Correspondence: Luka Powanga, School of Management, Regis University, 3333 Regis Blvd, Denver, CO 80221, USA. Tel: +1 303 458 4023; E-mail: Lpowanga@regis.edu

¹is student in the Communications department at the University of Colorado at Boulder.

²is a professor of International Business and Economics and MBA Degree Chair at Regis University. He has authored papers, a case and a textbook.

Received 11 October 2007; Revised 11 October 2007.

Abstract

Timeshare vacation ownership, a purchase of the right to occupy accommodation or a facility for a defined period of time during a year over a specified number of years or perpetually, has over the past 30 years experienced a significant and sustained growth to become one of the most sought after products in the hospitality industry. The timeshare industry grew from $50m in 1975 to $10bn in 2006 fueling a significant increase in the industry capacity. This paper ascertains why timeshares have gained so much significance to hotel developers and to explore whether consumers should invest in timeshare vacation ownership. Two divergent factors combined to drive the popularity of timeshares ownership among hotel owners. First, the multiple sources of income namely contract sales, interest payments and maintenance and club membership fees. Secondly, timeshares are immune to economic performance.

Timeshares are not suitable as investment properties because prices are inflated to cater for the expensive marketing programmes, which account for more than 43 per cent of the contract price. However, industry surveys suggest that the owners are generally satisfied. Consumers should not enter into timeshare vacation contracts for investment purposes but for buying a vacation in advance. Even then, it is better to purchase outright instead of financing the purchase.