FEBRUARY 2012 |www.opp.org.uk WORDS | George Sell


have written in this column before that any mention of the word timeshare (or ‘The T Word” as it is sometimes called) in fractional ownership circles, is a sure-fi re way to put the cat amongst the pigeons. You will fi nd people getting extremely vexed trying to explain that the two products are a world apart, and that timeshare should not under any circumstances be confused with fractional ownership. When I see steam starting to come out of the fractional defender’s ears I always think that we wouldn’t be having this conversation if timeshare hadn’t had its reputation dragged through the mud by shady and unscrupulous characters who saw the opportunity to get rich quick at the expense of others. It is a great concept, and when administered and sold correctly and honestly, is a logical bridge between taking a holiday and buying a holiday home.


Dealing with time I


many readers of OPP will know, since April of 2011, the European Union introduced the Timeshare Directive which applies equally to both timeshare and fractional. The main thrust of the legislation is to allow buyers a cooling- off period, and offer more consumer protection than whole ownership property purchases. Fractional resorts, particularly at the cheaper end of the market, should embrace its possibilities as a very compatible and productive feeder market rather than try and distance themselves from timeshare. Some of Europe’s more progressive


International fractional expert David Disick takes a world view.


BUSINESS


Developer profi le


FRACTIONAL | 35


The word timeshare sends shivers down the spine of most overseas property professionals. It should only be referred to as the “T-word” says OPP columnist George Sell. And yet, maybe the timeshare client of yesterday is the fractional client of tomorrow.


Summit Europe – held in London on February 27 and 28, although staged a predominantly fractional-focused conference, will feature a panel discussion on how timeshare, fractional and whole ownership properties sit alongside each other in the resort mix. The session will feature developers who have experience of all three forms of product. I have a sneaky feeling that existing timeshare owners could be the fractional industry’s biggest source of new business.


George Sell is the editor of Fractional Trade. Visit: www.fractionaltrade.com


value. Of course, “higher quality property” and “more luxurious experience” are in the eye of the beholder. Subjective matters of taste, such as these, are not to be disputed.” However, he says, rememer that “fractional ownership and timeshare each have an entirely different ‘Unique Selling Proposition’ and that fractional properties have fewer owners per home.


“Existing timeshare owners could be the fractional industry’s biggest source of new business”


Although you may be unlucky enough to bump in to the odd timeshare shark circling unwary buyers, their numbers have been greatly reduced, and most timeshare owners are very happy with what they have bought. A recent survey of UK timeshare owners by exchange company Interval International found that 83% of its members are happy with their timeshare. Interval’s UK member profi le is not dissimilar to the buyers at many of the lower priced fractional schemes – they have an average household income of around £70,000 per year and more than a quarter of them own a second home as well as their timeshare interest. Of course, there are key differences between timeshare and fractional ownership – in general terms one is the purchase of a right to use a property while the other is the purchase of a share of the deed of the property. But even this distinction is blurred by the availability of deeded timeshare and other products. And as


Timeshare sharks | don’t circle around anymore - they have been made extinct


developers are certainly doing that, with many making the move across from timeshare to fractional, or developing the two in conjunction. In late 2009, Seasons Holidays completely sold out a 43-unit fractional development in southern Spain solely by marketing the fractions to its database of timeshare owners. That’s 344 sales (43 units sold in 1/8th shares) without having to do any external marketing. Club La Costa sells timeshare, fractional ownership and whole ownership while Royal Resorts sells timeshare and fractional. And this month’s Fractional


“As we know, laws in most countries defi ne both fractional real estate ownership and timeshare as ‘shared ownership.’


So, these different


property types are treated legally as the same,” he told OPP. “From the point of view of fractional owners, however, what they own is not the same as timeshare. They believe their fractional real estate property is higher quality than timeshare and affords a more luxurious vacation experience than timeshare. Most important, it offers them solid real estate investment


Fractional properties usually have a maximum of thirteen to fi fteen owners. Timeshare can have as many as fi fty— or even fi fty-two—different owners per home. Fewer arrivals and departures contribute to a more relaxed atmosphere at fractional properties and a more personalised vacation experience.” Also, Disick adds, “a smaller number of owners per home results in fractional interest prices being higher. And due to higher offering prices, fractional real estate interests are directed to a more affl uent clientele than timeshare. Fractional owners have much higher household incomes than timeshare owners. Fractional owners earn at least twice as much as timeshare owners.” “In the United States,” he adds, “household income qualifi cation is considered to be: Timeshare: $75,000+ a year / Fractional ownership: $150,000+ a year (top 5% of the US households) / Private Residence Club: $250,000+ a year (top 1% of US households). Affl uent fractional owners are highly demanding in terms of luxury, quality and service.”


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