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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.

Key findings

  • 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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Table of contents

  1. Introduction

      • Key findings
        • Definitions
          • Abbreviations
          • Data Sources

              • Timeshare and related holiday ownership structures
                • Consultants
                  • Trade and consumer associations
                    • Secondary residences worldwide
                      • Official statistics and trade associations
                        • Consultants, brokers and financial services
                        • Timeshare and Related Holiday Ownership Structures

                            • Figure 1: A summary of the various types of holiday ownership products, 2008
                          • Timeshare
                            • Ownership structures
                              • Deeded property ownership (freehold or fee simple)
                                • Right-to-use ownership
                                  • Product variants
                                    • Fixed week
                                      • Floating week
                                        • Points clubs
                                          • Biennial ownership
                                            • Timeshare product features
                                              • Banked usage
                                                • Lock off or lockout
                                                  • Maintenance fees
                                                    • Owners’ associations
                                                      • Timeshare in competition with hotels, homeownership and holiday rentals
                                                        • Advantages over property ownership
                                                          • Holiday rentals – the most direct competition
                                                            • Changing demographics and lifestyles encourage timeshare
                                                              • Global product recognition
                                                                • Highest among the affluent
                                                                  • Growth in US
                                                                    • Europeans’ attitude to timeshare
                                                                      • Figure 2: Surveyed consumers* by geographical region expressing an interest in acquiring a given type of holiday lodging product, 2006
                                                                      • Figure 3: Surveyed consumers* by European country expressing an interest in acquiring a given type of holiday lodging product, 2006
                                                                    • Fractional interests
                                                                      • Property comparison with timeshare
                                                                        • Cost and financing comparison with timeshare
                                                                            • Figure 4: NextStar Funding offers for financing timeshare and fractional purchases above a 70% loan-to value ratio, 18 January 2009
                                                                          • Services
                                                                            • Use and exchanges
                                                                              • Sales process
                                                                                • Location ever more important
                                                                                  • Supply and diversity of product increasing
                                                                                    • Developers like fractionals
                                                                                      • Resale price appreciation
                                                                                        • Recent industry performance
                                                                                          • Figure 5: Breakdown of fractional interest sales, 2006-07
                                                                                        • Private Residence Clubs
                                                                                          • Price is not a governing factor
                                                                                            • Buyers are wealthy ‘empty-nesters’
                                                                                              • Usage plan is vital
                                                                                                • Location and social ambience
                                                                                                  • The service of a luxury hotel
                                                                                                    • As a property investment
                                                                                                      • Timeshare exchange companies
                                                                                                        • How they work
                                                                                                          • Bonus weeks
                                                                                                            • Resort affiliation and exchange membership
                                                                                                              • RCI
                                                                                                                • The Registry Collection
                                                                                                                  • Disney affiliated to RCI
                                                                                                                    • Other activities
                                                                                                                      • Interval Leisure Group
                                                                                                                        • UK Resort Exchange
                                                                                                                            • Figure 6: UKRE exchange bands, 2009
                                                                                                                          • Dial An Exchange
                                                                                                                            • Points clubs
                                                                                                                              • Destination clubs
                                                                                                                                • Barriers to entry are high
                                                                                                                                  • Tanner & Haley bankruptcy
                                                                                                                                    • Taken over by Ultimate Resort
                                                                                                                                      • Equity destination clubs
                                                                                                                                        • Profit and non-profit structures
                                                                                                                                          • Figure 7: Destination clubs compared (ranked in order of average home value), 8 January 2009
                                                                                                                                        • Transparency
                                                                                                                                          • Destinations clubs compared to PRCs
                                                                                                                                            • Destinations clubs compared to freehold purchase
                                                                                                                                              • Cost and equity
                                                                                                                                                • Financing
                                                                                                                                                  • Maintenance and repairs
                                                                                                                                                    • Service
                                                                                                                                                      • Figure 8: List of services provided by destination clubs, 2008
                                                                                                                                                    • Personalisation
                                                                                                                                                      • Multiple locations
                                                                                                                                                        • Availability
                                                                                                                                                          • Guilt and obligation
                                                                                                                                                            • Rental income
                                                                                                                                                              • An investment in lifestyle?
                                                                                                                                                                • Figure 9: A comparison of minimum reservation requirements at selected destination clubs, 2008
                                                                                                                                                              • Exclusive Resorts
                                                                                                                                                                • Figure 10: Exclusive Resorts membership plans, 2008
                                                                                                                                                              • Quintess, The Leading Residences of the World
                                                                                                                                                                • An equity injection
                                                                                                                                                                  • Condo-hotels
                                                                                                                                                                    • Condo-hotels versus traditional condominium apartments
                                                                                                                                                                      • Business model called into question
                                                                                                                                                                        • Disappointed investors
                                                                                                                                                                          • Pipeline has shrunk by 30%
                                                                                                                                                                            • Wrong locations
                                                                                                                                                                              • Conversion to conventional hotels
                                                                                                                                                                                • Timeshare buyer profiles
                                                                                                                                                                                  • Asia-Pacific
                                                                                                                                                                                    • Australia
                                                                                                                                                                                      • Accor Vacation Club
                                                                                                                                                                                        • Thailand
                                                                                                                                                                                          • China
                                                                                                                                                                                            • India
                                                                                                                                                                                              • Central and South America
                                                                                                                                                                                                • Belize and Panama
                                                                                                                                                                                                  • Caribbean impact by reduced air service
                                                                                                                                                                                                    • Costa Rica
                                                                                                                                                                                                      • Mexico – a hot market
                                                                                                                                                                                                        • Europe
                                                                                                                                                                                                          • Spain
                                                                                                                                                                                                            • Anfi Group
                                                                                                                                                                                                              • Anfi Tauro Golf & Luxury Resorts
                                                                                                                                                                                                                • UK and Ireland
                                                                                                                                                                                                                  • Figure 11: Timeshare capacity in the UK and Ireland, May 2008
                                                                                                                                                                                                                • Butlins
                                                                                                                                                                                                                  • De Vere
                                                                                                                                                                                                                    • Macdonald’s Options Vacation Club
                                                                                                                                                                                                                      • Middle East
                                                                                                                                                                                                                        • Dubai
                                                                                                                                                                                                                          • US
                                                                                                                                                                                                                            • Figure 12: US timeshare owners by income bracket, 2008
                                                                                                                                                                                                                            • Figure 13: Features that draw timeshare buyers to specific locations, 2006
                                                                                                                                                                                                                            • Figure 14: Use of timeshare in the US, 2008
                                                                                                                                                                                                                          • Timeshare capacity and sales still growing
                                                                                                                                                                                                                            • Distribution and capacity
                                                                                                                                                                                                                              • Principal timeshare resort locations
                                                                                                                                                                                                                                • Figure 15: Main destination states for timeshare resortsand sales in the US, 2007
                                                                                                                                                                                                                              • Hawaii could get more
                                                                                                                                                                                                                                • California weak
                                                                                                                                                                                                                                  • Orlando and Vegas
                                                                                                                                                                                                                                    • Marriott in Florida
                                                                                                                                                                                                                                      • Type of attraction
                                                                                                                                                                                                                                        • Figure 16: Breakdown of US resorts by type, 2007
                                                                                                                                                                                                                                      • Product characteristics
                                                                                                                                                                                                                                        • Urban timeshare and branded residences
                                                                                                                                                                                                                                          • Hilton’s New York showcase
                                                                                                                                                                                                                                            • The major US players
                                                                                                                                                                                                                                              • Figure 17: The major US timeshare groups, 2007
                                                                                                                                                                                                                                            • Wyndham Vacation Ownership
                                                                                                                                                                                                                                              • Wyndham Vacation Resorts
                                                                                                                                                                                                                                                • Wyndham Vacation Resorts properties
                                                                                                                                                                                                                                                  • Maintenance fees
                                                                                                                                                                                                                                                    • Sales and marketing
                                                                                                                                                                                                                                                      • WorldMark by Wyndham
                                                                                                                                                                                                                                                        • Purchaser financing
                                                                                                                                                                                                                                                          • Sub-prime lending?
                                                                                                                                                                                                                                                            • Wyndham’s timeshare cost structure
                                                                                                                                                                                                                                                              • Revenue recognition
                                                                                                                                                                                                                                                                • Wyndham’s timeshare revenue breakdown
                                                                                                                                                                                                                                                                  • Figure 18: Wyndham Vacation Ownership business model, 2008
                                                                                                                                                                                                                                                                • A drop in net revenues is expected for 2008
                                                                                                                                                                                                                                                                  • Nine-month net revenue and EBITDA declined
                                                                                                                                                                                                                                                                    • Gross sales and tours up for the nine-month period
                                                                                                                                                                                                                                                                      • Increased tour flow and higher prices
                                                                                                                                                                                                                                                                        • Bad debts on the rise
                                                                                                                                                                                                                                                                          • Deferred revenue increase
                                                                                                                                                                                                                                                                            • Restructuring to meet the crisis
                                                                                                                                                                                                                                                                              • Securitisation programme
                                                                                                                                                                                                                                                                                • Marriott
                                                                                                                                                                                                                                                                                  • Marriott Vacation Club International
                                                                                                                                                                                                                                                                                    • New resorts at Marco Island & Newport California
                                                                                                                                                                                                                                                                                      • Newport
                                                                                                                                                                                                                                                                                        • Ritz-Carlton Club
                                                                                                                                                                                                                                                                                          • Figure 19: The Ritz-Carlton residences, 2008
                                                                                                                                                                                                                                                                                        • Kapalua Bay
                                                                                                                                                                                                                                                                                          • Marketing
                                                                                                                                                                                                                                                                                            • Figure 20: Marketing channels for Ritz Carlton fractionals and residences, 2007
                                                                                                                                                                                                                                                                                          • Grand Residences by Marriott
                                                                                                                                                                                                                                                                                            • Horizons by Marriott Vacation Club
                                                                                                                                                                                                                                                                                              • Current operations and performance
                                                                                                                                                                                                                                                                                                • Weaker timeshare sales in 2008
                                                                                                                                                                                                                                                                                                  • Loans and inventory up
                                                                                                                                                                                                                                                                                                    • Figure 21: Value of Marriott’s timeshare fractional and residence inventory, at 31 December 2007
                                                                                                                                                                                                                                                                                                  • Site purchases continue
                                                                                                                                                                                                                                                                                                    • Securitisation could be hit by the credit crunch
                                                                                                                                                                                                                                                                                                      • Outlook
                                                                                                                                                                                                                                                                                                        • Starwood Vacation Club
                                                                                                                                                                                                                                                                                                          • Figure 22: Timeshare and fractional sales breakdown and customer profile by Starwood brand, September 2008
                                                                                                                                                                                                                                                                                                          • Figure 23: Timeshare Resorts by Starwood brand and status, September 2008
                                                                                                                                                                                                                                                                                                        • Hilton Grand Vacation Club
                                                                                                                                                                                                                                                                                                          • Disney Vacation Club
                                                                                                                                                                                                                                                                                                            • Disney seeks to attract weekend stays
                                                                                                                                                                                                                                                                                                              • Diamond Resorts International
                                                                                                                                                                                                                                                                                                                • European hotel chains developing timeshare
                                                                                                                                                                                                                                                                                                                  • IHG to develop timeshare with son of Holiday Inn founder
                                                                                                                                                                                                                                                                                                                    • Expansion plans
                                                                                                                                                                                                                                                                                                                      • Sol Meliá Vacation Club
                                                                                                                                                                                                                                                                                                                      • Secondary Residences Worldwide

                                                                                                                                                                                                                                                                                                                          • The trend in property prices
                                                                                                                                                                                                                                                                                                                            • Boom heading toward bust?
                                                                                                                                                                                                                                                                                                                              • Figure 24: Change in average house prices by country (ranked in order of Q3/2008 y-o-y change)
                                                                                                                                                                                                                                                                                                                            • Russia and Eastern Europe have been strong
                                                                                                                                                                                                                                                                                                                              • Weakness in the Anglophone markets
                                                                                                                                                                                                                                                                                                                                • No ‘decoupling’
                                                                                                                                                                                                                                                                                                                                  • Major ‘buyer’ markets
                                                                                                                                                                                                                                                                                                                                    • Canada
                                                                                                                                                                                                                                                                                                                                      • Figure 25: Household spending on owned holiday homes, 2000-07
                                                                                                                                                                                                                                                                                                                                    • Ireland
                                                                                                                                                                                                                                                                                                                                      • Figure 26: Second-hand* Irish house prices (nationally), 1998-2008
                                                                                                                                                                                                                                                                                                                                      • Figure 27: Domestic trips and overnights to own holiday home, 2003-08
                                                                                                                                                                                                                                                                                                                                      • Figure 28: Outbound trips and overnights to own holiday home, 2003-08
                                                                                                                                                                                                                                                                                                                                    • UK
                                                                                                                                                                                                                                                                                                                                      • Figure 29: Country location of UK overseas second homes, 2007
                                                                                                                                                                                                                                                                                                                                    • Spain losing share
                                                                                                                                                                                                                                                                                                                                      • Figure 30: Enquiries for property financing received by Conti Financial, y-t-d end September 2008 vs 2007
                                                                                                                                                                                                                                                                                                                                    • Cape Verde – the new Canaries?
                                                                                                                                                                                                                                                                                                                                      • Germany – a coming market
                                                                                                                                                                                                                                                                                                                                        • US – taking advantage of the property crash
                                                                                                                                                                                                                                                                                                                                          • France – less affected by the crisis
                                                                                                                                                                                                                                                                                                                                            • Turkey – free from Euro prices with excellent property value
                                                                                                                                                                                                                                                                                                                                              • Use of borrowing has increased greatly
                                                                                                                                                                                                                                                                                                                                                • Buyer motivation
                                                                                                                                                                                                                                                                                                                                                  • ‘Fly-to- let’
                                                                                                                                                                                                                                                                                                                                                    • Reductions in LCC service threatens property values
                                                                                                                                                                                                                                                                                                                                                      • Climate change not an issue
                                                                                                                                                                                                                                                                                                                                                        • US
                                                                                                                                                                                                                                                                                                                                                          • A slowdown due to economic uncertainty
                                                                                                                                                                                                                                                                                                                                                            • Buyer profile
                                                                                                                                                                                                                                                                                                                                                              • Median price dropping
                                                                                                                                                                                                                                                                                                                                                                • More condos purchased
                                                                                                                                                                                                                                                                                                                                                                  • South is favoured
                                                                                                                                                                                                                                                                                                                                                                    • Foreign buyers
                                                                                                                                                                                                                                                                                                                                                                      • Foreigners pay more than average
                                                                                                                                                                                                                                                                                                                                                                        • Foreigners more likely to pay cash
                                                                                                                                                                                                                                                                                                                                                                          • Foreign buyer motivation
                                                                                                                                                                                                                                                                                                                                                                            • Outlook for foreign buyers
                                                                                                                                                                                                                                                                                                                                                                              • Major inbound destination regions/countries
                                                                                                                                                                                                                                                                                                                                                                                • Alpine region
                                                                                                                                                                                                                                                                                                                                                                                  • Overcoming seasonality
                                                                                                                                                                                                                                                                                                                                                                                    • Figure 31: Examples of property asking prices in alpine resorts, 2007
                                                                                                                                                                                                                                                                                                                                                                                  • Austria
                                                                                                                                                                                                                                                                                                                                                                                    • France
                                                                                                                                                                                                                                                                                                                                                                                      • Switzerland
                                                                                                                                                                                                                                                                                                                                                                                        • ‘Lits chauds’ versus ‘lits froids’
                                                                                                                                                                                                                                                                                                                                                                                          • Local government restrictions
                                                                                                                                                                                                                                                                                                                                                                                            • A premium for central locations
                                                                                                                                                                                                                                                                                                                                                                                              • Brazil
                                                                                                                                                                                                                                                                                                                                                                                                • Development concentrated in the north east
                                                                                                                                                                                                                                                                                                                                                                                                  • Big-time developers eyeing the market
                                                                                                                                                                                                                                                                                                                                                                                                    • Land is overpriced
                                                                                                                                                                                                                                                                                                                                                                                                      • Houses still relatively cheap by international comparison
                                                                                                                                                                                                                                                                                                                                                                                                        • Demand for second homes
                                                                                                                                                                                                                                                                                                                                                                                                          • Figure 32: International demand for Brazilian luxury second homes, 2008
                                                                                                                                                                                                                                                                                                                                                                                                        • Outlook for supply and demand
                                                                                                                                                                                                                                                                                                                                                                                                            • Figure 33: Forecast of new residential units to be built in tourism property developments in north-east Brazil, 2008-14
                                                                                                                                                                                                                                                                                                                                                                                                          • Bulgaria
                                                                                                                                                                                                                                                                                                                                                                                                            • Rampant supply growth
                                                                                                                                                                                                                                                                                                                                                                                                              • Hotel conversions
                                                                                                                                                                                                                                                                                                                                                                                                                • Russians replacing British and Irish
                                                                                                                                                                                                                                                                                                                                                                                                                  • Croatia
                                                                                                                                                                                                                                                                                                                                                                                                                    • Prices almost doubled in ten years
                                                                                                                                                                                                                                                                                                                                                                                                                      • Clouds on the horizon
                                                                                                                                                                                                                                                                                                                                                                                                                        • Wide regional price differentials
                                                                                                                                                                                                                                                                                                                                                                                                                          • Favourable legislation on the way
                                                                                                                                                                                                                                                                                                                                                                                                                            • Cyprus
                                                                                                                                                                                                                                                                                                                                                                                                                              • Russians well established
                                                                                                                                                                                                                                                                                                                                                                                                                                • Suppy and demand in balance?
                                                                                                                                                                                                                                                                                                                                                                                                                                  • Figure 34: Luxury residential property values, 2007
                                                                                                                                                                                                                                                                                                                                                                                                                                • Uncertain outlook
                                                                                                                                                                                                                                                                                                                                                                                                                                  • Dubai – is the boom is finally over?
                                                                                                                                                                                                                                                                                                                                                                                                                                    • Burj speculation has come back down to earth
                                                                                                                                                                                                                                                                                                                                                                                                                                      • Broader market also weak
                                                                                                                                                                                                                                                                                                                                                                                                                                        • Bank lending reduced
                                                                                                                                                                                                                                                                                                                                                                                                                                          • Further evidence of weakness
                                                                                                                                                                                                                                                                                                                                                                                                                                            • How low can prices go?
                                                                                                                                                                                                                                                                                                                                                                                                                                              • A 70% drop peak to trough?
                                                                                                                                                                                                                                                                                                                                                                                                                                                • Why a 30% floor?
                                                                                                                                                                                                                                                                                                                                                                                                                                                  • Speculators need to liquidate before taking possession
                                                                                                                                                                                                                                                                                                                                                                                                                                                    • Egypt – an emerging destination?
                                                                                                                                                                                                                                                                                                                                                                                                                                                      • A friendly fiscal environment
                                                                                                                                                                                                                                                                                                                                                                                                                                                        • Cheap prices
                                                                                                                                                                                                                                                                                                                                                                                                                                                          • Security a potential worry
                                                                                                                                                                                                                                                                                                                                                                                                                                                            • The Red Sea Riviera
                                                                                                                                                                                                                                                                                                                                                                                                                                                              • The first ‘quality’ developments
                                                                                                                                                                                                                                                                                                                                                                                                                                                                • New upscale resorts
                                                                                                                                                                                                                                                                                                                                                                                                                                                                  • Over 3,000 UK owners
                                                                                                                                                                                                                                                                                                                                                                                                                                                                    • Ancient Sands
                                                                                                                                                                                                                                                                                                                                                                                                                                                                      • Florida – the market could be bottoming out
                                                                                                                                                                                                                                                                                                                                                                                                                                                                        • Sales volumes up year on year
                                                                                                                                                                                                                                                                                                                                                                                                                                                                          • Florida has already had a severe correction
                                                                                                                                                                                                                                                                                                                                                                                                                                                                            • Correlation between price declines and a pickup in sales volume
                                                                                                                                                                                                                                                                                                                                                                                                                                                                              • Volume up in Miami, but prices sharply down
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                • Figure 35: Florida Sales Report, single-family, existing homes, October 2008
                                                                                                                                                                                                                                                                                                                                                                                                                                                                              • Fewer buyers attracted to foreclosed homes
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                • South Florida particularly hard hit
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  • France
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    • Less affected than some markets
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      • Figure 36: Trend in French property prices*, 1995-2008
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    • British retreating
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      • Transaction volume down 20%
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        • Housing starts down 13%
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          • Price trends by region
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            • Figure 37: Trend in French house prices by region, 2006-08
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          • Sombre outlook
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            • Three straight years of decline
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              • Scenario 1
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                • Figure 38: Scenario 1, 2008-12
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              • Scenario 2 – the FNAIM’s central hypothesis
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                • Figure 39: Scenario 2, 2008-12
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              • Scenario 3 – a pessimistic outcome
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                • Figure 40: Scenario 4, 2008-12
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              • Scenario 4 – an optimistic outcome
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                • Figure 41: Scenario 4, 2008-12
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              • Fall in transaction volumes predicted
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                • Punta del Este
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  • Argentinians are the main market
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    • New projects
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      • Acqua
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        • A major renovation project
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          • Jose Ignacio
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            • Rocky Mountains
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              • Jackson Hole and Teton Village – a luxury enclave
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                • ‘Little Nell’ coming to Jackson
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  • Median values up almost 50% since 2005
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    • How will this market weather the current crisis?
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      • Diversified buyer group
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        • Where to put staff?
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          • Spain
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            • At least two and a half years to digest new home glut
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              • Inventory up 20% mid-year
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                • Over 600,000 new homes built in 2008
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  • Glut concentrated in certain regions
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    • Balearics under pressure
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      • Barcelona starts down 83%
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        • Costa Blanca starts sharply down
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          • Inland regions also affected
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            • Secondary market activity at a low ebb
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              • Prices are collapsing
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                • Reliability of official government figures in doubt
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  • Figure 42: Property price by region and city, 2007-08
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                • Average asking prices flat
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  • Lack of transparency – one cause of the crisis
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    • A broad range in asking prices
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      • Figure 43: Quarterly house price trends by province, 2007-08
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    • Barcelona especially hard hit
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      • Holiday rental companies
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        • Timeshare properties are often rented out
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          • Holiday rentals serve two customer bases
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            • Consolidation underway
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              • North America
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                • A rising supply of holiday rentals
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  • Europe
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    • Asia Pacific
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      • Big groups promote brand image
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        • Supply and demand for holiday rental accommodation
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          • INTER CHALET
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            • Figure 44: Details of INTER CHALET’s six holiday rental brochures, 2008
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          • Interhome
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            • Winter bookings driving revenue growth
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              • Figure 45: Interhome key figures, 2006 and 2007
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            • Interhome takes over ’Just France’ distribution
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              • Interhome expands to the US, UAE and India
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                • ResortQuest
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  • Sales and marketing
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    • Competition
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      • ResortQuest International Inc
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        • Cooperative Partnership with Interhome of Switzerland
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          • New initiatives
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            • Wyndham Vacation Rentals
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              • Figure 46: Trend in Wyndham’s holiday rental transactions and average rental price, 2003-07
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            • Revenue recognition
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              • Wyndham has a slew of brands
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                • Wyndham’s rental inventory
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  • Expansion strategies
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    • Distribution strategies
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      • New business models
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        • Seasonality and booking window
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          • Social networking has come to the holiday rental business
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          • What Next?

                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              • Three myths exploded
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                • Myth One
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  • A ‘fire sale’ on luxury homes in Dubai
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    • Financing drying up
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      • Myth Two
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        • Myth Three
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          • Russia hit by weak energy prices and financial market turmoil
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            • Chinese economy on the skids
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              • Supply risk growing
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                • Is timeshare recession resistant?
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  • Major cutbacks in operations
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    • Credit crunch is hitting securitisation
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      • Inventory loans dead too
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        • But delinquencies are relatively contained
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          • Timeshare could benefit from ‘trading down’ trend
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            • Lower-priced fractionals are struggling

                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            Companies Covered

                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            To learn more about the companies covered in this report please contact us.

                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            Timeshare and Secondary Residences - International - March 2009

                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            £1,495.00 (Excl.Tax)