Timeshare and Secondary Residences - International - March 2009
This report treats two main topics. The first part is devoted to the various forms of interval ownership and related holiday ownership structures, which include, in addition to timeshare, fractional interests, private residence clubs (PRCs), timeshare exchange companies, destination clubs and condo-hotels.
The second part covers the outright (freehold) ownership of secondary residences, including the branded residential developments of major hotel chains, such as Hilton, Marriott and Kempinski. Also included is a review of major holiday rental groups, such as Wyndham Worldwide’s Endless Vacation Rentals unit, Interhome and Resortquest.
The report’s scope is worldwide, but not comprehensive, as it focuses on major resort areas and source markets, most of which are to be found in the wealthy Organisation for Economic Co-operation and Development (OECD) countries.
The current macroeconomic environment is extremely unfavourable for the short-term growth prospects of virtually all forms of holiday ownership.
Demand is being sapped by falling incomes, rising unemployment and huge losses on investments in property and financial assets.
Timeshare purchases are often financed by the developer because bank borrowings would be too costly for the buyer.
The lack of available financing due to the credit crunch is an impediment to growth in the sector. In particular, the large timeshare developers could be deprived of funds for customer loans due to the difficulty of securitising receivables.
The UK buyer is particularly disadvantaged due to the sharp fall in the Pound, which has made key resort areas in Europe and the US prohibitively expensive.
The Spanish residential property market is in a free fall due to massive oversupply and the shrinking purchasing power of incoming buyers, the British in particular.
The Dubai residential property market is also experiencing a sharp correction due to massive oversupply and heavy speculative activity, particularly regarding new luxury developments. The fall in values may be as much as 70% – peak to trough.
However, the property market in southern Florida appears to be bottoming out.
Timeshare will not prove to be recession resistant from the point of view of developer sales of new contracts, which constitute about two thirds of interval ownership-related revenues for the major developers.
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