A timeshare is a form of ownership or right to the use of a property, or the term used to describe such properties. Timeshare properties are typically resort condominium units, in which multiple parties hold rights to use the property, and each sharer is allotted a period of time (typically one week) in which they may use the property. Timeshares may be on a part-ownership or lease/"right to use" basis, in which the sharer holds no claim to ownership of the property.
According to one account, this notion was originally created in Europe in the 1960s. A ski resort developer (Hapimag) in the French Alps marketed his resort by encouraging guests to "stop renting a room" and instead "buy the hotel". Subsequent success followed, and the concept was quickly embraced by developers worldwide, boosting sales of surplus condominium units at a time when the resort industry was depressed.
Due to the promise of exchange, these units, called "vacation ownership" by the industry, often sell regardless of their deeded resort (most are deeded into a certain resort site, though other forms of use do exist). What is not often disclosed is that all differ in trading power. If one is in Hawaii or Southern California it will exchange extremely well, however, those areas are some of the most expensive in the world, subject to demand typical of a highly trafficked vacation area. The vast majority of inventory flows briskly through two international exchange companies: Resort Condominiums International (RCI) and Interval International (II). Critics contend these units are often overpriced, especially in places such as Mexico and Florida where almost every resort offers this style of accommodation.
Recently, with most point systems, owners may elect to:
Some developers, however, may limit which of these options are available at their properties.
Owners can elect to stay at their resort during the prescribed period, which varies depending on the nature of their ownership. In many resorts, they can rent out their week or give it as a gift to friends and family.
Much lauded is the idea of owners exchanging their week, either independently or through several exchange agencies, to stay at one of the thousands of other resorts worldwide. There are many exchange agencies, of which the two largest are Resort Condominiums International (RCI) and Interval International (II). They have resort affiliate programs and members can only exchange to affiliate resorts. It is most common for a resort to be affiliated with only one of the larger exchange agencies, but it isn't rare to find a dual affiliate resort. Together they have over 7,000 resorts. The time share resort one purchases determines which of the major exchange companies can be used to make exchanges. RCI and II charge a yearly membership fee and fees for when they find an exchange. They also bar members from renting weeks for which they already have exchanged.
Owners can also exchange their timeshare through independent exchange companies. Dial an Exchange, Trading Places International, Platinum Interchange, The San Francisco Exchange, Timex, and Redweek.com are the main independent exchange companies. Owners can exchange without needing the resort to have a formal affiliation agreement with the companies.
Sometimes, owners may also arrange a direct exchange. This requires locating an owner with the location and weeks both mutually desire. This form of exchange is rare but since it can save in exchange fees it is often sought after. Several bulletin boards have been created to help timeshare owners meet others and swap.
This type of lodging may take different forms depending on the seller. The vast majority consist of one week of ownership, i.e. 1/52 year, but some developers sell point based systems that are a different form of vacation currency that allow hotel stays, car rentals, and stays at large networks of resorts.
With deeded contracts the use of the resort is usually divided into week long increments and these are sold as fractional ownership and are real property. As with any other piece of real estate the owner may use his or her week, rent his or her week, give it away, leave it to his or her heirs or sell the week to another prospective buyer. While this form of ownership can offer additional security to the owner as a form of physical ownership, deeded ownership can be as complex as outright property ownership in that the structure of deeds varies according to local property laws. Leasehold deeds are common and offer ownership for a fixed period of time after which the ownership reverts to the Freeholder. Occasionally, leasehold deeds are offered in perpetuity however many do not convey ownership of the land but merely the apartment or 'unit' of accommodation.
With right to use, the purchaser has the right to use the property in accordance with the contract but at some point the contract ends and all rights revert to the property owner. In other words, the right to use contract grants the right to use the resort for a specific number of years. In many countries there are severe limits on foreign property ownership, so this is a common method for developing resorts in countries such as Mexico. Disney Vacation Club is also sold as a right to use. Care should be taken with this form of ownership as the right to use often takes the form of 'club membership' or right to use the reservation system. Where the reservation system is owned by a Company not in the control of the owners, the right of use may be lost with the demise of the controlling Company.
Exchange company point programs are not a method of ownership nor are specifically associated with one resort or resort group. With the exchange company points programs the members may be limited to exchanging for weeks deposited by other members.
A points program member may often request fractional weeks as well as full or multiple weeks stays. The number of points required to stay at the resort will vary based on a points chart. The points chart will allow for factors such as:
There is flexibility as well as complexity in point programs.
Units are usually listed by how many the unit will sleep and how many the unit will sleep privately.
Sleep privately refers to the number of guests who will not have to walk through another guest's sleeping area to use a restroom. Timeshare resorts tend to be strict on the number of guests per unit. Unit size can affect demand at a given resort where a two-bedroom unit may be in higher demand than a one-bedroom unit at the same resort. The same does not hold true comparing resorts in different locations. A one bedroom with a great location may still be in higher demand than a resort with less demand. An example of this may be a one bedroom at a great beach resort compared to a two bedroom unit at a resort located inland from the same beach.
Buying from the developer, you'll see exactly what your buying, the developer will have financing available, closing will be fast and the developer will often have extras included in the deal. But if you buy from a current owner, you will likely save at least 50% over what the developer is asking for the same timeshare. Please keep in mind that several contracts stipulate that once they are sold from person to person many benefits are lost. In other words, it is not the same contract originally bought from the developer. The advantages and disadvantages of buying from developer vs another owner have to be analyzed in an individual basis as no two contracts in the industry are alike.
About half of the resorts in the USA are currently selling, generating sales of $8.6 billion in 2005 (AIF 2006).
The global scope of the industry is not as readily quantified. Interval International, one of the two major exchange companies, reports there are 5,400 resorts in nearly 100 countries, with 2004 worldwide sales estimated at nearly $11.8 billion (Interval International 2006).