The Timeshare Industry At a Glance

A look at the history and business of timesharing, and what the future might hold for vacation ownership.

Stats & Facts

6,700,000 Worldwide timeshare owners.
4,100,000 US timeshare owners in 2006.
130,000 Timeshare units in the US.
5,500 Worldwide timeshare resorts.
1,600 US timeshare resorts in 2006.
1,200 US timeshare resorts in 1997.
378 Florida timeshare resorts (highest in US).
123 California timeshare resorts (second highest in US).
117 South Carolina timeshare resorts (third highest in US).
95 Countries worldwide in which there is at least one timeshare resort.
85 Percentage of US timesharers who own their own home.
84.5 Percentage of US timeshare owners who are satisfied with timesharing.
83 Number of units in the average US timeshare resort.
78 Percentage of timeshare owners who travel by air to reach their destination.
31 Percentage of timeshare owners who are married, with children at home.
14.5 Percentage of increase in US timeshare sales in 2002 over the previous year.
1.8 Number of vacation weeks owned by the average timesharer.
(Source: American Resort Developers Association)

Snapshots

Motivation. Timeshare owners have identified the five most important factors that motivated their purchase: (1) Flexibility of use; (2) Quality of accommodations; (3) Credibility of the sales company; (4) Exchange opportunities; (5) Resort appeal. -Source: www.arda.com

Singles nation. While most current timeshare owners are married, a recent national survey (Future Timeshare Buyers: 2004 Market Profile, Interval International) reveals that of respondents indicating an interest in purchasing a timeshare in the near future, nearly one-third were single, with the highest concentration being among GenXers.

Top dog. Cendant Corporation is the world’s top hotel franchisor. Its timeshare-related holdings include Fairfield Resorts, Trendwest Resorts, and exchange company Resort Condominiums International (RCI). It also owns Amerihost Inn, Howard Johnson, Travelodge, Days Inn, Super 8, Ramada, Century 21, Coldwell Banker, Avis, and Budget Rent A Car.

Exchange rate. The two largest timeshare exchange companies, RCI and Interval International, combined for a total 2,949,787 vacation exchanges in 2003 (the most recent year for which statistics are available).

A Short History of Timesharing

While there is some disagreement over who exactly invented timesharing, everyone agrees it began in either Switzerland or France in the mid-1960s.

Depending on how the concept is defined, the honor might belong to Alexander Nette of Switzerland, whose company, Hapimag, began selling right-to-use holiday packages at Swiss resorts in 1963. A year or so later, Paul Doumier was offering ownership interests in his company’s SuperDevoluy ski resort in the French Alps.

The first American timeshare, a leasehold program, was begun in 1969, at the Kauai Kailani resort on Kauai, Hawaii. Four years later, Innisfree, a subsidiary of the Hyatt Corporation, sold the first deeded American timeshares at the Brockway Springs condominium development, in Kings Beach (Lake Tahoe), California. It was during this venture that the term “timeshare” was coined.

In 1974, the Sanibel Beach Club, on Sanibel Island, Florida, became the first US resort designed and built as a timeshare. By the end of 1975, just a year later, there were 45 timeshare properties and more than 10,000 timeshare members in the US. Vacation ownership had arrived, and soon took a leisure-loving public by storm.

Over the next 15 years, timesharing became one of the fastest-growing segments of the vacation travel industry, though there were a few bumps in the road along the way, such as the questionable sales tactics used by some of the early timeshare retailers to lure buyers.

But such practices have become increasingly rare due to consumer protection laws, buyer awareness, and the entrance into the timeshare market of larger, more respectable vacation companies. As a result, timesharing has both matured and become more user friendly. In fact, if current sales are an indication, timesharing may just now be entering its “golden age.”

In the 40 years since it first appeared in Europe, timesharing has grown to become the premiere alternative to traditional vacationing, offering greater flexibility, more spacious accommodations, luxury amenities, and a vacation lifestyle once reserved for the “rich and famous.”

As one timeshare company executive recently noted, “We used to sell just bricks and mortar. Now we’re offering a product with all the bells and whistles.”

Trends and Directions

A lot has already changed in the four decades since the first timeshare opened its doors. Over the next ten years, we will undoubtedly see the transformation of timesharing into a total vacation experience. Here’s a look at what’s been happening of late, as well as where timesharing is headed.

Adventure resorts and theme clubs. As with most industries, as timesharing grows, it will also become more specialized. Some of the activity-based markets that timeshare developers have already considered tapping into include horseback riding, charter fishing, scuba-diving, mountain biking, even paintball. Theme clubs are another idea generating industry buzz. These would cater to buyers who share such interests as religion, health and fitness, ecology (eco-resorts), art, music, gambling, or gourmet food and wine.

All-inclusive programs. The all-inclusive concept has been around since the 1950s, when Gerard Blitz founded Club Med. But it received a big boost in the 70s when several Caribbean resorts began offering all-inclusive packages that included alcoholic drinks. Thirty years and a few hangovers later, hundreds of timeshare resorts worldwide now offer their own all-inclusive plans, to the delight of bargain-seeking travelers: A recent study determined that 60% of vacationers now look for all-inclusive packages when shopping for a vacation resort. Expect more resorts to follow suit in the near future.

Fractionals. Fractional ownerships first appeared in the mid-1990s. Today, they represent the fastest-growing and most lucrative segment of the timeshare market, with nearly 500 fractional interest resorts in North America and the Caribbean, with a combined 4,000 units. Unlike traditional timeshare resorts, where owners usually own one week a year, fractional ownerships are sold as multi-week blocks of time. When expressed as fractions of a 52-week year, purchases typically range from a 1/21 (two-week) to a 1/4 (thirteen-week) interest in a residence, though even larger fractions are not uncommon. Think of it as owning a part-time home. In recent years, the concept has also been applied to sailboats, yachts, RVs, exotic cars, and airplanes.

Hotel timesharing. Having witnessed the phenomenal growth of the timeshare industry, some of the best known hoteliers in the world, including Hilton and Marriott, are beginning to add vacation ownership to their traditional vacation rental properties, creating a new, mixed-use business model.
Non-traditional timeshares. If a condominium can be a timeshare, why not a campground, or a houseboat, or a recreational vehicle? In fact, these already exist. So what might be next? Shopping mall timeshares? Ballpark timeshares? If you can think it, then it’s probably an idea whose time(share) will come.

Points programs. While vacation points aren’t new, the concept is gaining in popularity as more and more timeshare owners express an interest in the usage flexibility that points programs afford. And timeshare developers are listening. Fairfield Resorts, for example, is the leading provider of points-based vacations, with over 50 resorts and a membership of more than 450,000 families. Recently, Marriott, Disney, and exchange company RCI have offered their own points programs. The resulting competition has been good for consumers, as points providers seek new ways to lure vacationers. For instance, some vacation clubs now allow members to redeem their points for airline tickets, car rentals, and cruises.

Private residence clubs. Also known as high-end fractionals, private residence clubs (PRCs) are the newest concept in luxury timesharing-and the fastest-growing segment of the “fractionals” market. Typically catering to wealthy buyers, PRCs are essentially a combination private club and upscale timeshare. Residences are fully furnished and feature designer décors and club amenities that can rival those of the world’s most exclusive resorts. Ownerships generally range from a 1/21 (two-week) to a 1/4 (thirteen-week) annual share, with prices averaging about $50,000 per week. In the future, we will likely see the PRC concept tailored to buyers with more modest incomes.

Urban timesharing. Except for entertainment destinations, such as Orlando or Las Vegas, traditional timesharing has sought to take folks out of the city, away from the madding crowd, and place them in settings more conducive to relaxation. Urban timeshares turn that idea on its head. Intended to appeal to buyers who want to visit the city, whether for business or pleasure, this newest trend in timesharing is quickly filling a previously neglected market niche. Call it getting away to it all.

Consider This

There was a time, back in the 1980s, when some timeshare developers began to resort to high-pressure, and sometimes deceptive, sales tactics to sell their product. Word about this behavior spread quickly. The unfortunate result was that some people became distrustful of the entire timeshare industry.

Things have changed. The last ten years have seen important reforms addressing these issues, including consumer protection laws and higher industry standards. And in recent years, an influx of respected hospitality providers has revolutionized the image and concept of timesharing: Disney, Marriott, Ramada, Sheraton, Four Seasons, Weston, Radisson, and Ritz-Carlton.

While this is good news for the retail side of the business, it’s important to note that timeshare owners who originally purchased from the resale market not only avoided these early problems (since they bypassed the developers completely), but they also paid less than half what retail owners were being charged.

Timeshare resales is the vacation industry’s best-kept secret. As a recent article in National Geographic Traveler points out, “Timeshare bargains are in resales, but most people don’t know they exist”-which obviously doesn’t apply to you, dear reader!

As the timeshare industry continues to improve its product through exciting innovations and a renewed commitment to customer satisfaction, the future of timesharing looks bright. Timeshare resales makes it even brighter.

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You may also be interested in: RCI Points vs. Traditional Timeshare Weeks

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