More importantly, vacation owners can travel around the world through exchange vacations. Vacation ownership offers unparallel flexibility and the opportunity for affordable worldwide travel through vacation ownership exchange. Through the international vacation exchange networks, owners can trade their timeshare interval for vacation time at comparable resorts around the world. Most resorts are affiliated with an exchange company that administers the exchange service for its members. Typically, the exchange company will directly solicit annual membership. Owners individually elect to become members of the affiliated exchange company.
Exchange companies and the resorts frequently offer their members the additional benefit of saving or banking vacation time in a reserve program for use in a different year. Often the exchange company offers other “travel agents” services including discounts on airfare and car rentals.
Tax advantages for vacation ownership
Time share owners are usually provided with a new program through which you can learn how to profit from every legal tax deduction and tax strategy that you can use to lower your taxes. The program teaches you the following:
-How to write off timeshare purchase cost, financing charges and maintenance fees.
-How to take the maximum itemized deductions for personal use of your timeshare
-How to get tax free cash when you rent out your timeshare
-How to use your timeshare in an existing business to create maximum business deductions; and the greatest tax strategy of them all …
-How to use your timeshare in conjunction with a “special business” that enables you to travel better for less, earn more money, and make all your timeshare activities (entertainment, recreation, dining out, golf, cruises and more) up to 100%- tax deductible!
Part 2: Growth in vacation ownership and advises when buying or selling timeshare:
- Growth in vacation ownership activities
Although the war with Iraq slowed domestic travel, the long-term outlook for the leisure vacation-ownership market is good, according to industry executives who attended the American Resort Development Assn.'s annual convention and trade show at the Gaylord Palms in Orlando in early April.
The average sales pace during 2002 was five per month. This figure is down from twelve per month in 2001 and ten per month in 2000. Average annual sales volume at high-end fractional interest projects has also declined – from $13.2 million in 2000 to $11.2 million in 2001 to $10.8 million in 2002.
Besides more projects increased prices than did not. Among the projects that were selling prior to 2002, 58% increased prices this past year, 34% maintained price levels, and 8% lowered prices.
- Highest-priced products sale fast:
High-end fractional interest projects often are segmented by price per square foot. “High-priced” projects typically have sales prices over $1,000 per square foot. “Moderate-priced” projects have sales prices between $500 and $999 per square foot. There are many fractional interest offerings that are priced below $500 per square foot.
In 2000, the average annual sales volume generated at each “moderate-priced” project was approximately half that of the average generated at “high-priced” projects.
During the past two years this gap has grown larger, as shown in the graph below. In
2002, the average “moderate-priced” project generated approximately $5.8 million compared to approximately $14.9 million generated at “high-priced” projects. The difference is not so great when monthly sales pace is considered. “Moderate-priced” projects made an average of four sales per month, while “high-priced” projects made an average of six sales per month.
- The brand name influence:
Like traditional timeshare, high-end fractional interest development started with independent developers. Over the past few years, major hotel brands have entered the arena – Four Seasons, Marriott, Hyatt, Hilton, Starwood, etc. And like traditional timeshare, branded fractional interest projects have – for the most part – experienced a higher level of success than their independent counterparts. In 2002, the average hotel-branded resort made more than twice as many sales per month (eight) compared to the average non-branded resort (three). The difference is even greater in terms of average sales volume. The average annual sales volume of branded resorts in the 2002 sample was $19.2 million, compared with $5.2 million among independents.
Brands typically bring greater marketing and sales strength along with consumer loyalty and confidence. But independents have been successful as well, albeit on a smaller scale. Take for example a non-brand stand-alone project in a high-end ski area in Colorado. In about three years of sales, the first phase was 85% sold-out. The average monthly sales pace was four per month. This accelerated during ski season and jumped even more once the units were open for occupancy – over two years into the sales process. No pre-construction reservations were taken, owners signed contracts locking-in price instead. These contracts matured into closed sales in 2002. With only twenty-five intervals left to sell in the first phase, the sales pace has remained steady – aided by the urgency created by an announced price increase in the second phase.
- Location influence:
When it comes to selecting a development site, it is well known location is essential. General proximity to attractions is crucial – even more so among high-end fractional offerings than traditional timeshare. But the type of location may also have an impact. High-end fractional development began in ski destinations. As of February 2002, 65% of existing high-end fractional interest projects in North America was located in ski areas. But 67% of projects being planned at that time were going to be situated in beach and/or golf-oriented communities. The average sales pace in 2002 was highest among high-end fractional interest projects located in ski and beach areas – at six per month. The slowest pace, two per month, was experienced by projects located in golf-oriented settings. In terms of average annual sales volume, the difference is even more extreme -- $15.7 million in beach locations, $14.3 million in ski locations, and $2.2 million in golf oriented locations.
- Stand alone or mixed-use:
There seems to be a trend among new high-end fractional to be part of a larger master-planned community, offering a mix of real estate options. The synergies and cross-marketing opportunities help to jump start sales. This certainly appeared to be the case for respondents to the survey in 2002. Projects with a timeshare or hotel component sold more rapidly than stand alone projects last year. The average monthly sales pace among mixed-use offerings was seven; among stand alone offerings it was five. Average annual sales volume follows the same pattern – $16.4 million compared with $9.4 million, respectively.
In conclusion, the slowing economy certainly impacted high-end fractional interest sales performance last year. But sales have decelerated, not stopped. Developers are finding creative ways to weather the economic storm. Product that is high-priced, branded, ski- or beach-located, mixed-use, and was in sales prior to 2002, is faring best.
Look for high-end fractional interest sales to recover and improve once the economy does.
- Advises when buying and selling vacation ownership:
- buying
Prospective buyers should not purchase a timeshare week with the intention of making a profit. Due to initial marketing costs, resale prices rarely appreciate to the point where a profit can be made.
Vacation ownership is best suited for those people who want to invest in the idea of providing luxurious vacations for themselves and their families. Over time, this works out to be a cost-saving way to enjoy this style of vacationing. On the average, it takes approximately nine years to recoup the investment spent on purchasing a week of timeshare. The educated purchaser, however, can literally save thousands of dollars and “break even” with his investment much sooner.
When you decide to buy timeshare, you need to be aware of what costs are involved. Besides your purchase price, (including closing costs), you will also be responsible for taxes, an annual maintenance fee and possible club fees. These annual fees normally range from $300 to $500, with some running even higher. If you want to belong to an exchange company you will also have an annual subscription fee (approximately $74 - $84 per year). Each time you exchange your week; there is a processing fee to pay. These fees range from $109 to $162, depending upon what type of exchange is made (i.e. domestic or international).
The most important factor in deciding what “timeshare mix” is right for you is determined quite simply by how and where you plan your vacations. Do you plan far in advance? Do you like to go to popular destinations at peak times, such as Cape Cod in the summer, Vail in the winter, etc.? Can you travel only when your children are out of school? If this is the case, you will do best by purchasing a week in high demand at an upscale resort, where and when you like to travel most. Be prepared to pay anywhere from $5,000 to more than $20,000 for a timeshare week at these prime destinations. The average price for a timeshare week is about $13,000, however the cost of a deeded timeshare can range from a few hundred dollars to over $40,000. The major variables in price include the desirability of location, the week of the year that you own, and what sizes your unit is (studio, 1, 2, or 3 bedrooms).
The benefit of owning prime time at a prime resort is knowing that you have that time guaranteed for yourself, or if you choose to exchange that week, priority is given to you in the exchange system to fulfill your trade request when you plan far in advance
- selling
If you are in a situation where you need or want to sell your timeshare, there are different methods which can be used. Realize first off that selling your week may take a year or more! It certainly can happen sooner, but you should know that it may take awhile.
A rough estimate of the value of your week on the resale market would be to figure 50-60% of the developer’s current sales price. If you need to sell your week quicker, drop the price. The resale market is just emerging, and it is definitely a buyer’s market. The speed of the sale depends upon the asking price. Once a prospective buyer becomes aware of the resale market, he or she will normally shop around in contrast to people who purchase directly from the resort.
For a current estimate of your week’s value, check the listings on the Internet. You can also contact your resort to see what the current price of a week would be. Keep in mind that the resort will quote you the retail sales price, and you should price your week below that figure if you expect to sell in a reasonable length of time.
You can attempt to sell your week yourself through classified advertisements, such as the FREE classified ads on TIMESHARES.COM. Check with your resort, as they may have an in-house resale program.
Many people choose to list their week with a resale company. You must be very careful when selecting a resale firm. Most resale companies are reputable; but some are not! Many of the legitimate resale brokers are getting away from charging a $300 or $400 listing fee. One ploy used by some unscrupulous companies to get listing fees is to tell prospects over the phone that “we have a buyer ready to close on the purchase of your week...all we need is your credit card number to enter your listing." Unfortunately, the sale rarely, if ever, closes. Like most things, if it sounds too good to be true, it probably is!
Any company wanting to collect a substantial listing fee will also likely tell you anything that it thinks you would like to hear regarding the price you can get for your week.
Regardless of which resale company you choose, take the following precautions:
Investigate the company’s background and its history of resale success.
Ask what methods the company will use to advertise and promote your property.
Find out how you can get regular updates on the status of your timeshare.
Be leery of companies offering gimmicks-such as "guaranteed purchasers wanting to buy your week" to get your listing fee.
If a resale company solicits your listing by telephone, resist any pressure to make an immediate decision.
Ask the solicitor to put details of the offer in writing and send the information through the mail. Obtain a written contract before making any payments.
After you receive the contract, be sure to review the terms and conditions, including:
* How long the contract is in effect.
* Exactly what services the company will provide.
* Who is responsible for documenting and closing the sale?
