Vacation ownership and exchange industries grow in tandem with hospitality trends

The evolution of the timeshare industry since its 1974 inception is probably best characterized by its modern-day moniker: vacation ownership. Like the name, the profile of the typical timeshare owner has also become more cosmopolitan: According to the "U.S. Shared Vacation Ownership Consolidated Owners Report 2016," the 9.2 million American households that own one or more types of a shared vacation-ownership product—timeshare weeks, points, fractional and/or private residence club—are diverse. Three-fifths are Causasian, one-fifth are African-American and more than one in 10 are Asian-American, according to the report from the American Resort Development Association.

The incidence of ownership also increases with household income: 10.9 percent of those nearly 10 million U.S. households earn upwards of $100,000 annually. RCI’s recently released white paper, "Leisure Real Estate: Trends and Opportunities," found that as of 2015, there were well over half a million shared ownership units worldwide, with nearly 294,000 of them in North America.

Vacation Ownership Drives Higher Occupancy

The players have also become equally affluent with Disney, Four Seasons, Hilton, Marriott and Wyndham all offering vacation-ownership products. Timeshare product has become so prolific that exchange companies like RCI have emerged to allow owners to swap units within a greater resort system.

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To put the total size of the vacation ownership industry in perspective, RCI has more than 4,300 resorts across 110 countries in its system alone. For hotels and resorts with separate timeshare units, it’s a dual revenue stream and one that also follows many of the same trends as the hospitality industry. “Timeshare can complement any hospitality offering, with the optimum scenario being a mixed-use property with transient, timeshare and whole-ownership offerings, because it drives much higher occupancy rates since owners and exchange members are regular customers at the property who come on a predictable basis, eliminating some of the seasonality issue,” said RCI’s President Gordon Gurnik. “Timeshare owners also use the restaurant and spa facilities so it also help to drive revenue on that side.”

According to Gurnik, average occupancy is just above 80 percent at properties with a timeshare component as opposed to standalone hotels’ current average occupancy rate of about 65 percent. He cited Wyndham Bonnet Creek in Orlando as an example of a property that has had success with its model as a purpose-built hotel and timeshare resort as well as AMResorts, which began as a traditional resort brand and is now considered a high-growth affiliate after launching its vacation club less than five years ago.

Vacation Owners, Hotel Guests Have Shared Interests

Gurnik also added that AMResorts and similar resort companies in the Caribbean and Mexico with a dual resort-timeshare concept benefit from destination wedding business that timeshare owners will arrange through RCI, which then works with the resort’s hotel reservations to arrange room blocks for wedding guests. In select Latin American destinations as well as in Japan, local businesses buy into vacation-ownership programs that are then used by employees for business travel.

As with the growing demographics among timeshare owners, the trends fueling the industry’s growth—as well as membership in vacation exchange programs like RCI—reflect the movements that are also driving the hotel business. Like hotel guests, timeshare owners are demanding new destinations outside of traditional vacation-ownership markets like Las Vegas, Orlando and the Canary Islands. So emerging markets like Brazil have seen success with the vacation-ownership industry in the past decade, as have China and India, where the growing middle class is more actively traveling in their respective countries than they had in the past. These travelers are also traveling internationally more than they have in the past.

Gurnik also pointed out that Croatia, Turkey, Vietnam and South Korea are all growing timeshare markets. “If it’s a market that has strong domestic travel and international interest and it has lift that makes it relatively easy enough to get to, it’s a potential timeshare market.”

Searching for Unique Experiences

Timeshare owners are also turning increasingly to vacation exchange companies because they, too, are seeking more experiential travel—and the industry is delivering. Karisma Hotels & Resorts, part of the RCI affiliate network, offers a family-focused experience at Nickelodeon Hotels & Resorts Punta Cana in the Dominican Republic, and Grupo Vidanta, another RCI affiliate in Mexico, has partnered with Cirque du Soleil for trapeze lessons available exclusively to on-property guests.

At freestanding vacation-ownership properties, arrangements can be made for private concerts and private cooking classes. “The hotel industry talks a lot about personalization and people working for a hotel brand often see it as a conversation, but in timeshare, there’s a commitment that works both ways and always has,” Gurnik said.

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