A timeshare is a form of ownership or right to the use of a property, or the term used to describe such properties. These properties are typically resort condominium 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. Units may be on a part-ownership or lease/"right to use" basis, in which the sharer holds no claim to ownership of the property.
History
This notion was originally created in Europe in the 1960s. A ski resort developer (Hapimag) in the French Alps marketed his resort by encouraging guests to "stop renting a room" and instead "buy the hotel". Subsequent success followed, and the concept was quickly embraced by developers worldwide, boosting sales of surplus condominium units at a time when the resort industry was depressed.
Due to the promise of exchange, these units, called "vacation ownership" by the industry, often sell regardless of their deeded resort (most are deeded into a certain resort site, though other forms of use do exist). What is not often disclosed is that all differ in trading power. If one is in Hawaii or Southern California it will exchange extremely well, however, those areas are some of the most expensive in the world, subject to demand typical of a highly trafficked vacation area. The vast majority of inventory flows briskly through two international exchange companies: Resort Condominiums International (RCI) and Interval International (II).
Industry
This concept has attracted many resort developers and prominent hoteliers, such as Starwood, Wyndham, Accor, Hyatt, Hilton, Marriott, and Disney. Vacation ownership has proven to be lucrative for stakeholders in these major resort families, due to its popularity with vacation-goers. This form of lodging has spawned a variety of products sold on similar occupancy schemes; cars, planes, narrowboats, condo-hotel units and luxury fractional properties (at which affluent guests may stay for as long as a quarter of a year, and which often command a six-figure price tag)
Scope of the industry
The scope of today's time share industry in the USA is well-documented. The ARDA International Foundation ("AIF"), which is the research arm of the American Resort Development Association ("ARDA"), reports there are 1,604 timeshare resorts, with 154,439 units, in the USA as of January 1, 2006 (AIF 2006). Though reportedly fewer than six percent of U.S. households own one, the prevalence of vacation ownership continues to expand. Approximately 4.4 million households own one or more U.S. weekly intervals or points-equivalent as of January 1, 2007, an increase of sixteen percent from the prior year.
About half of the resorts in the USA are currently selling, generating sales of $8.6 billion in 2005 (AIF 2006).
The global scope of the industry is not as readily quantified. Interval International, one of the two major exchange companies, reports there are 1800 resorts in nearly 80 countries, with 2004 worldwide sales estimated at nearly $11.8 billion (Interval International 2006). RCI has 4000+ resort in nearly 100 countries.
Worldwide exists 5,425 timeshare resorts, of which around 31% are situated in North America, 25% in Europe, 16% in Latin America (where Mexico leads with 40% in the region). Emerging resorts in Asia offers 14%, led by Japan, but with Thailand and India increasingly prominent.
Legislation
The industry is regulated in all countries where resorts are located. In Europe it is regulated by European and by national legislation. In 1994 the European Communities adopted the "The European Directive 94/47/EC of the European Parliament and Council on the protection of purchasers in respect of certain aspects of contracts relating to the purchase of the right to use immovable properties on a timeshare basis", which was subject to recent review.
Methods of use
Owners can:
- Use their usage time
- Rent out their owned usage
- Give it as a gift
- Exchange internally within the same resort or resort group
- Exchange externally into thousands of other resorts
- Sell it either through traditional advertising, online advertising or by using a licensed broker
Recently, 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, 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.
Owners can elect to stay at their resort during the prescribed period, which varies depending on the nature of their ownership. In many resorts, they can rent out their week or give it as a gift to friends and family.
Exchanging time shares
Much lauded is the idea of owners exchanging their week, either independently or through several exchange agencies, to stay at one of the thousands of other resorts worldwide. There are many exchange agencies, of which the two largest are Resort Condominiums International (RCI) and Interval International (II). They have resort affiliate programs and members can only exchange to affiliate resorts. It is most common for a resort to be affiliated with only one of the larger exchange agencies, but it isn't rare to find a dual affiliate resort. Together they have over 7,000 resorts. The time share resort one purchases determines which of the major exchange companies can be used to make exchanges. RCI and II charge a yearly membership fee and fees for when they find an exchange. They also bar members from renting weeks for which they already have exchanged.
Owners can also exchange their weeks or points through independent exchange companies. Owners can exchange without needing the resort to have a formal affiliation agreement with the companies.
Sometimes, owners may also arrange a direct exchange. This requires locating an owner with the location and weeks both mutually desire. This form of exchange is rare but since it can save in exchange fees it is often sought after. Several bulletin boards have been created to help timeshare owners meet others and swap.
This type of lodging may take different forms depending on the seller. The vast majority consist of one week of ownership, i.e. 1/52 year, but some developers sell point based systems that are a different form of vacation currency that allow hotel stays, car rentals, and stays at large networks of resorts.
Varieties
Deeded versus right to use
A major difference in types of vacation ownership is that between deeded and right to use contracts.
With deeded contracts the use of the resort is usually divided into week long increments and these are sold as fractional ownership and are real property. As with any other piece of real estate the owner may use his or her week, rent his or her week, give it away, leave it to his or her heirs or sell the week to another prospective buyer. The Owner is also liable for his portion of real estate taxes, which usually are collected with condominium maintenance fee. Potentially owner can even deduct some property related expenses, such as real estate taxes, from his taxable income.
While this form of ownership can offer additional security to the owner as a form of physical ownership, deeded ownership can be as complex as outright property ownership in that the structure of deeds varies according to local property laws. Leasehold deeds are common and offer ownership for a fixed period of time after which the ownership reverts to the Freeholder. Occasionally, leasehold deeds are offered in perpetuity however many do not convey ownership of the land but merely the apartment or 'unit' of accommodation.
With right to use, the purchaser has the right to use the property in accordance with the contract but at some point the contract ends and all rights revert to the property owner. In other words, the right to use contract grants the right to use the resort for a specific number of years. In many countries there are severe limits on foreign property ownership, so this is a common method for developing resorts in countries such as Mexico. Disney Vacation Club is also sold as a right to use. Care should be taken with this form of ownership as the right to use often takes the form of 'club membership' or right to use the reservation system. Where the reservation system is owned by a Company not in the control of the owners, the right of use may be lost with the demise of the controlling Company.
Fixed week ownership
The most basic unit is a fixed week; the resort will have a calendar enumerating the weeks roughly starting with the first calendar week of the year. An owner may own a deed to use a unit for a single specified week. For example, week 26 normally includes the Fourth of July holiday, week 51, Christmas and so on. If an owner owned Week 26 at a resort he or she could use that week every year.
Floating
Sometimes units are sold as floating weeks. The ownership will be specif
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