Timeshare, Private Residence Clubs or Fractionals…which is right for you?

Shared ownership is more flexible, innovative and affordable than it has ever been.

With important consumer protection measures being implemented this year – the new EU Timeshare Directive comes into force in the UK on 23 February 2011 – there’s never been a better time to buy than now.

There’s no doubt the vacation lifestyle products marketed by big brand hoteliers such as Hilton, Disney, Marriott, Sol Melia, Four Seasons and other resort developers are more sophisticated than ever but with more choices come more decisions. Which type of timeshare should you choose, and how do the options differ from one another?

Researching what’s on offer requires a bit of homework but choose a product that feels right and suits your lifestyle and you’ll be able to reap the rewards of your home(s)-from-home in the year to come

Both timeshares and fractional properties run the gamut from family-friendly properties for a beach-and-pool holiday, to exclusive getaways where the peace, quiet, privacy and location are priceless – and the locations and types of accommodation are as varied as the price tags.

Three main pointers to bear in mind before buying are to make sure:

* You buy from a reliable developer, hotelier or resort operator
* You buy a product that fits properly with your lifestyle (and your family and friends’ lifestyles, if they’ll be using it – what is it like off-season, how easy is it to get there?)
* You understand exactly what you’re buying and scan the fine print (with legal help if need be)
* Broadly speaking, shared ownership covers fractional ownership, private residence clubs (PRCs), condo hotels (an American concept less well known in Europe), destination clubs and traditional timeshare/vacation clubs.

To strip things down to basics, one of the main distinguishing features between products is that there are two main types of shared ownership products: those where you own your share of the actual asset/property (as is usually the case with fractionals) and those where you are buying time (i.e. as points or weeks) to spend at the property (as with timeshare and vacation clubs) but not buying the property itself.


Swiss company Hapimag came up with the timeshare idea in the 1960s and it wasn’t long before it took off, particularly in sunny destinations (or ski resorts in the USA). Spain, the Canary Islands and France are still firm timeshare favourites. Within timeshare, there are variables, such as:

Fixed Weeks – The most basic form of timeshare is fixed weeks. You buy a week or two at a resort and return year after year, knowing that your apartment will be available for you on those exact dates.

Floating Weeks – More flexible than fixed weeks, you can choose weeks within seasons and also get more flexibility when it comes to unit size.
Exchanges – With the rise of exchange companies such as RCI and Interval International, consumers’ holiday horizons have expanded beyond recognition. Owners can swap their week(s) in Spain, for example, for the equivalent week(s) somewhere else, say India or South Africa.

Points-based timeshare – Timeshare went a step further when points systems were introduced. You buy points, instead of weeks, giving you ultimate flexibility. You can bank points for future holidays, take short breaks in between proper holidays, splurge on more spacious accommodation, get extra value from your points by taking off-season breaks, and so on.

Private Residence Clubs

PRCs belong to the exclusive, high end of the shared ownership experience and come under the fractional framework. As a rule PRCs have fewer properties but they’re grander, in “millionaire lifestyle” locations.

They tend to be patterned after city or country clubs, combining the advantages of owning property with a full complement of on-site luxury amenities and services.

Owners can return to the same private property year after year if they want to, or holiday at different residences in other parts of the world. Homes are staffed and serviced to five star standards and owned by members with shares usually divided between four to twelve owners per residence (entitling them to stay for around 12 weeks to about 4 weeks per year). Owner members may hold a title deed so that if there is a rise in real estate values they stand to benefit.

While ski, golf and beach lifestyle properties have dominated, this year there is a noticeable trend towards urban fractionals. London’s 47 Park Street in Mayfair (part of the Marriott Group) or the Hideaways Club’s brand new City Collection, a portfolio of luxury apartments in city centres, are two high profile examples.

Ritz-Carlton, Marriott, Four Seasons and St. Regis are some of the big names in the hotel industry that manage PRCs and an excellent example of how fabulous the PRC lifestyle can be, is Four Seasons’ Aviara Resort in San Diego.


Destination Clubs

At first glance destination clubs resemble private residence clubs but destination clubs often have much larger resort portfolios and a wider choice of destinations and there is no equity interest involved.

Members pay upfront to join the club, and also pay a yearly maintenance fee and sometimes a nightly fee for staying in the accommodation. Destination Clubs are like staying at a holiday resort but have a much more private feel and fuller concierge services.

A member of a destination club has no legal ownership in the club and would usually receive a refund of around 80% – 100% of the original deposit paid upon joining, when they resign from the club.

Fractional Ownership

Aside from timeshare, the newcomer to the shared ownership world is fractional property. “Fractionals” cover everything from fractional property at home and abroad, to super car clubs or even part ownership of a French vineyard, for example, and it’s important to remember that their terms and conditions will all differ.

When you buy a fractional holiday home, instead of owning the entire freehold property what you own is the fraction you purchased, sharing the property with the other owners (usually on a rotating calendar system). And if you decide to sell and the property’s value has risen on the open market you may even make a profit.

Like timeshare you’ll probably be paying an annual maintenance fee which means you will never have to worry about expensive repairs while you’re away, or hiring staff to look after your property as if you’ve bought within a resort, the onsite management team will take care of things.

At the end of the day the unique selling point of fractional property is the “equity factor” – you’re not just paying for the time you’ll be spending by the pool at your beautiful Algarve home-from-home, you’re buying into the bricks and mortar, your own slice of the property for you, your friends and family to use exclusively while you’re on holiday. It’s like owning an overseas property without the expense of buying a whole holiday home with the financial headaches that sometimes come with that. And it’s yours when you need it, not when you don’t.

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