The Hotel Industry - Timeshare
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The Rise of Timesharing in the Hotel Industry
Overview
As the hotel industry grapples with lower occupancy rates and a shifting economy, timesharing has emerged as a compelling solution. Once regarded with skepticism, timesharing is now experiencing a renaissance, thanks to the involvement of major companies like Disney, Marriott, and Hilton. These developments signal a new era for timesharing within the hospitality sector.
Understanding Timesharing
Timesharing is gaining popularity as a practical and affordable vacation option. In recent years, nearly 500,000 households have acquired over 700,000 timeshare intervals, bringing the total number of owners to more than 3 million across 3,000 resorts globally. Contrary to past perceptions, most owners report satisfaction with their purchases.
"Timesharing is on the rise, not just in the U.S., but also in Europe, Mexico, and South America," notes Tom Franks, president of the American Resort and Residential Development Association. "We anticipate the industry will double in the next decade, with significant participation from the hotel industry."
Timesharing Models
The traditional model involves purchasing one or more weeks at a resort, with the option to either return annually or exchange for a different location. Prices average around $9,000, with yearly maintenance fees of about $300.
There are two primary forms of timesharing:
- Fee Timesharing: Purchasers receive permanent ownership rights via a deed (85% of resorts follow this model).
- Right-to-Use Timesharing: Purchasers gain usage rights for a set period without a deed.
Owners can exchange their timeshare through companies like Resorts Condominiums International or Interval International, which is a significant incentive for many buyers. Hotel chains often create internal exchange systems to enhance these services.
Marriott’s Success Story
Marriott entered the timesharing market in 1984, transforming it into a lucrative venture. They initially collaborated with American Resorts on Hilton Head Island, leading to successful projects in Orlando, Hilton Head, and internationally in the Bahamas and Barbados. With over 40,000 owners and annual sales exceeding $100 million, Marriott highlights how hoteliers can thrive in timesharing.
Marriott's strategy involves developing high-quality resorts with well-managed exchange programs and resale operations. They've also initiated management contracts with no direct capital investment, expecting to expand such arrangements.
Hilton’s Entry into Timesharing
Hilton Grand Vacations Company (HGVC) recently launched its timesharing program with significant ambitions. Partnering with Florida's Mariner, Hilton has acquired 15 resorts and 22,000 owners. Their approach focuses on creating a network of premium resorts worldwide, leveraging existing hotel amenities, and establishing a points-based ownership program.
Other Major Players
Other renowned companies like Disney and Ramada are also tapping into timesharing. Disney Vacation Club offers an innovative points system and flexible vacation options, while Ramada is exploring timesharing in the Bahamas as part of a broader strategy.
Conclusion
With heavyweights like Marriott, Hilton, and Disney driving innovation and expansion, timesharing is reshaping accommodations. It offers a sustainable model for filling hotel rooms and meeting the evolving needs of modern travelers, marking a promising future for this segment in the hospitality industry.
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