow for factors such as:

• The popularity of the resort;
• The size of the accommodations;
• The number of nights;
• The popularity of the season;
• and the specific nights requested.

There is flexibility as well as complexity in point programs.

Types and sizes of timeshare units

Timeshare properties tend to be apartment-style units ranging in size from studio units (with room for two) to three and four-bedroom units. These larger units can comfortably house large families. Timeshare units normally include fully equipped kitchens with a dining area, dishwasher, televisions, VCRs and more. It is not uncommon to have washers and dryers either in the unit or easily accessible on the resort. Kitchens are equipped to the size of the unit, so that a unit that sleeps four should have at least four glasses, plates, forks, knives, spoons, and bowls so that all four guests can sit and eat at once.

Timeshare units are usually listed by how many the unit will sleep and how many the unit will sleep privately.

• Sleeps 2/2 would normally be a one bedroom or studio
• Sleeps 6/4 would normally be a two bedroom with a sleeper sofa

Sleep privately refers to the number of guests who will not have to walk through another guest's sleeping area to use a restroom. Timeshare resorts tend to be strict on the number of guests per unit. Unit size can affect demand at a given resort where a two-bedroom unit may be in higher demand than a one-bedroom unit at the same resort. The same does not hold true comparing resorts in different locations. A one bedroom with a great location may still be in higher demand than a resort with less demand. An example of this may be a one bedroom at a great beach resort compared to a two bedroom unit at a resort located inland from the same beach.

Scope of timeshare industry

The scope of today's timeshare industry in the USA is well-documented. The ARDA International Foundation ("AIF"), which is the research arm of the American Resort Development Association ("ARDA"), reports there are 1,604 timeshare resorts, with 154,439 units, in the USA as of January 1, 2006 (AIF 2006). Though reportedly fewer than six percent of U.S. households own a timeshare, the prevalence of timeshare ownership continues to expand (Scoviak 2005). Approximately 4.4 million households own one or more U.S. timeshare weekly intervals or points-equivalent as of January 1, 2007, an increase of sixteen percent from the prior year.

About half of the resorts in the USA are currently selling timeshares, generating sales of $8.6 billion in 2005 (AIF 2006).

The global scope of the industry is not as readily quantified. Interval International, one of the two major timeshare exchange companies, reports there are 5,400 resorts in nearly 100 countries, with 2004 worldwide timeshare sales estimated at nearly $11.8 billion (Interval International 2006).

See also

• Vacation rental
• List of house types
• Time Share Tours
• Fractional Ownership
• Fractional financing

References

• "Perspective Magazine: Independent Timeshare Industry News & Reviews". United Kingdom: Perspective International Ltd. 2008. {{cite magazine}}: Cite magazine requires |magazine= (help); External link in |publisher= (help)

• "The Timeshare Blog: Daily News & Press Releases From Around The World". United Kingdom: Timeshare News. 2008. {{cite news}}: External link in |publisher= (help)

• State of the Vacation Timeshare Industry: United States Study 2006 Edition. Washington DC: ARDA International Foundation. 2006. {{cite book}}: External link in |publisher= (help)

• Scoviak, Mary (February 2005). "New Look Of Timeshare". Hotels. Retrieved 2006-12-26.

• "The Timeshare Industry – The Bright Future of Timesharing". Interval International. Retrieved 2006-12-26.

External links

• ARDA, American Resort Development Association.
• ATSPI, - Association of Timeshare Sales Professionals-International..
• OTE, Organisation for Timeshare in Europe
• CRDA, Canadian Resort Development Association
• AIRDA, All India Resort Development Association
• ATHOC, Australian Timeshare and Holiday Ownership Council
• TVOA, Thai Vacation Ownership Association
• TATOC, The Association of Timeshare Owners Committees - Putting Timeshare Owners First
• GRN, Global Resorts Network
• International trading of time share periods between owners