Vacation Ownership: What is it, really?

TopicsConcept of vacation ownershipVarious vacation ownership productsResort life-cycle theory

Concept of Vacation Ownership

• Timesharing = the act of sharing vacation time at a luxurious resort facility

• Timeshare consumer purchases the right to occupy a vacation-type home/unit for a set period of weeks

• Home-type unit but no day to day maintenance usually associated with home ownership

• Resort offers high quality recreational and leisure services

Timeline of vacation ownership industry

1964 – Ski resort in the Alps

1970’s – converted hotel projects in USA

1980’s – lots of unethical developers selling non-existent properties

1983 – first timeshare law passed in Fla, USA

1984 – Marriot entered timeshare industry

1990’s – public trading of timeshare companies

1992 – Disney and Hilton enter industry

Canada Timeshare Act, 1992

1999 – Alberta Fair Trading Act (Timeshare contracts regulation)

2005 – Ontario Consumer Protection Act, 2002

2003 –Timeshare companies publically traded

Vacation Ownership Product Mix

By Time By Legality By FacilityTimeshare Deeded Mixed-Use Timeshare

Resorts

Fixed Week Right to Use Fractional Timeshare Resorts

Float Week Leasehold Private Residence Clubs

Point

Purchase

Vacation Ownership Product Mix

• Timeshare– Consumer has access to

vacation accommodation sold by weeks, allowing access to a specific unit and all resort common areas

• Fixed week– Consumer has access to

vacation accommodation and resort useage for a set week each year for duration of contract

• Float Week– Consumer has access

rights to a specific unit for a specified range of weeks within a year

• Float unit– Consumer’s usage period

(week) is fixed but the actual unit used may vary, but must be of same class/type (i.e. one bedroom) as per contract

Vacation Ownership Product Mix

• Points Purchase– Consumers purchase points not weeks– Each point has a predetermined value which is used for vacation

club usage– Points can be used for various vacation club products e.g.

cruises, golf– Highly customer focused but complex to manage

Vacation Ownership Product Mix

• Deeded– Owner receives title for the property– Has legal ownership for period of use– Can use property in perpetuity– Can will the property– Can sell the property

Vacation Ownership Product Mix

• Right to Use– Owner is given

contractual rights to use facility for specified period (e.g. 20yrs) at which time the contract terminates

• Leasehold– Similar to Right to Use– At end of lease

property reverts back to developer

– Leasehold period of use is shorter than Right to Use

Vacation Ownership Product Mix

• Mixed Use Timeshare– Combination of a traditional

resort and a timeshare resort

– Part of facility operates as a traditional resort with full amenities e.g. restaurants, spa, gym

– And another area operates as under an ownership model

• Fractional Timeshare Resorts– Upscale product where

owner owns high number of weeks e.g. 3 – 12 weeks

• Private Residence Clubs– Offer services similar to

country clubs– May have golf courses, pro

shops, dining– Larger accommodation

units

Vacation Ownership Design

Campus style resort with 2 bedrooms, 2 bathrooms

Golf oriented resort units have 2 bedrooms with 2 beds each to accommodate foursomes

Vacation Ownership Design

1990’s townhouse units in clusters around small pools. Smaller resorts

2000’s large resorts developed in phases900 units or more

Butler’s Product Life Cyclefor

Tourism Product Development

Exploration

Involvement

Development

Consolidation

Stagnation

Decline

Sustainable Growth

Rejuvenation

Butler’s Product Life Cycle

• Exploration– Interest in new travel area

emerges– Product brands and service

quality levels are established

– Pricing is set to ensure consumer interest

– Distribution is selective and focuses on the primary target markets

– Promotion techniques are geared to the early adopters of the product

• Involvement– The developer refines their

marketing and sales approach to increase the identified potential customer to the area

– Includes onsite and offsite marketing programs

Butler’s Product Life Cycle

• Development– High level of product and

service development– Developer drives consumer

demand by moving the price point upward

– Marketing and sales is high but now uses market penetration strategies relevant by each target market

– Rapid increase in sales and profits

• Consolidation– Market has now matured in

both level of competition and consumer demand

– Marketing is key to developer’s success

– Tactics include product differentiation, lower pricing

Butler’s Product Life Cycle

• Stagnation– Very low cost and product

delivery– Sales have peaked– Profits begin to level off

• Decline– This phase can be

impacted both positively and negatively depending on previous competition levels

– Developer may introduce new versions of product, new distribution methods, price reductions to rejuvenate interest

– If these are not successful then arrival levels to area will drop

Levels of Timeshare Products

• 5 levels– Luxury

• $20,000 per interval

• Penthouse, 1,500 sq ft +

– Up-market• $15,000 - $25,000

• One room unit 1,000 sq ft or two room unit 1,800 sq ft

– Quality• $9,000 - $17,000

• One room unit, 800 sq ft or two room unit, 1,400 sq ft

– Value• $7,000 - $10,000

• One room unit, 800 sq ft or two room unit, 1,000 sq ft

– Economy• $5,000 - $8,000

• Studio, 600 sq ft, one room unit, 900 sq ft