Timeshare has undoubtedly earned one of the worst reputations in the hospitality industry since its launch on the European market nearly 35 years ago. Fraudulent sales representatives swindling pensioners out of their life savings became a daily headline in the media, tarring every company with the same brush.
However, the introduction of the 1994 Timeshare Act and the emergence of quality brands have sparked an overhaul. Now timeshare owners not only have confidence in the market but are also its most loyal supporters.
Marriott Vacation Club International says almost half of its European sales come from owner-generated sources, such as friends and family. And a 2006 survey carried out for the Organisation for Timeshare in Europe revealed that 75% of UK timeshare owners – about 500,000 households – were pleased with their decision. In fact, 17% said it was one of the best decisions they had ever made.
When asked for their reasons, 73% of respondents said they liked the quality of the fixtures and fittings, 53% were happy that the upkeep and maintenance guaranteed quality and 65% enjoyed the freedom.
Darren Ettridge, vice president of European sales for exchange facilitator Interval International, says the industry is now worth $11bn globally, with more than 5,500 resorts worldwide. Interval has more than 2,000 resorts on its books in 75 countries, ranging from three-star to five-star deluxe. It represents many international brands, including Accor, Carlson, De Vere, Disney, Four Seasons, Hyatt, Marriott, Royal Resorts, Starwood and Sunterra.
Ettridge says two factors helped the industry shed its ‘cowboy’ image. The first was the introduction of the 1994 UK Timeshare Act, amended in 1997 under a European directive which bans deposits at the point of sale. "This has driven out the dodgy practices so people can make an informed choice," explains Ettridge.
The second factor was the response of responsible businesses to boost the quality of their product. Ettridge says: "The product has improved considerably over the period. Now if you want to sell something and people can walk away, they need to be impressed to come back."
A QUALITY EXPERIENCE
Ettridge cites De Vere Resort Ownership (DVRO) as an example of how timeshare should operate, describing the guest experience as ‘tremendous’.
DVRO launched in 1996 and boasts luxury resorts at Belton Woods in Lincolnshire, Slaley Hall in Northumbria and Cameron House and The Carrick at Loch Lomond in Scotland. It has sold 8,000 weeks to 6,400 individuals with an average ownership of 1.25 weeks.
Craig Mitchell, managing director, explains: "DVRO was launched just as brands were coming into the market and the European directive was due to come into place.
"The act was enforced in the UK almost straight away and it cleaned the market up almost overnight. The key for us was to develop a product at the top end of the market and nobody had really done that before. Marriott and Hilton got involved and immediately the market went up a level."
Research by Marriott says nine out of ten people would prefer to purchase a timeshare from a recognised brand, and for them it is paying off.
Ed Kinney, vice president of corporate affairs at Marriott Vacation Club International, adds: "We are enjoying the culmination of the most significant growth in our history. We have experienced nine consecutive years of 20% growth, with annual sales of $1.46bn in 2004. Customer confidence and satisfaction in our UK owners’ holiday experience is reaching levels beyond our expectations."
Mitchell says DVRO added £2.5m in sales to its existing 100-bed hotel following the introduction of ownership. This has allowed the group to add to its facilities and restaurants and further maximise its yield.
DVRO has also discovered that the key to creating loyalty is to nurture a sense of belonging. A survey showed 63% of owners responded to feeling like part of an exclusive club, with 57% agreeing that it felt like a second home and 62% saying they are treated like a friend not a customer.
This in turn leads to an increase in the rental and hotel business as loyal customers bring their friends and family to share the resort experience.
BUYING INTO TIMESHARE
With the number of UK residents interested in ownership increasing by 3% since 2004, what is motivating holidaymakers to choose timeshare?
The main reasons, according to Darren Ettridge, are the sense of membership, the additional space, the value for money and the exchanges. Flexibility is important as more than half of timeshare owners use exchange systems to travel around and only 9% holiday each year at their resort.
While Europe and the USA remain the most popular destinations, exchanges are now available in Australia, Nepal, China and South Africa, with emerging markets in Eastern Europe and Asia. In 2005, Interval International organised exchanges for nearly half its members or helped them swap their weeks for other holidays.
According to Marriott, growth in the industry can be partly attributed to the diversity of locations on offer and the increasing range of resort types. While the majority still prefer the traditional beach destination, there is growth in urban locations, lakes and mountain settings and cruise holidays, in addition to specialist areas such as couples-only and boutique resorts.
Another reason for timeshare growth is the value for money, according to Ettridge: "Owners make their one-off payment and then their annual maintenance fee; so, for example, if that is £400 and you have a two-bedroom apartment for seven nights it’s more economical than a hotel equivalent.
"We also find that owners tend to spend 30% more on average in resorts than hotel guests because the main cost of their holiday is already taken care of," he adds.
The timeshare market has also proved to be more stable against external forces such as terrorism and disease. Ettridge explains: "After September 11, timeshare owners started to travel much sooner than non-owners because they didn’t want to lose out on their investment. Timeshare eliminates the risk of seasonality and downturns in tourism."
On a more regional scale, Mitchell comments that timeshare also tends to have a higher occupancy rate than hotels, with fewer seasonal fluctuations: "The occupancy rate of our hotels is 82%, with the lodges at 97%, and it’s less seasonal because people want to come at all times of the year."
Even Butlins is getting in on the act as it launches its first timeshare apartments in Somerset. BlueSkies will offer guests the opportunity to ‘own a piece of Butlins’, and has teamed up with exchange facilitator RCI.
With the entry of quality, recognised brands on the market, tough legislation and a growth in loyalty, vacation ownership is now ready to take its place on the hospitality stage.