"Timeshare - a History"

Popular opinion is that the timeshare industry started in Europe in the early 60's. "Hapimag", a ski resort developer in the French Alps offered his guests a chance to buy into the hotel ownership.

The concept quickly grew and was embraced by developer's world wide, ultimately developing from hotel rooms to superb one, two and three bedroom suites, with fully equipped kitchens and all the comforts of home.

As with any new concept, it experienced a controversial and

bumpy path before becoming the universally successful vacation vehicle we enjoy today. Anyone of us who worked in, or purchased the early projects, has a storehouse of horror stories!

It was not, however, until the mid 80's that the major hotel and resort developers realized the enormous potential the concept could provide, if done right.

As anyone who has been in this industry for any time is only too aware, that change was introduced by Bill Marriott Sr.

His son, Bill Jr. proudly continues the family tradition.

The Marriott group founded nearly 50 years earlier was already an established world leader in quality hotel management.

The Marriott story has been well documented elsewhere however little has been written about the amazing growth of their vacation club product, which now extends from Phuket, Thailand to Hawaii.

Their 50 plus, spectacular properties will soon see the addition of a Dubai Vacation Club in the Arab Emirates.
I had the opportunity to spend 3 months at their Marbella Beach Club on the Costa del Sol in sunny, southern Spain last year.

So successful was Marbella, Marriott's first European

resort, that it sold out in a few short years. Today, a sister resort only 20 minutes away is fast following in Marbella's footsteps.

It is, however, the ability to vacation at resorts in so many beautiful locations around the world that has largely been responsible for the growth of the timeshare industry.

RCI (Resort Condominiums International) along with II (Interval International) are the two major exchange companies that provide an opportunity for affiliated timeshare resort owners to 'swap' their home vacation, week for a week, at over 5000 resorts world wide.

In the mid 90's I was privileged to attend RCI's University in Kuala Lumpur, Malaysia.

The industry is well served by the American Resort Development Association, of which I have been a proud member for many years.

In 1996 I received an award for my sales achievement at Hilton Grand Vacation Club and the following year I was awarded their ARP (Associate Resort Professional) designation. Their research division provides our industry with statistics and in 2006, it reported there were over 1,604 timeshare resorts in the USA.

Ownership continues to rise at an amazing rate. In 2007 the

percentage growth was recorded at 16% over the previous year.

Over four and a half million households owned one or more weeks or their points equivalent. I will touch on the 'points' aspect of Vacation Ownership in a later chapter.

Worldwide, it is estimated that there are over 5,450 timeshare resorts, across some 80 countries!

Ownership options or if you prefer, membership, differs widely across the industry.

As stated, I bought my first timeshare in the late 70's in Australia.

I owned the 3rd week of July in apartment 12A, and had the right to stay in that apartment for one week (that exact week) every year for 30 years total.

Due to poor maintenance this property is badly in need of repair.

Though highly controversial, I personally believe that maintenance of your chosen timeshare is one of the most important factors in determining from whom you should purchase.

If you OWN a piece of the property (Real Estate), you want to be sure that it will look as good 50 years from now as it did the day you bought it. This will be the responsibility of your management company. For the most part today, timeshare buyers actually own real estate. With the title deed comes the right to stay for one week, every year, forever.

This, however, is not the case with every developer and options often vary within the developer's portfolio.

Disney Vacation Club, here in the United States, sells a limited deed. At the end of the specified time frame the deed reverts back to Disney. In most cases this time frame extends over a family's vacation lifetime. This is called a "right to use" and there are still many resorts here in the USA that only offer this option.

Many countries have restrictions on foreign ownership of land and prohibit a developer selling deeded ownership - such as Mexico.

In the case of international companies like Marriott Vacation Club International, regional restrictions (Spain for example) preclude deeded ownership 'in perpetuity', as enjoyed by their USA based resort owners.

Nearly all resorts offer seasonal ownership. These 'seasons' are often designated by color, or other designations such as Gold, Silver, Platinum, etc. As a general rule owners are restricted to vacationing during their assigned season. It is the seasonal demand that determines the price of a given week.

Obviously, if you want to be able to access your week during peak demand you would expect to pay more, right?

Weeks during New Year's, Christmas, Easter and School Holidays come immediately to mind.

Again as a general rule, owners of a high demand week may trade to a lower demand week, but not vice versa.

Many developers are currently moving to a 'points' based program or option. Simply stated this enables the owner to either exchange their designated week for a given number of points (as in the case of Marriott) or to receive a set number of points annually (like Hilton), which may be used in varying amounts to secure a one, two or three bedroom unit throughout the year. Larger units and/or high season weeks, would of course require more points.

In the case of Marriott, these points are actually Marriott's hotel guest loyalty reward points (Marriott Rewards), a significant part of Marriott's frequent stayer reward program.

These points can therefore be used at any of Marriott's 3000

hotel/resort properties around the world. They may also be used for air/hotel packages, airline miles on most major airlines, and for vacations on no less than 17 cruise lines (at time of this writing). Marriott is unique in this regard, though many of the principal hotel programs offer variations of these options.

In the case of Hilton - their vacation club points may be exchanged for their Hilton Hotel Group's "Hilton Honors" program points.

Similarly, Starwood's Vacation ownership, Westin, Sheraton, etc. offers comparable options.

It is the ability to use their membership points for such a wide range of accommodation and transportation options that induces owners of Marriott, Hilton, Starwood and many similar hotel linked properties, to purchase several weeks of timeshare.

The major difference in the various types of timeshare ownership is between 'deeded ownership' and the 'right to use' concept.

Let's examine both from a user's point of view.

Deeded projects:

In the case of a 'deeded property' the resort ownership is usually divided into one week increments and is sold as 'real' property.

This ownership gives the purchaser all the rights and privileges that go with any form of deeded ownership - their own home for example. They may choose to rent their week, sell it whenever they choose, give it to be used to whomever they like (neighbors/family etc.) exchange it for a week at another location or 'will' it to their estate.

As with any real estate purchase, there are certain obligations. God forbid that your property should

suffer the same fate as my Australian (right to use) property, which is so badly maintained you would not want to visit there.

You want to be assured that 30, 40, 50 years from now, your

apartment or villa will look as good as it did the day you bought it.

THIS WILL ONLY HAPPEN IF THE PROPERTY IS

ADEQUATELY MAINTAINED.

In the case of major hotel groups - it's what they do best. They are after all, Hotel and Resort Management Companies.

To ensure this happens, you will be responsible for your share of the maintenance cost, based on where and what you own.

This, in your writer's opinion, is the true cost of owning a

timeshare.

For those who have purchased 'real property', those

funds aren't going anywhere.

In real terms, it is the cost of your annual maintenance that is the true cost of your vacation ownership. After all, because your purchase price is invested in real property, this annual cost will be offset by any increase in the real estate value your selected location may enjoy.

In the case of this writer's timeshares, all without exception are sold today for considerably more than I paid for them. So much so that if I were to sell them today for the current developer price, I would also recover my entire maintenance costs as well.

I WOULD LIKE TO POINT OUT, HOWEVER, THAT THIS IS

NOT THE CASE IN MOST SITUATIONS.

UNLESS YOU HAVE OWNED YOUR PROPERTY FOR 5 YEARS OR MORE, ANY GAIN WILL BE EATEN UP IN THE MARKETING AND TRANSFER COMMISSION COSTS.

I must add, however, that these costs etc. are more than out weighed by the incredible vacations my family and I have enjoyed; vacations that we would never have believed possible had we not become timeshare owners.

Right to Use projects

Like my first timeshare purchase in Australia back in the 70's, there are many developers that still offer a 'right to use' option.

This means that the purchaser has a 'right' to use the property in accordance with the rules and regulations laid down by the developer.

At some time in the future, as indicated in the agreement, the property will revert back to the developer and the purchaser's 'rights' are terminated. This, as I have previously mentioned, is the case with Disney Vacation Club and many timeshares sold in locations like Mexico, Hawaii and Europe.

Extreme caution should be taken in purchasing any 'right to use' product. Make sure you know the name and reputation of the developer you are dealing with.

Obviously, in the case of a developer like Disney, the reputation of the company doesn't come into question. Moreover, companies like Disney have more to loose by selling you an inferior product, than someone who has no hospitality background or other commitment in the hospitality industry.

'Caveat Emptor' is Latin for "Let the buyer beware"

and is certainly applicable to anyone buying any form of timeshare from a non branded developer.

Does that mean that there are not independent properties and vacation clubs out there that make for great vacations? Absolutely NOT! Just make sure you know what you are buying and do your due diligence. This rule applies of course to any capital purchase.
(This is an exepert from "Timeshare.... you bought What?" ISBN # 978-1-58909-652-3. (http://picturethedifference.com )