How It Works
The cost of a timeshare is determined by a number of factors including location, size, season, flexibility options and whether it is a direct or resale purchase. The cost benefit of a timeshare is securing your future holidays at today’s prices – which over the long term proves cheaper than other holiday accommodation rates that escalate each year with inflation.
After paying an upfront purchase cost, an annual maintenance fee (or levy) is charged to safeguard against wear and tear and to ensure that you always arrive to a fully functional, fresh, modern and inviting accommodation.
It’s important to remember that timeshare is a use-product, so the real value comes from taking regular holidays. It should never be viewed as a financial investment or an opportunity to generate an income.
During the 1980s and 1990s timeshare owners wanted more flexibility than a fixed week, which led to timeshare exchange systems (such as RCI) being introduced. This gave owners the ability to exchange their week with other timeshare weeks that had been “banked” by other owners.
While exchange systems improved the ability to swop weeks, there was no guarantee as to what other timeshare owners would bank. This then led to the points system. There are several variations, but in general Points Clubs acquire a variety of timeshare weeks from a spread of resorts. They then assign each week with a points value based on the accommodation size, location, season and demand.
The consumer purchases points from the Club, which then grants membership and the right-of-use to any of the timeshare weeks held by the Club. This model provides a larger variety of holidays options, including short midweek breaks and includes the option to save points for longer holidays every second or third year.
Types of Timeshare
Pooling Schemes (newer version of timeshare)
Types of Agreements
Value of Timeshare to the Economy(Sourced from a report commissioned for the American Resort Developers Association)
- 40-year-old industry
- Timeshare comprises:
- 63% of the beach apartments in Umhlanga
- 60% of the accommodation in the Drakensberg
- 70% of the bush/safari apartments in Hazyview
- Hospitality brands in timeshare include Tsogo Sun, Southern Sun Resorts and Legacy Hotels and Resorts, amongst others
- Over 160 resorts comprising around 10 000 homes and apartments or over 7.5 million room nights
- The industry provides employment for roughly 30 000 people
- Resort occupancy all year-round are on average between 85% to 90% for beach properties and around 70% for inland resorts
- Timeshare owners spend on average 6.5 more days on holiday than their non-owner counterparts
- 64% of owners say timeshare has increased the amount of time they spend on holiday
- Direct economic output $ 57 billion
- Total economic impact, direct and indirect: just under $146 billion
- Total number of resorts: 5357, in 121 countries across the globe
- Total number of owners: approximately 22 million
- Total accommodation units: 527,000
- Sales volumes $19.7 billion
- Weeks/points-equivalent sold: 1 million
- Occupancy levels: 79.4%
- Global hotel chains in timeshare include Disney, Hilton, Hyatt, Wyndham, Four Seasons and Marriott and Ritz-Carlton, amongst others
- In the U. S.:
- The size of the industry is $10.5 Billion – compared to the $9 billion in revenue for Major League Baseball and the $8 billion music industry
- 9 million U.S. households own 1 or more types of timeshare (weeks, points, fractional and/or private residence club)
- $11.29 Billion is the amount spent by timeshare owners & guests during timeshare stays of which approximately $2.96 billion is spent onsite at resorts and $8.33 billion was spent off-site in the communities where the timeshare resorts are located
What is shared vacation ownership?
It is essentially purchasing the right to a holiday one week every year at either a specific resort, or by making use of flexible options a variety of resort options. Your holiday accommodation is paid in advance, providing you and your family with a lifetime of luxurious holidays at today’s fixed, low rate.
What is the difference between conventional holiday ownership (timeshare) and Points clubs?
Conventional holiday ownership (timeshare) ownership entails the payment of an upfront sum for a fully furnished accommodation plus yearly maintenance fees. Depending on the agreement, owners either own the rights to a specific, fixed week or the rights to a floating arrangement where you can visit for a week within a period each year.
Points Clubs are a newer variation of the timeshare model. Instead of purchasing the rights to a specific unit, club members pay an upfront sum to purchase a number of points, which can be redeemed for different holidays each year. The number of points translate to different types of holidays based on the desirability of the resort’s location and the time of the year. In addition to the purchase of the points, maintenance fees still apply.
What are maintenance fees?
This is the annual fee used to cover the operating and maintenance costs of the property, thereby ensuring quality holidays. Bear in mind that maintenance fees will be subject to normal inflation rates, but not to any form of profit.
What should I consider before purchasing?
First consider your finances and your holiday lifestyle, and then find a product that matches your needs. Do you want to return to the same favourite holiday spot each year and build a legacy of holiday memories for your family, or do you prefer the flexibility of exploring new destinations? This will determine whether you purchase a fractional product or opt for the points-based system.
What is exchange and how does it work?
Through exchange companies, such as RCI, you can trade your week at your resort for another owner’s week at a different resort. Owners deposit their weeks with an exchange company and can then select from thousands of comparable weeks deposited by other owners within the exchange network.
What if I can’t use my vacation ownership (timeshare) one year?
Depending on your product purchased, there are a couple of options:
- You can put it up for rent through your resort.
- Give it to family or friends to enjoy.
- Deposit your week with an exchange company so that you can use it during a different time and location.
- Points based products can also be accumulated over a specified period of time.
Can I cancel my contract?
Yes, subject to the cancellation terms and conditions of your signed agreement.
Who manages the maintenance of the resort?
The resort is usually first built by the developer who owned the property and made all the decisions regarding the resort until almost all the unit-weeks were sold. Once the developer decided it was time to move on, a Body Corporate is formed with a Board of Directors who then have the decision-making power of the resort to ensure that it maintains its high standards of excellence.