Two years ago, American Resort Development Association (ARDA) released a new research that offered insight into the international shared vacation ownership industry which showcased several optimistic signs for the timeshare business. The study surveyed owners in 24 different countries and found that nearly two percent of households (20 million owner households) own at least one timeshare product, and that 81 percent of owners vacationed in the past year. In fact, the global occupancy rate remained strong through the recession and on average outpacing the worldwide hotel industry occupancy rate. ARDA also had a three-year analysis of the market that revealed impressive stability through a global financial crisis. For example, after a 27% drop in 2009, sales in 2010 held steady. Another example is that in some region particularly Asia, Central and South America, sales volume actually increased from 2008-2010.
Domestically, the timeshare business, largely based in Central Florida, is slowly improving. The industry fell from a high of more than $10 billion in sales in 2007 to $6.3 billion in 2009. Sales for 2010 was on par with or slightly higher than those of the previous year. “As an industry, we’re back in a growth mode,” said Don Harrill, the association’s incoming chairman and the president and chief executive officer of Kissimmee-based Holiday Inn Club Vacations.
So you’re looking to purchase some timeshare and like most others living in this age of informational technology, the first thing you probably will do is to Google it. Immediately, you’re bombarded with listings, information, and real estate jargons that require further Googling. One of the more confusing terms for new timeshare buyers is “fractional ownership” which often pops up concurrently with the word “timeshare”. What is fractional ownership and how does it differ from timeshare?
The main difference lies in the way actual equity is distributed. In fractional ownership arrangement, the buyer actually owns a piece of equity in the property which means that if there is a change in the property’s value, the fractional owner’s share of the pie reflects that change. In a timeshare arrangement, ownership remains with the principal owner. What the timeshare buyers own are weeks or months of enjoyment in a property which do not fluctuate with the changes in the property’s values.
So to fractional ownership or to timeshare? That is the question. There are many benefits of a timeshare over fractional timeshare such as not having to pay taxes, insurance and other fees on the property. Since the property is not your responsibility, you don’t have to maintain it and while you contribute to some of these expenses through your fee, you’re not liable for the property as a whole.
With the current state of the economy, many timeshare owners are desperate to unload their acquisitions, making themselves prime target for scammers who require an upfront fee for their “service”. State Attorney General Rob McKenna says timeshare scam is major problem that’s affecting consumers across the country, “The attorney general of Florida has had 8,500 complaints just this year. The attorney general of Illinois tells us people are losing as much as $5,000. We get lots of complaints about timeshares and timeshare selling. It’s a big issue.”
The rising rate of timeshare scam has led to a stronger crackdown by state and federal authorities. For example, a new Florida law, which took effect in July, makes it illegal for timeshare resellers to misrepresent that they have a buyer and requires them to honor cancellation requests and provide refunds. Another case of timeshare scam prosecution took place in the Southern District of Illinois where 22 people were indicted for timeshare resale fraud.
These scammers often approach owners out of the blue. Thus, it’s necessary that timeshare owners do a background check on a person or company before paying them any fee. “What you want to do is go with a licensed company and check them out with the Better Business Bureau…” McKenna said. For example, we at timesharetravel was accredited with an A+ rating from the Better Business Bureau. Other tips to differentiate between creditable timeshare companies and questionable ones include noting how long the company has been in business, whether the business has been operating under the same name, the number of licensed agents the company has, and references from industry leaders.
In 2009, American Resort Development Association (ARDA) published its Timeshare Owners Report which demonstrated that there was a growing trend of a younger generation purchasing timeshare. Three years later this trend continues with the average age of timeshare owners at 42 years old. The same report also suggested that these new, younger owners are purchasing timeshare due to the flexibility and longtime saving cost of vacation ownership.
The upward tick in this trend signifies also a shift in the way timeshares are marketed as the younger generation of potential buyers is a generation that spends a great amount of time online whether for work and recreation. In fact, according to another report by the ARDA, 90% of timeshare owners have computer at home and Internet access. Thus, it is safe to assume where most prospective owners look for potential timeshare purchase is on the Internet. It is also interesting to note that 27% of the current timeshare purchases are made in the secondary market where buyers looking to buy a timeshare can purchase from owners with timeshare to sell.