Mixed-Use Development With Timeshares

Hospitality industry experts are saying that the concept of fractional ownership, timeshares and residences joining forces with hotels is a promising idea. At panel on timeshare at the Meet the Money conference in Los Angeles in May, panelists discussed the possibility of hotel properties converting space into fractional ownership or timeshare properties.

Mixed-use of hotels and timeshares can be a double win if the developers take advantage of hotel strengths. Maximizing the marketing overlap is what’s most important. Over-aggressive growth within the mixed-use spaces can be risky. Converting high end space into fractional ownership rather than timeshares is generally more successful. It is also important to reduce the amount of conversion and even try to go for as much as double the space through fractional ownerships, control is key. Existing infrastructure can make thing complicated,  you have to make sure kitchen and plumbing wiring is allowed and zoning regulations must permit two and three bedroom spaces.

CEO of Vacation Finance, Bob Waun, said, “We think there’s great opportunity in the resort sector, condo-hotels, fractional ownership and timeshare”. The only foreseeable problem with mixed-use and timeshares comes with the lenders. They often do not understand the timeshare model and they need to be educated about mixed-use and timeshares before shared ownership is introduced to them.

Do Timeshare Maintenance Fees Ever Decrease?

During timeshare presentations, the audience is often shown a chart or some organized way of portraying timeshare costs as being less than comparable luxury hotel accommodations over time.  At least in the past, these comparisons included escalation in hotel costs due to inflation.  But was the consistent rise in maintenance fees ever discussed?  Probably not.  But many timeshare owners have experienced increases in their maintenance fees.

Regardless of the presentation style or exact numbers, the case is made for a timeshare to save money over a period of time if a timeshare owner can consistently go on vacation annually to their timeshare.  This way the new timeshare owner can justify spending the money now in order to save later.

However, one assumption is made in the cost analysis — the price of hotel rooms does not go DOWN.  But during this recession, we know that hotels have lowered costs, sometimes drastically in order to bring in guests. This begs the question, “Do timeshare maintenance fees ever decrease?”  I cannot recall a timeshare owner ever getting a smaller annual maintenance fee bill year-to-future-year.  This would certainly change the cost comparisons between hotels and timeshares.

Just a couple questions to ask your timeshare sales person the next time you find yourself in a timeshare presentation.