Consumer: Timeshare
What is Timeshare and Holiday Ownership?
Background
Timesharing was first conceived in France in the mid-60s, but it was not until the oil crisis of the mid-70s that the industry really started to develop.
In Florida, in the United States, sales of holiday real estate slumped during the early 70s and the Americans looked to new and innovative ways of selling their empty properties.
The solution was timeshare - or the sale of the use of one apartment for each week of the year, with prices varying according to size and seasonal demand.
Hoteliers realised they could dramatically increase occupancy rates and increase year-round revenue through mixed use resort developments, i.e. 30% to 40% timeshare combined with 60% to 70% hotel. And in many cases, the timeshare component has outgrown the hotel.
It was in 1974 the concept of holiday exchange was developed where owners could exchange the holiday weeks and resort they own with other timeshare owners throughout the world.
How Does it Work?
Timesharing or holiday ownership is the way millions of families around the world have luxury holidays for a fraction of the cost of owning a holiday home.
An individual makes a one time purchase as a fraction of whole ownership. The apartment is divided into 52 weeks. 51 weeks are sold and one week is kept for maintenance of the property. An annual maintenance levy is then paid for the constant upgrade of the property and facilities.
Once consumers have purchased their holiday time, they can either use it themselves, pass it to friends or relatives, use as a staff incentive, or rent it out. But while there is total flexibility over who uses the holiday tile, timeshare products lacked the flexibility of when and where it had to be taken. Consumer demand for greater flexibility led to the growth of exchange systems and, more recently, point systems. These allow the owner to exchange their timeshare week for either another week at the same resort or for a week in another resort within the exchange network in over 5,400 resorts in over 95 countries. Exchange companies can often provide their members with associated services - flights, car rental, insurance etc - at competitive prices.
The popularity of exchange has led to a new product offer, where consumers buy points instead of time in a particular resort. These points then act as a holiday currency. Each time the consumer wants to take a holiday, they choose the size of apartment, duration and location they want and pay accordingly from their allocation of points. With some companies points can also be used for the purchase of air fares, car hire and other travel related products.
All the benefits of a holiday home without the year round costs!
The Benefits of Timeshare
- The flexibility to use your vacation time anywhere in the world.
- The accommodation is generally larger and the standards are usually much higher than available through a standard holiday package. Decor and furnishings are also of a high quality and of a more varied nature, both within the apartments and the development itself.
- Users of timeshare look after the properties that they stay in as they feel an ownership of the apartment.
- Owners of outright purchases do not necessarily use their unit every week of the year.
- Holiday/timeshare owners purchase only the number of holiday weeks they wish to use.
- Holiday ownership/timeshare allows a purchaser to purchase in a "lifetime" of holiday accommodation at today's prices.
- Owners can bank their week for three years and take a longer holiday if they choose.
- Regulation designed to reassure and protect purchasers is in place
Holiday Exchange: The Concept
How it Works
- Members have a week or more to exchange with, or points to relinquish
- Members deposit their weeks into the exchange pool and draw on it when they wish to place their holiday request
- Members can then request the use of other Members' holiday weeks from the Exchange pool. It is the 'trading power' that has an influence on the week that is confirmed for their holiday.
- Similarly, exchanges are confirmed taking into consideration seasonal values of the week being relinquished
- Exchange members can place their exchange requests in some cases up to two years in advance
- Members pay a fee for this service
- Staff will help members throughout the process, suggesting alternative locations or dates should original requests not be available.
Industry Statistics
In Australia
The timeshare industry provides significant regional and community economic development throughout Australia.
- Over 150,000 timeshare owners in Australia own approximately 170,000 timeshare weeks
- Timeshare owners and guests spend around $90.8 million annually in local communities during their holidays.
- Timeshare resorts spend around $39.7 million annually on maintenance, staff and the purchase of goods and services.
- Timeshare resorts operate at a 97% occupancy which provides strong year-round utilisation and stable employment in resort communities.
- Average household income of Australian timeshare owner is $66,000 (Reference Ragatz)
- Estimated to contribute A$150 million to the Australian economy per year
- Approximately 150 resorts in Australia - the majority of which are located in regional areas (Reference RCI)
- $400 Million in timeshare sales in 2004
Globally
Timeshare is the fastest growing segment of the tourism and leisure industry growing at 14% annually worldwide. (World Tourism Organisation)
The entry and success of branded hospitality players such as Disney, Marriott, Sheraton, Hilton etc in timeshare has acted as a strong catalyst for growth. The market is opening in India, Asia and Eastern Europe whilst steady growth continues in the US and Western Europe.
- 5,425 Timeshare Resorts Worldwide
- Timeshare Resorts are located in 95 different countries
- 6.7 million Timeshare consumers Worldwide
- 10.7 million Timeshare weeks owned Worldwide
- Timeshare owners reside in over 270 countries