6TH SEMESTER

CHAPTER 2
TIMESHARE AND VACATION OWNERSHIP

TIMESHARE AND VACATION OWNERSHIP

Time-share hotels are referred to as vacation ownership hotels. The concept is that for a set
period which may be one week or more in a year the person gets the right to enjoy the stay
and other facilities and services in an apartment or any other type of lodging in a tourist
complex. It is like an advanced purchase of time in holiday accommodation. Here the
purchaser has to pay a one-time capital sum and then an annual contribution towards the
maintenance of the property. The fee usually covers services such as cleaning and
maintenance of apartment and public areas, electricity, gas, water, etc. Avalon
resorts,Sterling resort, Mahindra holidays, etc. are the few time-share hotels in India.

Classification Of Timeshare Properties

Deeded/Right to Use
The buyers buy the timeshare for a specific number of years(20-30) in advance. Based on a
contract for a period of time and after the time is completed all the rights revert to the
property owner.
Floating Timeshare
One can holiday with their family in various resorts owned by the timeshare for a specific
company for the specific period one has purchased the holidays for. In this ownership it allows
a guest to buy a week within a specific period. For eg.5 days in January and 10 in some other
month. So the customer can plan suitably where there are no seasonal variations,
Fixed Week Ownership
The owner may own a deed to use a unit for a single specified week. He may choose any
calendar week like the first week of July as per his need and convenience. The owner will have
to use that week every year. This concept was not very popular as it was rigid and didn’t give
the customer the flexibility in usage so it became outdated in1980s.
Rotating Week Ownership
Weeks are rotated forward or backward in the calendar to give owners a chance for the best
week. For eg. one year the owner may use the 1st week of January then 2nd week next year.
Gives owner an opportunity for prime weeks.
Vacation Clubs
Owners become members of the club. Timeshare has vacation ownership programs based on
point systems Eg. Hyatt. Has ownership for a certain number of years.

Advantages of Timeshare
1.Spacious accommodations
One of the advantages that timeshares have over hotels when going on vacation is the space
that they provide.

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 Guestrooms
 Living and dining areas
 Bathroom
 Fully equipped kitchen
 Laundry
2.Easy vacation planning–
 Where to go, when to go, where to stay, how much to spend?
 No need to search online for the stay
 No need to spend time or stress about vacation accommodation
3.No need to eat out
 One of the most expensive aspects of travelling is the cost of food.
 Most timeshare come with equipped kitchen. It may be advantages to those on dietary needs
with kids
 Options to eat out or cook meals yourself.
4.Unlimited resort amenities
 Use on the hotel amenities and facilities of the hotel like pool, tennis court to own sauna etc.
 It can be less expensive than to pay for a tennis membership or a golf membership.
5.Known commodity
 When you go to the same timeshare resort every year, you know exactly what you will be
getting on your vacation.
 You can be confident that you will get exactly what you have come to expect from your
previous visits
6.No additional charges for friends
 Able to invite additional people on vacations with no extra charges.
 Timeshares have fewer limitations then hotels to the number of people who are allowed to
stay as timeshare has larger accommodation units
7.Convenient laundry
 Most Timeshare units provide washers and dryers in the room.
 No need to find local Laundromats or go for expensive hotel laundry.
 Especially convenient for those with kids that soil the clothes easily.

Condominiums
Similar to timeshare, except that condominium hotels have a SINGLE OWNER instead of
multiple owners sharing the hotel. In a condominium hotel, the owner informs the
management company when they would occupy the unit. The management company is free to

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rent the unit for the year, and this revenue goes to the owner. Owners generally pay a
monthly or annual fee to management company.

How is Hotel Business different from the condo units

The normal hotel business is run on a day to day basis. Condominiums have a policy of doing
only that which they feel will be for their common goods. They have no fixed standards which
may compete with any standard hotel. They don’t have to confirm the standards which a 5
Star has to –
 Certain services which are required 24 hours such as Front Office counter, Restaurants, Coffee
Shop, Room Service, Swimming Pool, Shopping Arcade may not be available
 Normal hotel function round the clock but no such service may be provided in a Condominium
 Period of stay may differ from normal hotels
 Condominiums do not follow any set policies
 Condominiums do not have restaurant servicing cuisines from different parts of India and also
from countries all over the world which are generally found in all the major hotels
 Condominiums do not have a set time for arrival or departure
 Condominiums do not have a fixed number of rooms to maintain
 Dining facilities in a condominium are restricted to own cooking

Timeshares and Condo Hotels Similarities

Timeshares and Condo Hotels Similarities Timeshares and condo hotels have many similarities,
including:
 Both are traditionally sold fully furnished, which is built into the price
 Timeshares and condo hotels are located in desirable locations and resort areas
 Both options allow you to find your own renters if necessary
When it comes to a developer, construction or interior design company furnishing timeshares
and condo hotels, the main differences will be in design and luxury. While timeshares and
condo hotels share some similarities, they are also very different.

Differences Between Timeshares and Condo Hotels

One of the main differences in buying timeshares and condo-hotels comes in the flexibility of
use. When purchasing a timeshare, you choose a specific location and set a week or two you
will use your vacation home each year. In purchasing a condo-hotel, you have the flexibility to
use your unit whenever you want, though there are usually restrictions that prohibit making it
a permanent residence.
In choosing a timeshare, your amenities may be limited to the use of the swimming pool and
other common areas. Choosing a condo-hotel provides you access to those amenities as well

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as those you would traditionally find at a luxury hotel such as restaurants, lounges, spas,
exercise facilities and bars. Also similar to a hotel, you have access to daily housekeeping,
maintenance services, room service and more. At a timeshare, you’re responsible for
housekeeping and unit upkeep during your stay.
Another difference in owning timeshares and condo-hotels comes at a price. Owning a condo-
hotel gives you deeded ownership of the property. Condo hotels are typically more expensive,
but that price difference usually goes into unit enhancement rather than commissions typical
of timeshares. With a timeshare, you’re only purchasing one to two weeks of usage. During
the time you’re not staying at the timeshare, you can’t generate any revenue, unlike a condo-
hotel. When not staying at a condo-hotel, your unit can be entered into the management’s
rental program.
DIFFICULTIES FACED IN MARKETING TIMESHARE BUSINESS
Effective marketing is one of the most important aspects of the success or failure of Timeshare
business. Problems faced in the marketing of Timeshare may be listed as below:
 Negative image of the industry: Some dishonest people in the industry who vanished after
collecting money from members have created a negative image of the industry. This makes it
difficult for the marketers to convince a customer to buy membership unless the timeshare
company is backed by a very reliable brand.
 Large upfront payment: As advance taken as membership fees is relatively large it
substantially reduces the total market size of the potential buyers.
 Intangibility: Hospitality experience is largely intangible as comfort, friendliness; courtesy etc.
cannot be measured but only experienced. Marketer finds it difficult to convince the potential
buyer as they cannot carry their product along with them but can only create a mental image
or show pictures, video etc.
 Cost: Cost of marketing is relatively very high because company has to reach different cities in
the country through their own executives and Timeshare product can not be sold through
travel agents unlike in the case of conventional hotels.
 Lack of holidaying culture: In India holiday culture particularly the concept of leisure vacations
is still in an infancy stage. This makes it difficult for marketer to convince the customer as
there is no pressing compulsion on the buyer to purchase a holiday product.
 Uncertainty of future : As timeshare business is about selling a product for future use and the
future itself is considered to be uncertain by most of us it creates a conflict in the mind of the
buyer whether to buy this product or not.

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ADVANTAGE & DISADVANTAGE OF TIMESHARE BUSINESS

Advantages of Timeshare
 Timeshare membership provides the member immunity from rising costs and inflation.
Accommodation is available even after 10 years at the amount paid today as per the current
value of money. Moreover, it has a one-time cost for the customer.
 Timeshare has an emotional connection as it is a commitment of the member to his family of
spending quality time with them every year
 Timeshare stay is safer for a member compared to conventional hotels as only the members
are given a right to admission. All the guests staying in timeshare are properties are known to
the management and they primarily constitute family clientele.
 Depending upon the company policy members can gift, sell, and transfer their membership to
others. Timeshare may also be considered as an investment in such cases.
 Facility of exchange provides a large range of options for Timeshare members.
 The overall cost of Timeshare holiday comes out to be less expensive in the long run of time.
 From the Timeshare company’s perspective there is a guarantee of business and generally, it is
not affected by the recession.
 Advance payment received by the company helps them to repay their loans. This reduces the
interest cost burden on the property and substantially lowers the fixed cost of the property.
 The timeshare industry is an employment generator for the locals and it helps in promoting
domestic tourism.
Disadvantages of Timeshare
 The large amount taken as an upfront payment is a major deterrent to potential customers.
 Fly –by- night operators have created a negative publicity for the Timeshare industry and
create an anxiety in the mind of the buyer.
 Sometimes timeshare companies do not provide quality service which creates negative word
of mouth publicity for the industry.
 Timeshare industry has a very high marketing cost which reduces the profit margin of the
promoter.
 Maintenance cost is high for Timeshare properties.
 Timeshare membership is considered expensive by a buyer when he starts calculating the
interest component and other associated costs of his investment.

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How Timeshare Exchange Works

Vacation ownership offers unparalleled flexibility and the opportunity for affordable
worldwide travel through a timeshare exchange. Through the international timeshare
exchange networks, owners can trade their timeshare interval for vacation time at comparable
resorts around the world.
Most resorts are affiliated with an exchange company that administers the exchange service
for its members. Typically, the Exchange Company will directly solicit annual membership.
Owners individually elect to become members of the affiliated Exchange Company.
To exchange, the owner places his or her timeshare into the exchange company’s pool of
resorts and weeks available for exchange and, in turn, chooses an available resort and week
from that pool. The exchange companies charge an exchange fee, in addition to an annual
membership fee, to complete an exchange.
Timeshare exchange companies and resorts frequently offer their members the additional
benefit of saving or banking vacation time in a reserve program for use in a different year.

RCI (Resort Condominiums International) and II (Interval International) are the two largest
exchange companies in the world. Each allows timeshare owners to trade, or exchange, their
timeshare weeks with other timeshare owners. Each company offers exchanges at thousands
of timeshare resorts around the world.
Resort Condominiums International (RCI) is one of the largest timeshare vacation exchange
groups in the world. RCI does not manage any timeshare properties directly but instead
operates an exchange for owners of affiliated timeshare to trade their weeks for other exciting
vacation opportunities. With thousands of RCI timeshare resorts located all over the globe,
members can plan their dream vacation year after year.
Interval International (II) is the Quality Vacation Exchange Network, made up of nearly 1,900
resorts and over 1.5 million member families worldwide. At the forefront of the industry, II has
maintained the highest standards of quality and excellence since 1976.

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How to improve the timeshare/referral/condominium concept in India: Government’s
role/Industry role
Government’s Role in Timeshare
Although the government should not be in the business of running a business it’s their job to
facilitate an environment which is conducive to business. This creates an atmosphere in which
confidence of the investor is high and they can focus only on running their business instead of
focusing on other issues.
Some of the areas where government plays a pivotal role in Timeshare industry are listed as
below:
1. Security: Safety and security is an important concern for any industry and specifically so for
the tourism industry. No tourist wants to visit a destination where he perceives a threat to his
life or belongings. It is government’s duty to ascertain that law enforcement agencies such as
Police and Para-military work properly to maintain security at the destination. At some places,
the government has also started a concept of tourist police who are specifically responsible for
policing in tourist areas.
2. Infrastructure: Timeshare industry is dependent upon infrastructure provided by the
government to run its operation and to facilitate the convenience of its customers. The
infrastructure to be provided by the government includes proper roads, continuous supply of
electricity, clean drinking water, sewage pipelines, garbage disposal facility, street lighting, etc.
3. Loans and Subsidies: Timeshare industry is capital-sensitive. It requires huge initial investment
to start a time-share business. Government can play an important role in this regard by
providing financial assistance on a loan basis through nationalized banks and through other
financial institutions. The government also provides subsidy on the interest of these loans and
other things like import duty, excise duty, etc. to promote an industry which is in a nascent
stage.
4. Regulatory Body: Timeshare industry has received a setback due to unscrupulous activities of
the fly-by-night operators which resulted in the loss of credibility for the industry. The
government in this case helps the industry by playing the role of a regulatory body which curbs
the dishonest players and controls the financial transactions between the properties and their
members.
5. Taxation: Government’s role also includes collecting taxes and dues from the Timeshare
operators and the money collected from the taxation is then used for infrastructure and
developmental activities in the region.

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