February 3, 2012 — It’s not a new idea and some fractional ownership properties in Europe and the USA have been doing very well with this approach for several years now. And the truth be told a handful of little known obscure timeshare projects have had a form of this scheme in Mexico for decades as did, I believe, a couple of the first TS projects in the USA back in the late 1960’s.
So here’s the scoop. The ‘tag’ and marketing/sales approach that some of today’s fractional resorts are successfully incorporating is one with the dreaded and forbidden (in timeshare) “investment” word. These ‘clubs’ are hawking an “Investment Fund” (IF) model to sophisticated purchasers seeking more bang for their buck than just an upscale vacation lifestyle and traveling experience.
The ‘IF’ is set up much like any investment in that the ‘owners’ actually hold a set number of ‘shares’ in an investment portfolio of one or more properties with the added benefit that they also get to use the property(s) for vacationing purposes throughout the life of the ‘IF’.
These portfolios (‘properties’) also have a future pre-set date, anywhere from a handful of years down the road to a decade or longer, when at a specific point in the future the management of the ‘properties’ (aka: portfolio) legally liquidate the ‘holdings’ (‘properties’; aka: ‘IF’) at the prevailing market value and then distribute any proceeds to the original investors, ah, I mean ‘owners’!
As I said, this approach is certainly not ‘new’ and timeshare sales reps have been telling prospects for the past four decades that (e.g.) “As an owner when you’re done vacationing you can sell your timeshare and get all the money back that you would have spent anyway on hotel rooms…”.
The structuring of such timeshare (‘IF’) models can be, I’m quite sure, as complicated and/or as simple as the prevailing jurisdictions and associated statutes would permit; not to mention the lawyers advising any timeshare developer contemplating such a product.
But if the fractional community can successfully do so, and with the ‘buyer’ (consumer) appeal that is being demonstrated, it might not be a bad approach for some timeshare developers to consider and put an end to what has been plaguing the timeshare industry for decades.
And that is to finally offer consumers (prospects; aka soon-to-be ‘owners’) the ultimate exit strategy and end the perpetuity aspect of timeshare ownership that haunts most everyone (developers, owners, sales-reps) to this day.
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©2012 Inside The Gate