Timeshare & Vacation Ownership

TIMESHARE

The Concept

Holiday ownership is a very simple concept, which lets one buy a week or weeks in a luxury home for a fixed number of a year or forever. Effectively one can own a share of the development and therefore one only pays for the upkeep of what one actually owns.

Objective:

As the overall cost of the development is much higher and the higher costs been incurred for the quality of amenities and furnishing so as it is not affordable to buy. The concept is splitting the cost across all the interested owners. The cost involves the payment for the week/weeks which one purchase and an annual maintenance fee, which covers the share of the upkeep of that particular accommodation plus any central facilities such as a swimming pool etc. This charge will be paid to the management who will be responsible for the day-to-day running and maintenance of the development.

The vacation ownership industry can be traced back to its European origin in the 1960s. A ski resort in the French alps known as SuperDévoluy” is the first known vacation ownership program in the world. The multiple ownership of individual’s weeks brought with the guarantee of reservations for those who wanted to ski in the area.

By the 1970’s some faltering condominium projects in St. Thomas, Fort Lauderdale, and Puerto Ricco were converted over to vacation ship and thereafter timeshare became a viable alternative.

Once the concept of vacation ownership was embraced by the United States, it began to gain wide acceptance by the public. A sale jumped to over 50 million by the mid-’70s and has climbed to more than 2 billion annually today. Vacation ownership has enjoyed substantial growth over the y4ears with approximately 3.3 million timeshares sold since 1980. Currently, there are over 5000 vacation ownership resorts in over 75 countries in the world.

What is Vacation Ownership?

Vacation ownership “timesharing” is not the right to use a specific week of a resort during a specific time period nor is it the pre-purchase of the vacation. It is important to understand that vacation ownership is a commodity, which is purchased to be enjoyed and used over the years. One should never purchase a timeshare with the intent of re-selling it for a profit. Vacations are holidays, which we spend money to relax and rejuvenate. Vacation ownership is not an investment.

Ownership of a time-share is very similar to the ownership of a condominium except that your rights are limited to a certain week during the year.

The types of ownership contracts can be deeded, leased, or licensed.

Deeded:

A deeded interest is owned outright forever. It is an absolute right that can be sold, leased, and even willed to heirs.

Licensed: The license is somewhat different in that prevailing with the clubs. A member has the right to use the club and all its amenities. The member must make him/her sure about the terms and conditions before they take the decision to buy.

Generally, licensed timeshare requires joining a “vacation club”. By purchasing a membership to a vacation club, owners receive a number of points which, they can then use to purchase vacations at various resorts. Some of the most well-known vacation clubs include Disney Vacation Club, Marriott Vacation Club, and Hilton Grand Vacations Club.

Leased:

The leased interest is much like an apartment lease except the right to use it is restricted to a specific week during the year. Upon expiration of the lease term your right to use will generally terminate and return to the resort.

Leased timeshare (also called right-to-use) gives you the right to use a specific week or weeks at the property for a set number of years (usually 20-99 years). • The right to use the property normally returns to the selling resort at the end of the lease period.

Classification of Hotels Based on Ownership

Based on ownership, hotels are classified into three categories:

  • Timeshare Hotels and Resorts
  • Condominium Hotel
  • Referral chain

Timeshare Hotels and Resorts

A timeshare can be defined as an advance purchase of time in holiday accommodation. The purchaser pays a capital sum to acquire this timeshare and then pays an annual contribution towards the maintenance of the property. The period of time sold is generally based on the module’s weeks.

Timeshare is a marketing concept in which hotels are marketed on a membership basis. Members can avail of accommodation in the timeshare property by paying the upfront advance for the stay of a fixed number of days every year for a specific number of years.

Examples of International brands for timeshare: Disney, Hyatt, Starwood, Marriott, Four Seasons, Hilton, Ritz Carlton, Accor, and Domestic Brands are Club Mahindra, Kamat Group, Sterling resort, Toshali Resort, Cambay group, etc.

These properties typically resort timeshare 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. The sharer holds no claim to ownership of the property.

This form of lodging has spawned a variety of products sold on similar occupancy schemes; cars, planes, boats, and luxury fractional properties.

Important features of Time-Share-

  • ​Properties normally found in resort areas
  • Involves people who purchase the accommodation for a specific duration in a year and for set number of year for e.g. 20-50 years.
  • Typically following color codes as follows-
    • Purple- peak season
    • Red – best season(vacation time)
    • White- mid-season
    • Blue- off season
  • The owner occupies the unit during slotted time
  • Owners who do not wish to occupy the unit in slotted time may rent it out
  • Possibility of trading ownership
  • Vacation options-
    • Fixed week
    • Floating week
    • Rotating week
    • Vacation clubs
  • Sharing maintenance-owners have to the annual maintenance fee
  • The flexibility of family size (no additional charges for friends)

Facilities offered in Time-Share accommodation-

  • Fully equipped kitchen (Cutlery, crockery, utensils, oven, etc.)
  • Separate Living room and Dining room
  • Laundry facility
  • Can use all resort facilities like swimming pool, tennis court, restaurants, health clubs, etc.

Condominium Hotels

They are apartotels or apartment hotels. These units are developed on joint ownership basis. Each ownership purchases and has full right of and the unit he has purchased and shares the most common to the complex such as taxes, insurance, maintenance, and upkeep of public areas including swimming pool, health club, parking, security, air conditioning, heating, cable, broadband, etc. Each owner can occupy or sell his unit independently but is required to follow the rules and regulations laid by the management. The owner enjoys the benefits of property, appreciation but needs not bother about its maintenance, security, upkeep, insurance, etc. He is required to pay yearly maintenance charges. In some cases, a corpus can be made and the maintenance expenses are paid from the interest earned from the corpus. In some cases, the management can help the owner is renting out the property. They take full responsibility for the owners’ units’ safety and also pay to the owner a major portion of the rent earned from renting out. Usually, the management requests the owners to rent out in case of major conferences. The management earns a major portion by renting out conference hall and from catering.

A condominium, frequently shortened to a condo, is a type of real estate divided into several units that are each separately owned.

Residential condominiums are frequently constructed as apartment buildings, but there had been an increase in the number of “detached condominiums” which look exactly like single-family homes but in which the yards, building exteriors, and streets are jointly owned and jointly maintained by a community association.

Unlike apartments, which are leased by their tenants, condominium units are owned outright. Additionally, the owners of the individual units also collectively own the common areas of the property, such as hallways, walkways, laundry rooms, etc.; as well as common utilities and amenities, such as the HVAC system, elevators, and so on. Many shopping malls are industrial condominium in which the individual retail and office spaces are owned by the businesses that occupy them while the common areas of the mall are collectively owned by all the business entities that own the individual spaces.

Referral chain hotels

referral hotel chain is a type of hotel franchise. It is a type of hotel that operates independently but maintains affiliation with a given chain. To stay within the chain, the hotel must meet certain minimum criteria.

The Referral system tends to be made up of independent properties or small chain hotels that have grouped together for common marketing purposes.

Referral association offers similar benefits to properties such as franchises, albeit at a lower cost. Hotels and Motels with referral associations share a centralized reservation system and a common image, logo, as well as management training and continuing training program.

A referral group consists of a number of properties, independently owned and operated that join under a common identity while maintaining their autonomy.

Advantages-

  • To operation a centralized reservation system
  • To publish a joint brochure
  • To share advertising
  • To refer business to each other
  • To refer trained staff to each other
  • To take advantage of joint purchasing power
  • To main sales office at major traffic centers.
time share hotel
Source: The Decor Circle

​Some Other Concepts Related to Timeshares

Time-sharing
Unlike a vacation club, time-sharing involves the purchase of real estate. You buy a week or weeks to use a furnished condo, cabins, or other accommodation that offers all the comforts of home, including a kitchen. Time-sharing limits travel options to one location, although often you have the opportunity to swap with owners of timeshares elsewhere in the country or the world.

Vacation Clubs

Membership in vacation clubs covers multiple locations. Some vacation clubs resemble timeshares in that they offer fully-furnished, home-style accommodations. Clubs such as one offered by Disney provide discounts to all of its resorts and theme parks. Hilton club members receive discounts at all the chain’s hotels. Ask if the club will give you a trial membership so you don’t have to commit yourself immediately.

Financial Obligations

Timeshare owners pay an initial fee to purchase their block of time and then annual maintenance fees that can rise over time. They can sell their block of time, much like any other real estate transaction. Vacation club members pay a single annual membership fee and generally do not have membership options.

How is timeshare different from Hotel Business?

A Hotel room is rented for a certain number of days where you have only one room to yourself. You may go down to a pool or restaurant or bar of the hotel, which has to be shared with the other guests.

However, when we talk about Time Share, we own a certain place to ourselves on certain periods of time. You do not pay for every night you stay there. The ownership is bought on basis of the number of years you wish to holiday there. It is bought by multiples parties unlike a hotel room and every member gets the condo to themselves for a certain time of the year that is distributed in a pre-decided order.

Not only this, you get two or even more rooms to yourself in a Time Share and the kitchen facilities or even pool is all to yourself. Time-share is more affordable in long run.

One can also further earn money in Time Share since certain members even rent these properties for one-day events.

Forms/ Types/Classification of Timeshare Properties

Floating Timeshare

One can holiday with their family in various resorts owned by the timeshare for a specific company for the specific period one has purchased the holidays for. In this ownership, it allows a guest to buy a week within a specific period. For e.g. 5 days in January and 10 in some other month. So the customer can plan suitably where there are no seasonal variations,

Fixed Week Ownership

The owner may own a deed to use a unit for a single specified week. He may choose any calendar week like the first week of July as per his need and convenience. The owner will have to use that week every year. This concept was not very popular as it was rigid and didn’t give the customer the flexibility in usage so it became outdated in 1980.

Rotating Week Ownership

Weeks are rotated forward or backward in the calendar to give owners a chance for the best week. For e.g. one year the owner may use the 1st week of January then 2nd week next year. Gives the owner an opportunity for prime weeks.

Vacation Clubs

Vacation clubs are another timesharing variation. A vacation club is an organization that owns multiple timeshare properties in different locations. If you are a club member, you can reserve space at the various resorts that are part of the club in accordance with club rules. You pay annual fees, and there is an initial cost to join the vacation club. As with a right-to-use property, the vacation club contract will either contain the timeshare program documents or will incorporate them by reference.

Club memberships can usually be bought, sold, or passed to heirs. There can be different levels of membership, with some membership levels receiving higher priority in reserving certain units or having access to larger units

The Split Week method/ Split in time-share

Is also now available where the owner can split his/ her week/period into smaller units, provided the cancellation of timeshare use has been made well in advance. A week’s holiday can be split in two parts for two different properties and locations for a period of 3-4 days each. In fact, a two weeks holiday can also be clubbed if the owner has not availed his vacations during the last year and he had intimated about his desire to club two weeks vacations during the year.

Points- based Programs

Under a point based system, consumers at chain timeshare properties purchase a number of points that are redeemed each year for a number of accommodation nights that vary depending on the season, day of the week, size of unit and location. These points can be redeemed in any of the hotels and timeshare product base.

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.

Many resort point programs provide flexibility from the traditional week stay. Resort point program members, such as World mark, may request from the entire available inventory of the resort group.

So, 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, and 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.

Types and sizes of Accommodation

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 units will sleep and how many units 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

OR

Studios:                                                          For 3 adults or 2 adults + 2 children

One-bedroom apartments:               For 4 adults and withdrawing room, dining room, bedroom, balcony, and kitchen

Two-bedroom apartments:                For 6 adults

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 can. The same does not hold true comparing resorts in different locations. A one-bedroom unit in a desirable location may still be in higher demand than a resort with less demand. An example of this may be a one-bedroom at a desirable beach resort compared to a two-bedroom unit at a resort located inland from the same beach.

The following are the types of accommodation available for the timeshare guest:

  • Apartment
  • Castle
  • Ski lodges
  • Bungalows
  • Condos
  • Vilas
  • Campsites
  • Cottages
  • Restored Farmhouse
  • Private Residence Clubs
  • Second Homes

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