The Uniqueness of Timeshare The Uniqueness of Timeshare Resort OperationsResort Operations

COMPILED BY,Sunil kumar

Explain the major differences in the Explain the major differences in the way traditional resorts/hotels and way traditional resorts/hotels and

condominiums operate with condominiums operate with respect to the role of:respect to the role of:

Guest/Owner CharacteristicsGuest/Owner CharacteristicsMarketingMarketing

ReservationsReservationsThe Front OfficeThe Front OfficeHousekeepingHousekeeping

Maintenance and Engineering Maintenance and Engineering Accounting and FinanceAccounting and Finance

Guest/Owner CharacteristicsGuest/Owner Characteristics

The target market for timeshare ownership is the growing The target market for timeshare ownership is the growing masses of middle-aged baby boomers who want the masses of middle-aged baby boomers who want the advantages of owning a resort property without the advantages of owning a resort property without the headaches. headaches.

People purchase timeshares for one or more of four People purchase timeshares for one or more of four reasons:reasons:– Flexibility over when, where, and how they vacation.Flexibility over when, where, and how they vacation.– Economics—Owners report they save money over the Economics—Owners report they save money over the

long term. long term. – Certainty about the availability and quality of popular Certainty about the availability and quality of popular

resorts.resorts.– Safety and secure environments for family vacations.Safety and secure environments for family vacations.

Guest/Owner Characteristics Guest/Owner Characteristics (cont.)(cont.)

Owners give three reasons as to why they Owners give three reasons as to why they hesitated before buying.hesitated before buying.– financialfinancial– concern about using the timeshare enough to justify concern about using the timeshare enough to justify

the expense of the purchasethe expense of the purchase– the resort experience will not meet the expectations the resort experience will not meet the expectations

created during the sales presentationcreated during the sales presentation

Two areas of concern to owners are the actions Two areas of concern to owners are the actions of their homeowners’ association and their of their homeowners’ association and their annual maintenance fees. annual maintenance fees.

Guest/Owner Characteristics Guest/Owner Characteristics (cont.)(cont.)

In terms of activities, skiing, golf, sightseeing In terms of activities, skiing, golf, sightseeing and beach/waterfront activities are more and beach/waterfront activities are more important to timeshare owners while important to timeshare owners while entertainment, shopping and dining are entertainment, shopping and dining are more important to hotel guests. more important to hotel guests.

MarketingMarketing

Resorts offer timeshares in a variety of formats. Resorts offer timeshares in a variety of formats. Over 90 percent sell interval interests in Over 90 percent sell interval interests in increments of one week of use each year or as increments of one week of use each year or as points offerings. points offerings.

The standard type of ownership is the deeded The standard type of ownership is the deeded week, offered by almost 90 percent of resorts. week, offered by almost 90 percent of resorts.

Marketing (cont.)Marketing (cont.)

The way timeshares are marketed depends on the The way timeshares are marketed depends on the motivation of the potential investor/guest. motivation of the potential investor/guest. – Home from home occasionsHome from home occasions– Swapper occasionsSwapper occasions– Activity occasionsActivity occasions– Family holiday occasionsFamily holiday occasions

The most popular marketing programs for selling The most popular marketing programs for selling timeshare products are referrals in-house guests, timeshare products are referrals in-house guests, telemarketing and direct mail. telemarketing and direct mail.

Reservations and Front DeskReservations and Front Desk

Front office procedures at whole and interval ownership Front office procedures at whole and interval ownership resorts have much in common with those at traditional resorts have much in common with those at traditional resorts. resorts.

Reservations at a traditional resort might come in via a toll-Reservations at a traditional resort might come in via a toll-free number or direct calls from prospective guests while, free number or direct calls from prospective guests while, at interval ownership resorts, they can also come from an at interval ownership resorts, they can also come from an exchange company or a vacation club. exchange company or a vacation club.

Reservations and Front Desk Reservations and Front Desk (cont.)(cont.)

In a traditional resort, the number of rooms In a traditional resort, the number of rooms available for rent is determined by management available for rent is determined by management while, in a vacation ownership resort, the number while, in a vacation ownership resort, the number of units available is determined by the number of of units available is determined by the number of owners who want to rent or exchange their units.owners who want to rent or exchange their units.

The person reserving the unit may own a specific The person reserving the unit may own a specific unit, own the right to stay in an unspecified unit, be unit, own the right to stay in an unspecified unit, be the guest of an owner, or “just” be a regular tourist the guest of an owner, or “just” be a regular tourist looking to stay at a resort. looking to stay at a resort.

Reservations and Front DeskReservations and Front Desk

Employees who take reservations at vacation ownership Employees who take reservations at vacation ownership resorts have a much more complicated task than do their resorts have a much more complicated task than do their counterparts at traditional resorts, which feature few room counterparts at traditional resorts, which feature few room types. types.

Some resorts have separate check-in facilities for owners. Some resorts have separate check-in facilities for owners.

Work patterns at interval ownership resorts differ from Work patterns at interval ownership resorts differ from those at both whole ownership or traditional resorts. At the those at both whole ownership or traditional resorts. At the former, guests check in and out on turnover days. former, guests check in and out on turnover days.

HousekeepingHousekeeping

The principal differences are in:The principal differences are in:

Size and Location of Units:Size and Location of Units:– Most vacation ownership units have two bedrooms Most vacation ownership units have two bedrooms

and two full baths and can sleep up to six people. and two full baths and can sleep up to six people. – Public spaces in a vacation ownership resort can Public spaces in a vacation ownership resort can

include hospitality areas consisting of a check-in include hospitality areas consisting of a check-in desk, concierge desk, and cashier, game rooms, desk, concierge desk, and cashier, game rooms, restaurants, and stores. restaurants, and stores.

– The lobby must be able to accommodate large The lobby must be able to accommodate large numbers of people and luggage during weekly arrival numbers of people and luggage during weekly arrival and departure times. and departure times.

Housekeeping (cont.)Housekeeping (cont.)

Size and location of units:Size and location of units:– The outdoor landscape is important to creating an The outdoor landscape is important to creating an

ambience that enhances the overall experience of the ambience that enhances the overall experience of the guest. guest.

– While a standard room can be cleaned in 30 minutes, it While a standard room can be cleaned in 30 minutes, it may take up to 90 minutes to clean a condominium may take up to 90 minutes to clean a condominium unit. unit.

– The problem is not just the size but also the complexity The problem is not just the size but also the complexity of the cleaning task. of the cleaning task.

– While hotel rooms are located in an enclosed building, While hotel rooms are located in an enclosed building, condominium units in a resort may be spread over condominium units in a resort may be spread over several acres.several acres.

Housekeeping (cont.)Housekeeping (cont.)

Arrival and Departure PatternsArrival and Departure Patterns– In a traditional hotel, guests come and go during the In a traditional hotel, guests come and go during the

week. In a vacation ownership resort, most guests week. In a vacation ownership resort, most guests arrive and depart on the same day. All units in the arrive and depart on the same day. All units in the property have to be cleaned in a matter of hours. property have to be cleaned in a matter of hours.

Staffing Patterns Staffing Patterns – Many housekeepers are needed—but for only one Many housekeepers are needed—but for only one

day a week. day a week.

Owner RelationsOwner Relations– Some owners develop strong feelings toward the Some owners develop strong feelings toward the

person taking care of their unit and want assurance person taking care of their unit and want assurance that that individual will always handle their unit.that that individual will always handle their unit.

Maintenance and EngineeringMaintenance and Engineering

Because of the interest and involvement of owners, there is Because of the interest and involvement of owners, there is more pressure on the maintenance department of a more pressure on the maintenance department of a vacation ownership resort compared to a traditional vacation ownership resort compared to a traditional property.property.

Because units are not standardized, it is difficult to specify Because units are not standardized, it is difficult to specify the same bedding, seating arrangements, and decor for the same bedding, seating arrangements, and decor for each. each.

In ownership condominiums, the maintenance function is In ownership condominiums, the maintenance function is often run as a break-even proposition. often run as a break-even proposition.

A system has to be set up to ensure that all work is A system has to be set up to ensure that all work is properly billed. properly billed.

Accounting and FinanceAccounting and Finance

Seventy percent of all timeshares are financed internally Seventy percent of all timeshares are financed internally with down payments ranging anywhere from 10 to 30 with down payments ranging anywhere from 10 to 30 percent and the remainder financed with an interest rate percent and the remainder financed with an interest rate much higher than if financed through a bank. much higher than if financed through a bank.

Timeshares generate returns of more than 20 percent. Timeshares generate returns of more than 20 percent.

Developers not make money from timeshare sales they Developers not make money from timeshare sales they also generate revenue from interest they receive on five- to also generate revenue from interest they receive on five- to seven-year loans they make to timeshare buyers. seven-year loans they make to timeshare buyers.

Timeshare developments generate revenue after the Timeshare developments generate revenue after the development is complete through timeshare management.development is complete through timeshare management.

Accounting and Finance (cont.)Accounting and Finance (cont.)

On turnover day, all units have to be cleaned in a On turnover day, all units have to be cleaned in a matter of hours. matter of hours.

Interval and whole ownership resorts rarely Interval and whole ownership resorts rarely overbook. Advance deposits and full payment on overbook. Advance deposits and full payment on arrival are common.arrival are common.

Key control can be a problem at interval resorts. Key control can be a problem at interval resorts.

Large whole ownership resorts have a separate Large whole ownership resorts have a separate department dedicated to owner relations. department dedicated to owner relations.

Accounting and Finance (cont.)Accounting and Finance (cont.)

Ownership properties have different accounting Ownership properties have different accounting needs compared to traditional hotels. needs compared to traditional hotels.

The essence of condominium and timeshare The essence of condominium and timeshare management is about revenue sharing rather than management is about revenue sharing rather than merely adding up posted numbers. Owners merely adding up posted numbers. Owners expect to receive the correct amount of rental pool expect to receive the correct amount of rental pool income from their units on a monthly basis since income from their units on a monthly basis since they are paid based on a formula based on the they are paid based on a formula based on the percentage of their possession in the timeshare percentage of their possession in the timeshare agreement. agreement.

Accounting and Finance (cont.)Accounting and Finance (cont.)

While hotels keep two types of accounting records While hotels keep two types of accounting records – one for guests in the form of guest accounts or – one for guests in the form of guest accounts or folios – and one for business, condominium folios – and one for business, condominium resorts need three sets of records: resorts need three sets of records: – Guest (unit-renter) accounts for each guestGuest (unit-renter) accounts for each guest– Owner accounts are unique to resort Owner accounts are unique to resort

condominiumscondominiums– Owners association accounts are used to Owners association accounts are used to

prepare budgets and financial statements for prepare budgets and financial statements for the owners associationthe owners association

The End!The End!