By: Alan Benlolo
Timeshares, which give travelers the right to enjoy a property for a specific period of time either through a deeded contract (buyers own a stake in the property) or “right to use” arrangement (no ownership rights), took root in Europe in the early 60’s when French developer Paul Doumier argued that it was “cheaper to own a hotel than to rent a room.” What began with a jointly owned estate tucked in the French Alps blossomed into a multi-billion global market and the fastest growing segment of the travel and tourism industry. According to the Oxford Economics and The Research Intelligence Group (TRiG), the global shared vacation ownership industry contributed more than $45 billion in direct economic output in 2010 while Ernst & Young reported sales of timeshare properties in excess of $7.6 billion in the U.S. in 2013— an increase of 11% from 2012—with approximately 8.5 million timeshare intervals owned.
WELCOME TO THE CLUB:
HOW MAJOR RESORT OPERATORS ARE SCORING
POINTS WITH CUSTOMERS THROUGH VACATION CLUBS
Unlike the static timeshare model that locks in a buyer for a specific period of time during which they can use a property, Vacation Clubs offer its customers “points,“ a vacation currency that can be redeemed for timeshares within a network of resort locations, hotel stays, cruise tours, amenities, and travel services. Take the hypothetical couple Mr. and Mrs. Smith, who want to spend 14 days out of the year every summer at a beachfront home in Spain. After purchasing an annual allotment of points from a Vacation Club, the couple will use them to book their timeshare, foot their airline ticket, rent a car, and enjoy five hours of snorkeling. The following year, instead of allocating their points to amenities covered by the program, they’ll book a two-night’s stay at a hotel in another region of the country. Suddenly, the couple’s vacation starts to look more like an all-inclusive package but tailored to their specific needs. In a traditional timeshare contract that does not follow the points system, the purchase of a 1/52 timeshare for example — a one-week reservation of a property—represents a sunk cost to the buyer; their purchase is for the entire week, even if they get to stay for just a few days. Under a Vacation Club, customers spend points only for the nights they use, making this model more equitable than fixed timeshare purchases. What’s more, points can be banked to or borrowed from the following year, donated as a gift, or exchanged under RCI, the largest and most reputable broker of timeshare trades boasting nearly 4,500 affiliated resorts in more than 100 countries.
HOW YOU ARE PROTECTED FROM RISK
While traditional timeshare models have experienced some bad press in the US, new ways of enjoying flexible vacation ownership now exist, and new legislation has grown along with it.
A safeguard designed to discourage fraud in the timeshare market relates to the right of rescission, a period —typically 5-10 days—during which new owners may cancel a contract for any reason without incurring penalties. Most states in the U.S. have such laws and the province of Ontario adopted one in 2005. In Canada, if no government–sanctioned law exists on rescission, consumers can request to have this cancellation privilege stipulated into their contracts by their timeshare provider, if the provider is a member of the Canadian Resort Development Association (CRDA).
Choice, flexibility, and convenience are the hallmarks of a robust points program and are fast gaining acceptance among travelers with changing lifestyles. And when you factor in the increased legislation surrounding timeshares, the sound reputation of resort developers and hotel chains behind most of the Vacation Clubs in operation today, co-owning a vacation home is giving travelers a newfound peace of mind in a market healing from it’s sores.