A lack of understanding of how the timeshare rental industry operates, and the ability for any individual to misuse social media to operate under the guise of being a legitimate timeshare rental agent, is putting the reputation of the industry at risk.
The modus operandi of third-party or ‘rogue’ rental agents – individuals without any formal training and experience in timeshare rentals – has the potential to devalue the timeshare product and create general negativity about the industry. These individuals acquire rental weeks mostly via social media where timeshare owners advertise their week for rent. Other sources are through word-of-mouth in large close-knit communities and through contacts they may have within the timeshare clubs.
By operating on the fringe of the industry, their business operations are open to abuse. This includes making false promises to relieve timeshare owners of their levy if they hand over full access to their membership login. In some cases, owners end up having all their points used and never receive a cent or hear from the agent again.
Tony Forbes, Beekman Group Executive, has been in the industry for over 20 years and is concerned about the rise in rental fraudulent activities.
“Typically, these ‘rogue’ agents are not registered with any regulatory authority or the timeshare industry association, VOASA. Because they don’t run professional booking systems or a Trust Account, double bookings often occur which leave families without any accommodation when they try to check-in. More damaging are the poor online reviews that are then leveraged against the resort or vacation club which had no involvement in the booking,” says Tony.
A myriad of issues ‘come to light’
A myriad of issues that undermine the value of timeshare have ‘come to light’. These include:
- Copying VOASA members’ resort marketing material and posting pictures on their own social media platforms to entice sales without consent. Thinking all resorts are the same and not understanding the different check-in procedures.
- Not having the correct administration procedures in place, especially if there are problems like cancellation or double booking.
- Not getting guest certificates issued from the resort or vacation club and instead producing their own guest certificate – which creates chaos at the reception check-in.
- Timeshare owners are either over-promised on rental returns and/or don’t receive their promised rental money.
- The renting out of RCI, SunSwop and other certain vacation club bookings – which are not permitted.
Red flagging the issue
Southern Sun Timesharing has been successfully helping their owners sell and rent weeks for over 25 years. The company’s website provides guidelines to help owners and consumers wanting to rent weeks at any of its resorts.
This ‘how to’ guide explains that an experienced team of rental experts will advise you of what you can realistically expect to receive for your week and will then market it to the right audiences. Before getting started, a rental mandate must be signed to give Southern Sun Timesharing authority to rent out your timeshare week.
According to the General Manager at Southern Sun Resorts, Pieter Pienaar who has 15 years’ industry experience, their rental team only accepts instruction from the timeshare owners themselves.
“We acknowledge that timeshare owners have a right to rent their week, however the problem doesn’t lie with the owners but instead rests with the individuals who are renting weeks on behalf of the owners,” he says.
Tony explains the measures taken by the Beekman Group, “We undertake regular communications to our owners and/or potential rental clients to be cautious when dealing with third party rental agents and advise that if a deal sounds too good to be true it normally is.” He goes on to say,
“We encourage all owners to make use of our officially mandated rental company – Beekman Holidays – who by agreement are responsible to invest in various marketing strategies and advertising to maximise returns, as well as to ensure that the renter’s payments are kept in a Trust Fund until disbursement to the timeshare owner”.
Established in the late 1980’s, Cape Escape is an industry forerunner in resales and rental. All Cape Escape agents are members of VOASA and registered real estate brokers. Karen Halvorsen is a Partner at Cape Escape and has been working with timeshare resales and rentals for over 20 years. She explains that all their rental stock is sourced from owners currently selling their portfolios through Cape Escape and that they are therefore able to offer a valuable tool to recoup some of the members/owners’ annual levy fees while waiting for a buyer.
“All rental funds remain in our Trust Account until the renter checks in; and the owner is then paid their proceeds on the first Monday after check-in. This protects the seller and the renter’s funds,” explains Karen. She adds, “To protect our documentation, the reputation of our company and that of the industry, we only rent stock to a select few agents, and we always insist on a signed rental agreement with clear terms and conditions and a clear cancellation policy”.
A damaging price war
According to Tony, the rental prices seen advertised are well below reasonable market rates, well below membership fee or levy values, and simply leave the client very unhappy that they have been ‘conned’ having given the so-called agent access to their online booking passwords.
Karen says they are concerned about an emerging price war as rogue agents cut prices in an attempt to increase their share of the market. “The rental prices being charged by these agents are much less than the market average as they don’t have any overheads and are happy to rent for between R200 and R500 commission.”
Peter Edmondson of TravTrust Investments, a mandated agent of Dream Vacation Club, believes online messaging platforms, like WhatsApp, worsen the situation.
“It provides a platform for these operators to bargain emergency rates, which undermines our value proposition and mandate,” he says.
“When you rent with Southern Sun Timesharing, you will be advised of what you can realistically expect to receive for your week,” adds Peter. The company’s website also provides the current prices for a week in each accommodation type across all their resorts.
Upholding industry best practices
As the voice for timeshare in South Africa, one of VOASA’s key priorities is upholding industry best practice and compliance with legislation as outlined in its Code of Conduct.
In this regard, VOASA has made significant progress in its industry stakeholder engagement sessions with the Property Practitioners Regulatory Authority (PPRA) on the implementation of the new Act and Regulations for the timeshare sector as it now covers a broader segment of the industry.
VOASA’s legislative consultant, Cari du Preez, says, “At the outset of our engagement sessions, the PPRA informed us that they are still investigating the registration of rental agents and will advise us in due course as to what process needs to be adopted going forward.”
VOASA Chairperson, John Lee, concludes,
“From an industry body and legislative perspective, questionable business practices in the timeshare industry must be addressed. Our role is to ensure the growth of a sustainable industry in which our members can build their businesses successfully and consumers can benefit from quality timeshare holidays”.