In the recent years, timeshares have negative image to consumers. As a result, many holidaymakers avoid such vacationing option while a number of current owners try to get out of their timeshare contracts. But despite such setbacks, industry experts predict that the future of timeshare, fractional ownership and residences aligning with hotels is promising.
During the Meet the Money conference held in Los Angeles in early May, the buoyancy of mixed-use development dominated the discussion at a panel on timeshare. Panelists discussed the feasibility of financing and operating hotel properties that choose to convert some space into fractional ownership or into timeshares.
As Jamie Klein, president of The Lore Institute of Shared Ownership said, it’s a very healthy environment to monetize hotel rooms into fractional ownership at the high end, or into timeshare at the lower end. He added that from a hotel perspective, it’s an outstanding way to monetize your hotel rooms and it’s also a great way to take a whole-ownership project and use it as an exit strategy.
Mixed-use with timeshare can be a win-win situation if developers take advantage of the inherent strengths of the hotel.
According to Klein, if you have another expression of your hotel in an ownership form, your marketing is taken care of. You’re not taking business away from your hotel, you’re just adding to it.
However, financing development remains a hurdle in the timeshare space despite the optimism of some lenders and it’s not just because of the common lack-of-liquidity problems. Mixed-use timeshare developers have another hurdle to overcome, that is, education. The minute you start introducing some other form of shared ownership, lenders just don’t get it right away. They don’t understand the timeshare or shared-ownership model. There has to be a lot of education at the lender level, before you introduce shared ownership as a new way of vacation option.