The Timeshare Industry

1
The Timeshare Industry

• Hyung-il Jung
• Virginia Tech
• April 22, 2002

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The Timeshare Industry

• Timesharing
• A term used to describe the joint ownership of a
  resort property by several families. Each family
  owns a certain period of time.
• Features Information
• Timesharing began in French Alps in the 1960s
• Concept immigrated to U.S. in 1970s.
• By 1998, the fastest growing sector with 3
  billion sales volume with 1.9 million owners.

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The Timeshare Industry

• Features Information (contd)
• Fraction of cost of full vacation home ownership
• For a one time purchase price and an annual
  maintenance fee, purchasers own their vacations
  forever (or predetermined period depending on the
  agreement).
• Timeshares are a hedge against inflation
• Takes a variety of forms resort condominium,
  hotel rooms, cabins on cruise ships, houseboats,
  motor homes.

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The Timeshare Industry

• Timeshare Purchase Options
• Fixed Week
• Floating Week
• Points Systems
• Deeded Agreements
• Right-to-Use Agreements
• Timeshare Exchange
• The system that allows timeshare owners to trade
  the accommodations they own for comparable
  accommodations

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The Timeshare Industry

• Cost for a Timeshare
• Average price for a 7-day timeshare unit in the
  U.S.
• 10,325 (1998 RCI estimate)
• 12,500 (other sources)
• Studio 7,380
• One Bedroom 8,620
• Two Bedroom 10,790
• Three Bedroom 13,925
• Maintenance fee an annual fee that timeshare
  owners pay for upkeep and improvements at the
  home resort. Average of 360.

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The Timeshare Industry

• Timeshare Then Now

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The Timeshare Industry

• Demographics of Owners (2001)
• Median Household Income 74,000
• Average Age 54 years old
• Marital Status 87 couples
• Big Players in Timesharing Industry
• Disney, Hilton, Marriott, Four Seasons, Embassy,
  Hampton, Ramada, and others

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The Timeshare Industry

• 1.5 million more households are likely to own
  timesharing in next few years.
• The U.S. market will grow to 10 penetration
  among those with an income more than 50,000.
  Currently, it is at 4 rate.

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The Timeshare Industry
Source 2001 National Leisure Monitor
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The Timeshare Industry
Source 2001 National Leisure Monitor
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Hospitality Education in relation with the
Timeshare Industry

• Timeshare programs are beginning to appear in
  various stages (currently offered at two
  universities).
• Mr. John Sweeny at UNLV says,
• Its a natural progression of the industry. It
  creates a career, and moves it up to the next
  strata.
• A number of students first learns of the concept
  as consumers of the product.
• Which aspects of the business shall we focus on
  in this burgeoning trend?
• Knowledge on Real Estate, Financial valuation (or
  appraisal) beyond our focus on customer service.

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Hospitality Education in relation with the
Timeshare Industry

• Timeshare industry has introduced a new concept.
• Consumers found it quite attractive.
• There is a match between supply and demand.
• Hospitality service providers can contribute to
  both sides in achieving their goals.

(Real Estate) Developers
Hospitality Operators
Consumers
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Hospitality Education in relation with the
Timeshare Industry
(Real Estate) Developers
Hospitality Operators
Consumers

• Consumers focus on experience (87) and financial
  benefit (53).
• Developers focus on financial goals (real estate
  value).
• Hospitality operators can coordinate both sides
  and achieve their own goals (career development).

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Savings on Accommodation

• Conditions
• Initial payment 12,000
• Equivalent Hotel Room 2,000 per week
• Inflation Rate 2.5 per year
• Bank Interest Rate 3 per year

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Advantage of Timeshare beyond Financial Profit

• Apartment (condominium) style facility rather
  than a hotel room (larger space)
• Kitchen facility
• Exchange programs available
• Resale value is possible (currently not that easy
  to resell).