Vacation Ownership What Is It Really


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Vacation Ownership What Is It Really

  1. 1. Vacation Ownership: What is it, really? <ul><li>Topics </li></ul><ul><li>Concept of vacation ownership </li></ul><ul><li>Various vacation ownership products </li></ul><ul><li>Resort life-cycle theory </li></ul>
  2. 2. Concept of Vacation Ownership <ul><li>Timesharing = the act of sharing vacation time at a luxurious resort facility </li></ul><ul><li>Timeshare consumer purchases the right to occupy a vacation-type home/unit for a set period of weeks </li></ul><ul><li>Home-type unit but no day to day maintenance usually associated with home ownership </li></ul><ul><li>Resort offers high quality recreational and leisure services </li></ul>
  3. 3. Timeline of vacation ownership industry 1964 – Ski resort in the Alps 1970’s – converted hotel projects in USA 1980’s – lots of unethical developers selling non-existent properties 1983 – first timeshare law passed in Fla, USA 1984 – Marriot entered timeshare industry 1990’s – public trading of timeshare companies 1992 – Disney and Hilton enter industry Canada Timeshare Act, 1992 1999 – Alberta Fair Trading Act (Timeshare contracts regulation) 2005 – Ontario Consumer Protection Act, 2002 2003 –Timeshare companies publically traded
  4. 4. Vacation Ownership Product Mix By Time By Legality By Facility Timeshare Deeded Mixed-Use Timeshare Resorts Fixed Week Right to Use Fractional Timeshare Resorts Float Week Leasehold Private Residence Clubs Point Purchase
  5. 5. Vacation Ownership Product Mix <ul><li>Timeshare </li></ul><ul><ul><li>Consumer has access to vacation accommodation sold by weeks, allowing access to a specific unit and all resort common areas </li></ul></ul><ul><li>Fixed week </li></ul><ul><ul><li>Consumer has access to vacation accommodation and resort useage for a set week each year for duration of contract </li></ul></ul><ul><li>Float Week </li></ul><ul><ul><li>Consumer has access rights to a specific unit for a specified range of weeks within a year </li></ul></ul><ul><li>Float unit </li></ul><ul><ul><li>Consumer’s usage period (week) is fixed but the actual unit used may vary, but must be of same class/type (i.e. one bedroom) as per contract </li></ul></ul>
  6. 6. Vacation Ownership Product Mix <ul><li>Points Purchase </li></ul><ul><ul><li>Consumers purchase points not weeks </li></ul></ul><ul><ul><li>Each point has a predetermined value which is used for vacation club usage </li></ul></ul><ul><ul><li>Points can be used for various vacation club products e.g. cruises, golf </li></ul></ul><ul><ul><li>Highly customer focused but complex to manage </li></ul></ul>
  7. 7. Vacation Ownership Product Mix <ul><li>Deeded </li></ul><ul><ul><li>Owner receives title for the property </li></ul></ul><ul><ul><li>Has legal ownership for period of use </li></ul></ul><ul><ul><li>Can use property in perpetuity </li></ul></ul><ul><ul><li>Can will the property </li></ul></ul><ul><ul><li>Can sell the property </li></ul></ul>
  8. 8. Vacation Ownership Product Mix <ul><li>Right to Use </li></ul><ul><ul><li>Owner is given contractual rights to use facility for specified period (e.g. 20yrs) at which time the contract terminates </li></ul></ul><ul><li>Leasehold </li></ul><ul><ul><li>Similar to Right to Use </li></ul></ul><ul><ul><li>At end of lease property reverts back to developer </li></ul></ul><ul><ul><li>Leasehold period of use is shorter than Right to Use </li></ul></ul>
  9. 9. Vacation Ownership Product Mix <ul><li>Mixed Use Timeshare </li></ul><ul><ul><li>Combination of a traditional resort and a timeshare resort </li></ul></ul><ul><ul><li>Part of facility operates as a traditional resort with full amenities e.g. restaurants, spa, gym </li></ul></ul><ul><ul><li>And another area operates as under an ownership model </li></ul></ul><ul><li>Fractional Timeshare Resorts </li></ul><ul><ul><li>Upscale product where owner owns high number of weeks e.g. 3 – 12 weeks </li></ul></ul><ul><li>Private Residence Clubs </li></ul><ul><ul><li>Offer services similar to country clubs </li></ul></ul><ul><ul><li>May have golf courses, pro shops, dining </li></ul></ul><ul><ul><li>Larger accommodation units </li></ul></ul>
  10. 10. Vacation Ownership Design Campus style resort with 2 bedrooms, 2 bathrooms Golf oriented resort units have 2 bedrooms with 2 beds each to accommodate foursomes
  11. 11. Vacation Ownership Design 1990’s townhouse units in clusters around small pools. Smaller resorts 2000’s large resorts developed in phases 900 units or more
  12. 12. Butler’s Product Life Cycle for Tourism Product Development Exploration Involvement Development Consolidation Stagnation Decline Sustainable Growth Rejuvenation
  13. 13. Butler’s Product Life Cycle <ul><li>Exploration </li></ul><ul><ul><li>Interest in new travel area emerges </li></ul></ul><ul><ul><li>Product brands and service quality levels are established </li></ul></ul><ul><ul><li>Pricing is set to ensure consumer interest </li></ul></ul><ul><ul><li>Distribution is selective and focuses on the primary target markets </li></ul></ul><ul><ul><li>Promotion techniques are geared to the early adopters of the product </li></ul></ul><ul><li>Involvement </li></ul><ul><ul><li>The developer refines their marketing and sales approach to increase the identified potential customer to the area </li></ul></ul><ul><ul><li>Includes onsite and offsite marketing programs </li></ul></ul>
  14. 14. Butler’s Product Life Cycle <ul><li>Development </li></ul><ul><ul><li>High level of product and service development </li></ul></ul><ul><ul><li>Developer drives consumer demand by moving the price point upward </li></ul></ul><ul><ul><li>Marketing and sales is high but now uses market penetration strategies relevant by each target market </li></ul></ul><ul><ul><li>Rapid increase in sales and profits </li></ul></ul><ul><li>Consolidation </li></ul><ul><ul><li>Market has now matured in both level of competition and consumer demand </li></ul></ul><ul><ul><li>Marketing is key to developer’s success </li></ul></ul><ul><ul><li>Tactics include product differentiation, lower pricing </li></ul></ul>
  15. 15. Butler’s Product Life Cycle <ul><li>Stagnation </li></ul><ul><ul><li>Very low cost and product delivery </li></ul></ul><ul><ul><li>Sales have peaked </li></ul></ul><ul><ul><li>Profits begin to level off </li></ul></ul><ul><li>Decline </li></ul><ul><ul><li>This phase can be impacted both positively and negatively depending on previous competition levels </li></ul></ul><ul><ul><li>Developer may introduce new versions of product, new distribution methods, price reductions to rejuvenate interest </li></ul></ul><ul><ul><li>If these are not successful then arrival levels to area will drop </li></ul></ul>
  16. 16. Levels of Timeshare Products <ul><li>5 levels </li></ul><ul><ul><li>Luxury </li></ul></ul><ul><ul><ul><li>$20,000 per interval </li></ul></ul></ul><ul><ul><ul><li>Penthouse, 1,500 sq ft + </li></ul></ul></ul><ul><ul><li>Up-market </li></ul></ul><ul><ul><ul><li>$15,000 - $25,000 </li></ul></ul></ul><ul><ul><ul><li>One room unit 1,000 sq ft or two room unit 1,800 sq ft </li></ul></ul></ul><ul><ul><li>Quality </li></ul></ul><ul><ul><ul><li>$9,000 - $17,000 </li></ul></ul></ul><ul><ul><ul><li>One room unit, 800 sq ft or two room unit, 1,400 sq ft </li></ul></ul></ul><ul><ul><li>Value </li></ul></ul><ul><ul><ul><li>$7,000 - $10,000 </li></ul></ul></ul><ul><ul><ul><li>One room unit, 800 sq ft or two room unit, 1,000 sq ft </li></ul></ul></ul><ul><ul><li>Economy </li></ul></ul><ul><ul><ul><li>$5,000 - $8,000 </li></ul></ul></ul><ul><ul><ul><li>Studio, 600 sq ft, one room unit, 900 sq ft </li></ul></ul></ul>