Timeshare Industry Development - A Quick Overview
Over the years, the timeshare Industry has evolved and shown consistent, steady growth that has sustained its development from its early inception in the 1960s, through a major global financial crisis, to a strong presence in today's global economy. This is a quick overview of its growth and its key development over the years.
The concept of timeshare was originally designed to allow a group of individuals to share the right to occupy a vacation property during the year, typically for one or two (2) weeks, on a yearly basis. The particularities of exchanging weeks to other properties came about in the 1970s with the creation of Resort Condominium International (RCI). The flexibility to exchange weekly intervals to other destinations around the world became a distinctive feature of the timesharing concept and contributed largely to the rise of its early popularity.
First created in the French Alps in the early 1960s, the concept of timeshare has often been accredited to Paul Doumier who coined the phrase: “ It is cheaper to own the hotel than to rent the room”, and it caught on!
As the concept of timesharing expanded in the 1970s and 1980s, timeshares developments quickly built around the world. Between 1990 and 2003, ownership of timeshares worldwide increased on an average rate of 12% per year. According to the Worldwide Timeshare Industry report of Ragatz Associates, a research and business unit of RCI, there were a total number of 5,425 timeshare resorts worldwide in 2003. It was estimated then that about 6.7 million of households owned or held membership use rights of timesharing to some 10.7 million weekly intervals worldwide. In the United States, important developments were concentrated prominently in the states of Florida, California, South Carolina, and Hawaii, which represented 41% of the world's timeshare resorts.
In 2010, the Global Shared Vacation Ownership Industry reported worldwide sales of nearly 785,000 intervals sold that represented 4.7% of the total inventory of intervals owned worldwide. Based on those numbers, we could estimate the total number of intervals owned worldwide to 16,7 million.
In 2016, the US Shared Vacation Ownership Owners reported that approximately 6.9% of US households own one or more types of shared vacation ownership - translated into 9.2 million of households owning a timeshare ownership product in the United States
In recent years, the concept has evolved to offer a more flexible ownership. The evolving shared vacation ownership has grown to include increasingly diverse options in leisure travel such as Timeshare/Vacation Ownership, Fractional Ownership/Private Residence Clubs, Destination Clubs and Condo Hotels. Often based on a system of points or credits, these vacation products had rendered the concept less restrictive and more appealing to a wider range of travelers. Today, with the increased flexibility of the trading systems, millions of timeshare owners continue to appreciate the principle of "owning their vacation" and enjoy the outstanding vacation destinations to more than 5,400 timeshare resort properties in about 120 countries around the world.
The timeshare industry, the fastest growing segment of the Travel and Tourism industry.
The industry has grown strongly throughout its development since 1974. With the exception of the recession period of 2008, the industry showed spectacular periodical growth during the decades of 1974-1984 and that of 1994-2004 with respective annualized growth of 38% and 17%.
A significant increase in global sales volume from $ 3.2 billion in 1990 to $ 9.4 billion in 2002, with 5.5. billion in the United States alone, revealed a promising future for the timeshare segment in the travel and tourism industry worldwide. Europe and Latin America together accounted for the bulk of the remainder of sales with Asia and Australia showing a strong emergence in the timeshare markets.
In 2007, a study published by the ARDA International Foundation (AIF), led by Ernst & Young, LLP showed indicators of accelerated growth for the future, projecting further sales growth of 81% over a five-year period. The same study also revealed that the sales volume in the United States reached a new high of $ 10 billion in 2006. From 2000 to 2009, in the United States alone, timeshare sales averaged $ 7.5 billion per year, with remarkable results in 2006, 2007 and 2008 with respective annual sales volume of 10, 10.6 and 9.7 billion of dollars.
The global financial crisis of 2008 however halted the momentum of its rapid growth in posting a drastic decline in US sales to 6.3 billion in 2009, of 35% drop in the United States and a 27% decrease worlwide. In some regions such as in Africa, Asia, Central and South America, however, sales continued to climb between 2008 to 2010.
In the United States, the sales volume subsequently rebound to rise from $ 6.4 billion in 2010 to $ 8.6 billion in 2015 - an annualized growth of 5.5% since 2009 with a significant increase of 9% in 2015 over the 2014 results - the second highest increase recorded since the financial crisis.
Between 2014 and 2015, global sales in Vacation Ownership increased by 11.5% from $17.7 billion to $19.7 billion and supported nearly 1.3 million jobs worldwide.
According to of ARDA's AIF Worldwide Shared Vacation Ownership Report of 2016, the shared vacation ownership supported nearly 1.3 million of jobs in 2015 and generated a 57 billion in direct economic output worldwide. In its report, AIF projected the global industry of timeshares - shared vacation ownership - will continue its rapid growth in key markets around the world. With timeshare sales and occupancy rates on the rise, both indicators give strong evidence of the consumers' interest for this type of vacation product.
The arrival of key players in the industry of timeshares
In its early inception, timeshares developed a more or less favorable reputation mainly due to the marketing tactics that offered generous incentives to encourage individuals « to buy today ».
The questionable marketing practices and the urgency imposed on the consumer to make a decision on the same day quickly earned timeshares its reputation of « pressured sales ». As the timesharing industry evolved, the involvement of governing bodies and consumer protection agencies led to stricter regulations and enforcement. With the adoption of legislation on consumer protection and the creation of leading organizations such as ARDA (American Resorts Development Association), CVOA (Canadian Vacation Ownership Association) in Europe, RDO (Resort Development Organization) and PROFECO (The Mexican Consumer Protection Agency), the industry established a higher level of credibility with the consumers and strengthened its markets worlwide.
In the 1990s, the timeshare industry experienced a resurgence that greatly contributed to its maturity and improved image. Key players in the hospitality business such as Disney, Hilton, Hyatt, Marriott, Starwood, and Wyndham gradually joined the industry by integrating a division of timeshares for which occupancy rates were often found to exceed those of their hotels.
The arrival of these major hospitality brands had the effect of bringing in a more diversified range of Vacation Ownership products that were less restrictive than the original form of timeshares and were more appealing to the savvy travelers.
These important hoteliers had a significant impact on improving the image and the reputation of timeshares for several reasons. First, these corporations spent considerable resources informing the public about the many benefits of timeshares. Secondly, the sales and marketing techniques they used were more transparent and refined to help restore consumers confidence. Thirdly, the established reputations and credibility of their branded names served to neutralize the consumer's early misconceptions about the concept. And, lastly, in an attempt to reverse consumers negative impressions often associated with the term « timeshares », they rebranded the concept with a more upscale appeal for a product now described as « Vacation Ownership » or « Shared Vacation Ownership ». The newly branded Vacation Ownership, often packaged as points-based ownership, offered better opportunities in trading destinations with greater flexibility of use and vacation benefits.
These changes had another positive impact on the consumers who started realizing that timeshare offered a real vacation option with a genuine holiday strategy. With the improved industry reputation, more and more people were attracted to the idea of using timeshares as opposed to discrediting it due of its unusual sales and marketing techniques. Although we are still far from the day when consumers wake up to the idea of « Today I'm going to buy a timeshare », they are warming up to the various uses timeshares can help in providing vacation benefits to them and their family.
Timeshare resales market and upcoming travel trends
With each timeshare unit sold, a timeshare resale is born. Timeshare resales really came into being with the advent of the popularity of online shopping.
The eBay and Craiglist sensations in the late 1990s provided excellent ways to advertise timeshares for sale by owners. For consumers who had already attended a timeshare presentation and had not bought, timeshare resales represented an excellent opportunity to acquire the coveted vacation ownership at considerably reduced prices!
Today, several resales companies have established a solid online reputation for the consumers who wish to research various vacation ownership products. Rentals as well as timeshare resales have considerably grown to offer a sound alternative for consumers with a low budget wishing to secure a vacation ownership at great discounted prices. The internet access is convenient to allow savvy travelers to research and contemplate the various options of vacation ownership that will best suit their travel needs. As retail sales and occupancy rates continue to climb globally, we can expect timeshare resales to continue to grow proportionately and to gain in resurgent markets.
As the buyers' profile slowly shifts to the next generations from the prominent buyers of the baby-boomer generation in the 1990s/2000s, the features of vacation ownership can be expected to attract the younger generation X coming to the retirement age and the millennials starting a family.
According to the ITB World Travel Trends Report of 2016-17, the millennials, the youngest generation with disposable income, have already secured their status as leaders in travel and tourism. As the largest generation to date, they will also be the largest market in travel in the next several years.
What does that mean for the timeshare industry?
The Vacation Ownership industry will certainly gain from reaching out to the millennials who is truly 'the connected' generation. When planning their trip, travel trends show millennials like to shop online, research and visit many websites and have their options conveniently available. They also like to use social media before, during and after their trip. In fact over 90% of them will post comments on social media while on vacation.
With the millennials coming around the corner and officially the largest 'connected' generation, the Vacation Ownership Industry including timeshare resales will certainly gain through establishing a dynamic online connection with the millennials.
Thanks to the consumer-friendly changes that took place in the industry and the existing online presence of the timeshare resales, the more connected and affluent buyers of the next generations will undoubtedly contemplate timeshares for sale by owners as a legitimate and savvy vacation strategy. As the demand for new timeshare-vacation clubs continue to grow, we expect the resale secondary market will continue to grow proportionately.