Timeshare and Fractional Ownership Spotlight: A Slice of Paradise

What makes a good idea great? Some are sparked by necessity, others take off when the time is right, and the best ideas in the holiday industry are based on meeting – preferably exceeding – the needs of the consumer.

Not so long ago we all lived and breathed “a place in the sun.” We were busy buying villas in Vilamoura, doing up farmhouses in the Dordogne, transforming derelict barns in scenic locations into rustic-chic holiday homes. But grey economic clouds started hovering overhead and turned a threatening shade of charcoal. Suddenly, the idea of pouring money into “grand designs” or saddling oneself with a second home mortgage for a place likely to lie empty (pelted by French winter rain) felt a bit burdensome.

Fast-forward to 2010. As the sun breaks through those clouds, property bargains abound and a taste of the good life beckons in emerging, untapped destinations. And in Europe, an American holiday concept over 30 years old is coming of age: timeshare and its younger relative fractional ownership – both immensely popular in the US and ingrained in the American lifestyle – are enjoying a renaissance this side of the pond.

No longer the domain of the blue-haired Florida set, it’s baby boomers and young families who are the new timeshare lifestyle adopters, attracted by the win-win formula of choice, luxury and value for money. Fractional property ownership (when more than one buyer invests in the same property, with each investor benefitting from any capital gains from their share) was big news last year, all over the property pages of the UK national press. Some experts, including lawyers, predict that within five to ten years fractional sales will easily outperform traditional holiday home sales. Help yourself to a slice of the fractional pie and treat yourself to a piece of a holiday villa, yacht, super car, racehorse, a private jet or a vineyard – they’re all on the world’s leading web portal dedicated to fractional living, Fractional Life www.fractionallife.com.

As consumer peace of mind is paramount, the timeshare and fractional ownership industries are backed by two main official bodies: the RDO (Resort Development Organisation www.rdo.org) and its fractional arm, FSOTA (the Fractional and Shared Ownership Trade Association www.fsota.org). Both ensure that consumers can invest in timeshare or fractional properties with confidence and both promote fair trading and publicise the benefits of timeshare and fractionals.

Richard McIntosh, Chairman of RDO, believes the conditions for choosing a purchase of Fractional, Vacation Club or Timeshare products have probably never been more appropriate than now. “We have just experienced hopefully the toughest financial crisis of our lifetime, and during that time it has become clear that holidays are not something we are willing to give up or compromise on. Owners of our products have been able to continue holidaying, with little financial impact, as they reap the benefits of having already purchased their holidays in better times.”


Facts


Timeshare

* There are 1.5 million timeshare owners in Britain, 6.7 million worldwide.
* The industry generates revenues of over over $9.4bn per annum.
* Timeshare members own weeks or points (points act as a holiday currency, used towards booking time at resorts, the value of which depends on the type of resort, size of accommodation, time of year, etc.)
* There are over 5,700 resorts to choose from, in over 90 countries available through RDO member companies.


Fractional Ownership

* Ownership starts from around £25,000, with the average in Europe between £100,000 to £200,000.
* Fractional ownership isn’t limited to real estate, there are fractional programmes for yachts, jets, helicopters, luxury cars, vineyards, and more.

Before buying, it’s worth checking the track record of the developer, reviewing the quality of the resort first-hand, ensuring you understand the legal structure, your liabilities and management fees, understand the booking system especially during peak periods, know whether the resort is affiliated to an exchange company, make sure you have a cooling off period in writing, finding out what additional services the fractional ownership covers – e.g. golf green fees, car rental, airport pick-up, etc.


Timeshare v. Fractional Ownership – what’s the difference?

Timeshare: Timeshare is exactly what the name suggests. The concept started in the 1960s but the old notion of two weeks in Spain, again and again, is virtually exctinct. As it becomes more and more sophisticated, pioneering quality and choice of destinations, these days members have a dizzying array of vacations and locations to choose, from ski trips to safaris, from California to Corfu. You buy weeks and the freedom to holiday around the world, all year round. The concept has come into its own in recent years, boosted by the number of benefits it offers. Combine value for money holidays (for many years to come) with luxurious and spacious accommodation at attractive well serviced resorts and what started as a holiday product becomes a long-term lifestyle.

A year in the life of a timeshare owner would go something like this: New Year’s Eve in Aspen…The Red Sea Riviera in March….Sicily for the summer….watching the leaves turn colour in Gleneagles. In other words, the world is their oyster; they may not own it, but they feel as if they do.

Fractional Ownership: Bricks and mortar fans will probably veer more towards fractional ownership. You pay a fraction of the entire property price – a quarter, or an eighth, for example – and the beauty of fractionals is that you actually own your share of the title deeds (in most cases). Plus you only use your home when you need to. Survey upon survey reports that most of us don’t get away often enough to make full use of our place in the sun. As Richard McIntosh sums up, “Today our customers are savvy, smart individuals who see the value in owning the time they can use, and not wasting money on having a property sitting empty when they are not there.”

Let’s say you buy a 25% fractional share of an Algarve villa. You’d be able to use it (usually seasonally, on a rotating basis) for around 12 weeks a year and if that’s too many weeks you could also gain rental income by letting it out via. the management company. Owners get the benefit of any capital gains if they choose to sell their share, and get to enjoy a far more luxurious property in a sought-after location than if they’d had to fork out for an entire building. The Brits, always on the lookout for new ways to get more sunshine into their lives have have been the first to catch fractional fever – 44% of all European fractional property owners are UK residents.

The industry has ironed out a few creases that initially slowed down its take-off, namely mortgage financing and the fact that regulations vary country to country. Both issues now resolved, fractional ownership is proving a smart way to buy, with early adopters ahead of the game already enjoying their palazzo in Italy, their Provençal gite or Mayfair penthouse during the year. Glamorous, eco and economical, the fractional lifestyle also solves the holiday property saturation problem – too many residences are left unused for large chunks of the year in those “a place in the sun” destinations. As a fractional owner, your medieval townhouse in Tuscany won’t lie dormant all winter – it’s yours when you need it, someone else’s when you don’t. That’s living la dolce vita, all year round.

For more information, visit:

www.rdo.org

www.fsota.org

www.fractionallife.com

Article by Fiona Klonarides

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