Property operators ask me many questions, but there is one that I hear over and over again:“What makes for a successful timeshare property?”
The answer I give is always the same. The recipe has three ingredients:
- The domestic market must be primed for travel, meaning that there is a thriving middle class
- The domestic market must consider travel an important part of their lifestyle
- The property itself must be desirable and must be easy to get to
With these factors in mind, you can see that many destinations today offer an environment where timeshare resorts can thrive. While there are currently vacation ownership properties in 121 countries around the world (2016 ARDA International Foundation Worldwide Report), there are a few places where timeshare is truly flourishing.
India
India’s middle class is growing at rates that outpace most nations. Ernst & Young estimate that the middle class will reach 200 million people by 2020, and then hit 475 million by 2030. And a growing middle class is good for business, especially the travel and timeshare industry.
In fact, the travel and tourism industry in India is expected to grow by 7% annually for the next decade, according to the World Travel and Tourism Council. Several factors are fueling growth: the advent of budget airlines in the region, modern credit card systems becoming widespread and rapid urbanization.
And, perhaps most importantly, the Indian public has a propensity to travel. Those with means to do so look to take two or three holidays a year, which demonstrates that travel is an important part of their lifestyle. They are willing to use their discretionary income to make that happen.
This is one of the most important signs of an area where timeshare will flourish. If the traveler places importance on yearly travel, then a product that guarantees them a vacation each year will be appealing to them.
The proof is in the industry sales numbers. The industry in India has seen impressive growth of rate of 15% to 18% over the last several years, with about 350,000 households owning timeshare in India (All India Resort Development Association).
Brazil
Vacation ownership is growing rapidly throughout Central and South America as a whole. This region had the largest number of new properties opened last year, adding nearly 2,400 total units (Oxford Economics).
Brazil has become an international sweetheart, thanks in part to recent sporting events held there. The domestic population is traveling as well, and vacation ownership has taken hold. There were more than 62,000 intervals sold in Brazil last year alone, and the number of resorts that offer vacation ownership has grown steadily for the last six years, nearly doubling in number from 2010 to today (data from TORE Advisory, a division of RCI Latin America).
The large majority of timeshare sold in Brazil are sold to Brazilians who plan to travel domestically. This is again due to a rising and flourishing middle class. Economic growth starting at the turn of the century has led to significant growth in the middle class, which now numbers more than 100 million Brazilians.
Interestingly, timeshare is capturing the attention of younger generations. We are seeing this across the globe with new owners, but even more so in Brazil. A recent omnibus survey by the American Resort Development Association showed that of timeshare owners in Brazil, an astounding 62% were between the ages of 18 and 34. While younger generations are latching on to timeshare globally, in Brazil it exceeds averages.
China
It may not come as a surprise that China makes this list as it is one of the fastest-growing travel markets in the world. International arrivals to China reached 133 million in 2015, according to the China National Tourism Association, and outbound travel volumes are significant. Domestic travel is also thriving with about 3.26 billion domestic travelers reported in 2013.
This healthy travel market is attributed to a thriving middle class, rising disposable incomes and rapid urbanization. And, it can’t be overlooked that the government has begun relaxing restrictions on foreign travel, making it a friendlier market for all of the hospitality industry.
Finally, a shift in vacation mentality has opened up opportunity in China. One of the challenges that has always faced China’s tourism industry is the relatively few vacation days offered to workers. Gradual lifestyle changes are encouraging an increasing number of workers to take vacations for relaxation. Further, in the last decade the government has adopted a new group of regulations on Paid Annual Leave for Employees by the State Council, offering more public holidays, weekends and paid annual leave for workers, which increases the time available for travel.
With several resort developers having created highly desirable properties for vacation ownership, there is huge potential for vacation ownership to continue growing in China. The American Resort Development Association estimates that here is a nearly 20 million household opportunity for vacation ownership in China.
Property developers considering converting part or all of their property to timeshare may have more options than they think.
Contributed by Gordon Gurnik, president, RCI Vacation Exchange, Parsippany, New Jersey