Timeshare: Big possibilities for Jamaica

 

The Ministry of Tourism remains committed to diversifying the country’s tourism product both as a long-term growth strategy for increasing tourist arrivals and also for positioning the country’s tourism industry favourably among its global competitors. To this end, the ministry pledges a renewed and aggressive focus on tapping into new innovations, products and trends in global tourism which can help to generate a dynamic, modern and innovative local sector that will appeal to more tourists from both traditional and non-traditional markets.

The ministry anticipates that the successful activation of all its intended growth strategies will see the country’s tourism sector, beginning 2017, growing at 5 per cent, per annum, for five years with over 100,000 visitors being added each year.

One aspect of the country’s tourism product that the ministry will be giving priority attention is the preparedness of providers of tourism accommodation to meet the growing demands among international travellers for cheaper, more flexible, more personally fulfilling, and more intimate experiences when choosing a resort or hotel at which to stay while visiting a foreign destination. It is also indeed true that the provision of accommodation services represents an essential aspect of the overall tourism economy as, without exception, tourists require the provision of some form of accommodation while away from their home countries. For this reason, the expansion and diversification of tourism accommodation based on modern demands and tastes must be considered crucial to the sustainable development of a globally competitive tourism sector.

Globally, the lodging and accommodation sector that caters to tourists has evolved tremendously over the past two to three decades. One of the most notable global trends in tourism accommodation is that many current accommodation products and services, when compared to earlier lodging and accommodation products, have been segmented to the point that they are much more flexible and cater better to the specific needs, wants or preferences of individual travellers. Tourism accommodation is therefore no longer defined by a single type of standardised product that seeks to cater to or accommodate the widest possible number of consumer tastes and preferences. Instead, tourism firms have broken down consumer demands into a number of basic segments of specific consumer preferences and evolved products that seek to best cater directly to individuals within these segments (Berger & Chiofaro Jr, 2007; Deng, 2013).

One of the most successful concepts that has emerged, based on the growing demand for segmentation of lodging and accommodation facilities among international tourists, is the practice known as timeshare.

What is timeshare?

The concept of timesharing originated in Europe (France) in the 1960s based on a catchy advertising slogan adopted by The Societe des grands Travaux de Marseille Development company, which when loosely translated means, “Don’t rent the room, buy the hotel, it’s cheaper.” It emerged as a means for skiers in the French Alps to stay at the company’s SuperDevoluy resort every year without having to purchase the property outright.

Timeshare or vacation ownership is a special type of real estate investment (one that is geared specifically towards recreation and leisure) that provides consumers with the opportunity to literally buy the exclusive right to own or occupy condominium-style accommodations at specific resorts (usually in popular domestic and international destinations) for a specific period and length of time each year. Depending on the purchasing arrangement, the timeshare owner has the options of occupying purchased slots in perpetuity (deeded arrangement) or only for a specified period of time (non-deeded arrangement) or willing or renting his unit to a friend or family member or cancelling an arrangement altogether.

Timeshare accommodations typically offer spacious floor plans and home-like amenities when compared with traditional hotels, and may include kitchens, laundry facilities, living room space, and multiple bedrooms.The share purchased by a timeshare consumer is referred to as a unit, and each unit is the equivalent of one week. Because there are 52 weeks in a year, a timeshare resort offers 52 units to be purchased by consumers guaranteeing them exclusive ownership of these units annually, providing they pay an upfront sum plus yearly maintenance fees.

The price of the week depends upon the season for which one is buying a slot. The basic timeshare concept is simple: you pay a one-time purchase fee that entitles you to a week every year (or sometimes every other year) at a resort. Instead of renting your vacations, you now own them. Due to the upfront costs, and the fact that the majority of timeshares do not appreciate like normal real estate, the cost saving is in future vacations.

Because the timeshare product is typically sold in weekly increments, the buyer is not burdened with the daily upkeep costs normally associated with full homeownership. As such, the timeshare owner is free from the daily maintenance concerns of the resort and is therefore able to maximise his or her recreational and leisure experiences while the developer or a property management group maintains daily operations.

From the consumer’s standpoint, vacation ownership takes away the uncertainty, bureaucracy, hassle, and oftentimes burdensome expenses associated with searching and booking hotel accommodation each time one travels.From a business standpoint it ensures a steady flow of revenues for hotels and income and employment opportunities for linked sectors.

One of the newest variants of the timeshare model currently being practised by leading hospitality chains such as Disney is the vacations club concept, based on the point-based system,which, instead of purchasing the rights to a specific unit as with a traditional timeshare purchase, allows members to pay an upfront sum to purchase points which can be redeemed for different vacations each year. Yearly maintenance fees still apply.

Jamaica’s position in global timeshare market

The practice of timeshare, by all accounts, remains largely unexplored and underutilised in Jamaica’s tourism landscape even though it dates back to the 1960s and has been successfully adopted by major hotel chains and resorts in Europe, Asia and North America such as: Disney, Marriott, Hilton, Ramada, Four Seasons, Hyatt, Westin, Ritz-Carlton, and Radisson. Today there are over 5,400 timeshare resorts (325,000 accommodation units) in over 100 countries with an estimated five per cent of them being in the Caribbean. Of the world’s timeshare resorts, just over 1,700 (or 31 per cent) are in North America, predominantly the United States. Europe hosts 25 per cent, with Spain (including the Canary Islands) offering over 500 timeshare resorts. Latin America includes another 16 per cent of the global total, led by Mexico with some 40 per cent of the resorts in that region. Rapidly emerging Asia offers 14 per cent, led by Japan, but with Thailand and India increasingly prominent, while Africa offers six per cent. These statistics indicate that, although being one of the leading tourist-receiving regions in the world, the Caribbean has been slowest in infiltrating the timeshare market.

Interestingly, the demand for Caribbean timeshare resorts among international tourists is greater than for any other region of the world (Interval International 2011), signalling a missed opportunity for the region. Jamaica’s share of the regional timeshare market is currently less than one per cent, with countries like Aruba, St Maarten and St Kitts being regional leaders, having established advanced timeshare industries which frequently see higher levels of occupancy than standard hotel accommodations.

Revenue estimates for global tourism indicate that the timeshare industry has consistently been one of the fastest-growing tourism segments. Since the 1970s, the sector has recorded double-digit growth (20 per cent per annum between the 1980s and 90s), which no other sector has been able to do for this same period of time. Timeshare sales have jumped from US$50 million by the mid-70s to now accounting for worldwide economic impacts exceeding US$115 billion annually. Additionally, the timeshare product has evolved in terms of sales volume, number of owners, and independent and brand-name developers that have entered the field.

It is clear that Jamaica’s tourism sector is missing out on the significant revenue-generating opportunities that timeshare has shown the enormous capacity to generate. If properly developed, the primary earning streams within the timeshare industry should include: marketing and sales; construction; furnishing and decoration of timeshares accommodations; the revenues earned by management companies for the provision of management services to a resort; revenues derived from the provision of food and beverage; pay-as-you-use facilities and other supporting commercial activities such as health and beauty, bar, nightclubs, duty-free stores, art and crafts, golf, tennis; revenues generated from holiday-related purchases such as flights and car rental; revenues generated for financial institutions that provide credit to timeshare developers; and tax revenues for Government.

Timeshare strategy

One of the main reasons that has accounted for Jamaica’s lacklustre performance in the timeshare industry was the country’s prolonged absence of a statutory framework. It is, however, now anticipated that with the official operationalisation of the Timeshare Vacation Act in May of this year the country now enjoys a modern regulatory framework that lays the foundation for the country to make significant gains in timeshare development. The Act gives legal recognition to timeshare vacation schemes in the form of right-to-use agreements, which are timeshare contracts and deeds issued in respect thereof. It also regulates the marketing, promotion and provision of timeshare accommodation.

The Act also provides for the licensing of agents of proprietors of timeshare plans, the registering of the timeshare plans under which the accommodation is offered, and standardising of information to be provided to purchasers before they enter into any timeshare contract. It also provides for a withdrawal period to purchasers after entry into timeshare contracts and the management of timeshare plans.

Locally, the Ministry of Tourism has been and will continue to collaborate with the Real Estate Board, Jampro, and other partners to roll out a marketing initiative for timeshares. As minister of tourism, I will consider a number of strategies that will seek to increase Jamaica’s timeshare market shares in the region from under one per cent to double-digit growth.

In an effort to increase this, the Government will aggressively seek to partner with leading local resorts and other providers of tourism accommodations to significantly increase the number of timeshare resorts in the domestic tourism market and will provide incentives, where necessary, to make this vision a reality.

This will be followed by increased international promotion of the country’s registered timeshare resorts in major international markets such as North America. This is a part of the Ministry of Tourism’s strategic plan to collaborate with the Real Estate Board, Jampro, and other partners to roll out an aggressive marketing initiative for the promotion of the country’s timeshare industry.

With 85 per cent of timeshare investors indicating satisfaction, the government will seek to collaborate with the Jamaica Tourist Board and the Jamaica Hotel and Tourist Association to sensitise players within the country’s tourism industry on how the development of timeshare offerings can boost their revenues, expand their appeal beyond traditional bases, and ultimately help to make their resorts more globally competitive.

The development of the timeshare industry requires substantial capital and this poses a unique challenge for many hoteliers, development companies and providers of tourism accommodation who may be interested in entry into this expanding and lucrative industry but do not have access to the capital to do so. The Government will work with the country’s leading financial institutions to facilitate the provision of low-interest credit to potential investors and companies who wish to develop timeshare offerings.

We will make further efforts to modernise our regulatory framework for the timeshare industry to bring it in line with international standards so that developers, investors and consumers will be assured of an environment in which government intervention optimally incentivises entry into the market instead of restricting it, promotes fair competition, ensures the security of investments, offers consumers maximum protection from market misconduct, and imposes strict sanctions for violators.

In keeping with these strategic objectives, I am inviting all interested investors, locally, regionally and internationally — to the consultation table to exchange ideas and discuss the possibility for entry into the timeshare market.

Edmund Bartlett is the minister of tourism.

Source: 
Jamaica Observer
Published Date: 
Sunday, August 28, 2016