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Vacation Ownership: What is it, really?

Topics Concept of vacation ownership Various vacation ownership products Resort life-cycle theory

Concept of Vacation Ownership


Timesharing = the act of sharing vacation time at a luxurious resort facility Timeshare consumer purchases the right to occupy a vacation-type home/unit for a set period of weeks Home-type unit but no day to day maintenance usually associated with home ownership Resort offers high quality recreational and leisure services

Timeline of vacation ownership industry


2005 Ontario Consumer Protection Act, 2002 2003 Timeshare companies publically traded 1999 Alberta Fair Trading Act (Timeshare contracts regulation) Canada Timeshare Act, 1992 1992 Disney and Hilton enter industry 1990s public trading of timeshare companies 1984 Marriot entered timeshare industry

1983 first timeshare law passed in Fla, USA 1980s lots of unethical developers selling non-existent properties
1970s converted hotel projects in USA 1964 Ski resort in the Alps

Vacation Ownership Product Mix


By Time
Timeshare

By Legality
Deeded

By Facility
Mixed-Use Timeshare Resorts
Fractional Timeshare Resorts Private Residence Clubs

Fixed Week

Right to Use

Float Week

Leasehold

Point Purchase

Vacation Ownership Product Mix


Timeshare
Consumer has access to vacation accommodation sold by weeks, allowing access to a specific unit and all resort common areas

Float Week
Consumer has access rights to a specific unit for a specified range of weeks within a year

Float unit
Consumers usage period (week) is fixed but the actual unit used may vary, but must be of same class/type (i.e. one bedroom) as per contract

Fixed week
Consumer has access to vacation accommodation and resort useage for a set week each year for duration of contract

Vacation Ownership Product Mix


Points Purchase
Consumers purchase points not weeks Each point has a predetermined value which is used for vacation club usage Points can be used for various vacation club products e.g. cruises, golf Highly customer focused but complex to manage

Vacation Ownership Product Mix


Deeded
Owner receives title for the property Has legal ownership for period of use Can use property in perpetuity Can will the property Can sell the property

Vacation Ownership Product Mix


Right to Use
Owner is given contractual rights to use facility for specified period (e.g. 20yrs) at which time the contract terminates

Leasehold
Similar to Right to Use At end of lease property reverts back to developer Leasehold period of use is shorter than Right to Use

Vacation Ownership Product Mix


Mixed Use Timeshare
Combination of a traditional resort and a timeshare resort Part of facility operates as a traditional resort with full amenities e.g. restaurants, spa, gym And another area operates as under an ownership model

Fractional Timeshare Resorts


Upscale product where owner owns high number of weeks e.g. 3 12 weeks

Private Residence Clubs


Offer services similar to country clubs May have golf courses, pro shops, dining Larger accommodation units

Vacation Ownership Design

Campus style resort with 2 bedrooms, 2 bathrooms

Golf oriented resort units have 2 bedrooms with 2 beds each to accommodate foursomes

Vacation Ownership Design

1990s townhouse units in clusters around small pools. Smaller resorts

2000s large resorts developed in phases 900 units or more

Butlers Product Life Cycle for Tourism Product Development

Stagnation Consolidation Development

Rejuvenation

Sustainable Growth

Involvement

Decline
Exploration

Butlers Product Life Cycle


Exploration
Interest in new travel area emerges Product brands and service quality levels are established Pricing is set to ensure consumer interest Distribution is selective and focuses on the primary target markets Promotion techniques are geared to the early adopters of the product

Involvement
The developer refines their marketing and sales approach to increase the identified potential customer to the area Includes onsite and offsite marketing programs

Butlers Product Life Cycle


Development
High level of product and service development Developer drives consumer demand by moving the price point upward Marketing and sales is high but now uses market penetration strategies relevant by each target market Rapid increase in sales and profits

Consolidation
Market has now matured in both level of competition and consumer demand Marketing is key to developers success Tactics include product differentiation, lower pricing

Butlers Product Life Cycle


Stagnation
Very low cost and product delivery Sales have peaked Profits begin to level off

Decline
This phase can be impacted both positively and negatively depending on previous competition levels Developer may introduce new versions of product, new distribution methods, price reductions to rejuvenate interest If these are not successful then arrival levels to area will drop

Levels of Timeshare Products


5 levels
Luxury
$20,000 per interval Penthouse, 1,500 sq ft +

Quality
$9,000 - $17,000 One room unit, 800 sq ft or two room unit, 1,400 sq ft

Up-market
$15,000 - $25,000 One room unit 1,000 sq ft or two room unit 1,800 sq ft

Value
$7,000 - $10,000 One room unit, 800 sq ft or two room unit, 1,000 sq ft

Economy
$5,000 - $8,000 Studio, 600 sq ft, one room unit, 900 sq ft

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