Timeshare

A timeshare is a form of ownership or right to the use of a property, or the term used to describe such properties. These properties are typically resort condominium units, in which multiple parties hold rights to use the property, and each sharer is allotted a period of time (typically one week, and almost always the same time every year) in which they may use the property. Units may be on a part-ownership or lease/”right to use” basis, in which the sharer holds no claim to ownership of the property.

History

The notion of the term “time-share” was originally created in Europe in the 1960s.^[1] Hapimag, a ski resort developer in the French Alps, was experiencing trouble finding customers for his high priced resort. Realizing that coffee shops sold cake only by the slice (since the entire cake was too expensive and could not be consumed at one sitting)^[2] he marketed his resort by encouraging guests to “stop renting a room” and, instead, “buy the hotel”. Success followed and the concept of partial ownership was embraced by developers worldwide, boosting sales of surplus condominium units at a time when the resort industry was depressed.

Due to the promise of exchange, these units, called “vacation ownership” by the industry, often sell regardless of their deeded resort (most are deeded into a certain resort site, though other forms of use do exist). What is not often disclosed is that all differ in trading power. If one is in Hawaii or Southern California it will exchange extremely well; however, those areas are some of the most expensive in the world, subject to demand typical of a highly trafficked vacation area. The vast majority of inventory flows briskly through two international exchange companies: RCI and Interval International (II).

Industry

This concept has attracted many resort developers and prominent hoteliers, such as Starwood, Wyndham, Accor, Hyatt, Hilton, Marriott, and Disney. Vacation ownership has proven to be lucrative for stakeholders in these major resort families, due to its popularity with vacation-goers. This form of lodging has spawned a variety of products sold on similar occupancy schemes; cars, planes, boats, condo-hotel units and luxury fractional properties (at which affluent guests may stay for as long as a quarter of a year, and which often command a six-figure price tag)^[3]

Scope of the industry

The scope of today’s timeshare industry in the USA is well documented.^[4]^[5] The ARDA International Foundation (AIF),^[6] which is the research arm of the American Resort Development Association (ARDA),^[7] 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 one, the prevalence of vacation ownership continues to expand.^[8] Approximately 4.4 million households own one or more U.S. 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, 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 exchange companies, reports there are 1,800 resorts in nearly 80 countries, with 2004 worldwide sales estimated at nearly $11.8 billion (Interval International 2006). RCI has more than 4,000 resorts in nearly 100 countries.

A 2001 report estimated there to be 5,425 timeshare resorts worldwide, of which around 31% are situated in North America, 25% in Europe,^[9] 16% in Latin America (where Mexico leads with 40% in the region). Emerging resorts in Asia offers 14%, led by Japan, but with Thailand and India increasingly prominent.^[10]^[11]

Legislation

The industry is regulated in all countries where resorts are located. In Europe, it is regulated by European and by national legislation.^[12] In 1994, the European Communities adopted “The European Directive 94/47/EC of the European Parliament and Council on the protection of purchasers in respect of certain aspects of contracts relating to the purchase of the right to use immovable properties on a timeshare basis”, which was subject to recent review^[13] which resulted in the adoption on 14 January 2009 of the European Directive 2008/122/EC.^[14]

Types and sizes of accommodations

These 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. Units normally include fully equipped kitchens with a dining area, dishwasher, televisions, DVD Players 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.

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. These 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.

Critique of timeshare concept

Critics contend timeshare units are often overpriced, especially in places such as Mexico and Florida where almost every resort offers this style of accommodation.^[15]

The U.S. Federal Trade Commission provides consumers with information regarding timeshares.^[16]

Some individual timeshare owners also complain about the annual maintenance fee (which includes property taxes) being too high.^[17]

Pricing is compared to staying at hotels in the long term, when interest and fees are not included. However with a hotel you do not have a fixed payment, upfront cost, fixed schedule, and set locations.^[18]^[19]