The Timeshare Concept
The timeshare industry is over 50 years old, and generates revenues of over $14bn per annum in sales and $45 billion in economic output (figures from the ARDA International Foundation, 2010). Today, there are approximately 20 million timeshare owners worldwide, of which over one and a half million reside in Europe alone. Yet few realise what timeshare is and the extent of its contribution to the economies of Europe and to providing all year round tourism and employment.
The modern timeshare concept provides holidaymakers with a unique combination of consistency and choice. Consistency, in that holidaymakers can purchase the rights to their preferred holiday venue into the future. Choice, in that these rights can be exchanged, through dedicated international exchange companies, for other high-quality holiday venues world-wide, or through the advent of points based timeshare clubs which offer flexibility.
The Timeshare Industry
The timeshare concept began in Europe in the 1960s as an innovative way for increasing holiday choice. Instead of booking a week or two at a resort every year, or purchasing a holiday property outright, timeshare offers holidaymakers the ability to buy rights of occupancy in a property, typically in multiples of one week, for either a set period or in perpetuity. It puts a holiday home within the reach of millions who could never afford to buy a property.
Once consumers have purchased their holiday time, they can either use it, pass it to friends or relatives, or rent it out. But while there is total flexibility over who uses the holiday, the basic timeshare product lacked the flexibility of when and where it had to be taken.
Consumers’ demand for greater flexibility led to the growth of exchange systems and, more recently, point systems. These allow the owner to exchange his 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 90 countries. Exchange companies often provide their members with associated services – flights, car rental, insurance etc – at competitive prices.
The popularity of exchange has led to a new flexible product, often called vacation clubs, where consumers buy points instead of a slot 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.
Timeshare in the 21st Century
Timeshare has come a long way since the first resort was developed iin the 1960s and is now a robust industry that provides millions of people with quality holidays each year. With 1312 resorts in Europe and over one and a half million owners, it generates £3.2 billion in tourism expenditure annually. And with high occupancy levels, averaging at 72% year round, the industry is an important contributor to economies in parts of Europe that traditionally suffer from high unemployment.
As the needs and aspiration of buyers has evolved over the years, so has the industry and vacation ownership, as it is called, now includes high-end concepts such as fractional ownership, condo hotels and destination clubs. These developments, which are marketed to high net worth individuals, frequently include services such as 24-hour concierge service, airport lounge access and a personalised travel service.
There has also been a rise in the development of fractional properties for those whose pockets are not so deep and this is proving to be a successful concept for RDO members, some of whom are moving away from traditional timeshare sales to focus on this new market.
It is no surprise that today’s buyers, in the midst of a deep recession, have less of an appetite for the long-term ownership that appealed to their parents’ generation and the industry is responding to this by developing short-term ownerships, typically of a five to ten year duration. Buyers then have access to luxurious accommodation around the world that they could only have dreamt of and may, in the long term, go on to buy longer-term timeshare or even fractional ownership.