Timeshares, Vacation clubs, and Fractional ownership

The timeshare industry has some challenges.  Timeshare is now a sleazy word, mostly due to sky-rocketing maintenance fees and deteriorating properties among the plurality of the market.

But when timeshares started, they were an innovation – a way for owner/operator/developer/investors to get sales and cash flow for properties that might otherwise have been challenging to sell or rent at anywhere near the pricing they received via timeshares.  And for early adopters of timeshares, they were often a great deal on a vacation spot at a much lower cost than hotels.

Timeshares started with 52 fixed weeks, and when you bought a timeshare, you received a certain week every year – say, week 35.

The next innovation in timeshares was the float… you could move your timeshare to different weeks.

Then, the location of your timeshare also became movable, through RCI.  You could exchange your week in Florida for a week in Costa Rica.

Then, some of the big hotel chains entered the market, both because they were threatened by this burgeoning industry, but also since they saw opportunity.

Marriot came in and provided great availability, among other features.

Starwood entered the market, and using points, offered great flexibility.

Four Seasons jumped in and offered amazing quality and service.

For the exchange market, Interval also entered to give timeshare owners an opportunity to exchange with more partners, with more product types, worldwide. Most people in the market assert that Interval’s properties are generally higher-quality than RCI’s.

Now, we are seeing vacation clubs, which often provide some of the best aspects of all of the above.

For me, if I was going to make an investment in a vacation club or timeshare, I would want flexibility, value, and a cap on the fees (or management participation via a HOA).

But, I personally prefer, intellectually and philosophically, the notion of fractional, Deeded ownership, rather than timeshares or vacation clubs.  Making a significant investment, but not having the upside of the real estate over time, makes no sense to me.

Tags: Four Seasons, Fractional ownership, hotels, Marriott, Starwood, Timeshares, Vacation clubs, vacations