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‘Timeshare: A hotel product’, an article by Francisco Lizarza

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14 Jun

‘Timeshare: A hotel product’, an article by Francisco Lizarza

In June 2012, the RDO Spanish Chairman, Francisco Lizarza, wrote an article for the CEHAT (the Spanish Hotel and Apartments trade body) newsletter. He first explained why Timeshare can no longer be considered a real estate product, stating that although for more than 30 years Timeshare has been arguing against the erroneous opinions that it is a real estate product, the fact is that it is an entirely touristic product, and this is how it is regulated at a national and regional level. For example, the Tourism Law of Andalusia defines it as a way of marketing a holiday apartment, hotel room etc… in periods of time, exactly as could be done with hotel vouchers to be used over two or three years or even as marketing programme for such accommodations.”

 

“The positive aspects of this way of promotion are obvious: On the one hand it has the advantage of using the existing building without having to make a new investment, and on the other the full price is paid upfront; in addition, there is a secondary income with the annual management fees. This promotes customer loyalty, overcomes seasonality and gives the users the option to trade their right to stay at a particular resort for one in another location with the same chain or use the exchange network to swap their week for similar accommodation type around the world.”

 

Lizarza continues to explore the positive and negative points of the new Law which now regulates timeshare in Spain, namely Royal Decree Law 8/2012. Although the law is in force it is still winding its way through Parliamentary debates and review.

 

“The previous 1998 Act, designed a new real estate of rotational use for this tourism product, claiming it was the only system which could be used and prohibiting the marketing of timeshare as a personal right subject to either Spanish or foreign Law. And indeed, when the legislator designs the actual form of a tourism product, and how it may be marketed, without regard for the reality of the sector and the operators, one ends up with an artificial product that has little to do with the actual needs.

 

“Spain has repeated the provisions of the earlier law of 42/98 in respect of how a timeshare project can be structured but unlike that earlier law it is no longer the only format that can be used. The effect of Rome I is recognised allowing other structures to be employed. The new Royal Decree Law recognizes explicitly (and this gives more legal certainty) that a personal right systems not subject to the Spanish law may be created. Obviously, the consumer protection rules (now uniform across the whole of the EU) set out in the same new law (implemented in RD 8/2012 from the Directive 2008/122/EC) must be adhered to in all instances.

 

“Along with this positive aspect of the new regulation, the negative side is given by excluding personal right systems subject to Spanish law.

 

“On balance, the new law, which naturally has to limit its scope to the narrow confines of the Directive, is a very positive step in the regulation of the sector.

 

“Today, although we are in times of crisis, however this is also the time of opportunity for the tourism industry and Spanish Operators should not miss the chance to market their resorts in different and innovative ways just as developers in other countries have grasped the opportunities..”

 

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