Curious about the Difference Between Timeshares and Fractional Ownership?
Thursday, January 26, 2006
Many people are hearing the words “fractional ownership” for the first time and wondering about this new take on timesharing.
According to research by Yesawich, Pepperdine, Brown & Russell, (a leading marketing, advertising, and public relations firm for the travel and tourism industry) almost 97% of affluent families are familiar with the concept of timesharing. (The study defines affluent as families with $150,000 in annual income and greater.)
Of this group, nearly one in five already owns a timeshare property and an additional 4% are interested in purchasing one. Additionally, 60% are familiar with the concept of vacation ownership (as in vacation clubs) with one in ten being members in vacation ownership clubs and an additional 5% actively thinking about joining. Yet when presented with the idea of fractional ownerships, only 40% even knew what the words actually mean.
Very simply, fractional ownership is timeshare’s more costly cousin. In fractional ownership, each property owner owns between one fourth and one thirteenth of a calendar year in a luxurious residence. Prices to buy into fractionals start on the low end at $40,000 (rare) and quickly move to over a million, with the average range being between $100,000 to $500,000.
Fractional ownership comes with some remarkable perks. Fractionals typically include use of a luxury car (Jaguars are a favorite), a domestic staff, and little amenities, like the storage of your personal belongings that are unpacked and placed in the home before you arrive and repacked and stored upon your departure.
And there is one other important distinction between fractionals and traditional timeshare—besides the price tag. To date, fractional ownerships have reportedly increased in value on the resale market. According to Hobson Advisors, a consulting firm that specializes in fractional ownerships, resale value at Deer Valley Club in Utah has increased 16% per year since 2001 and resales at the Colorado Timbers Club are 50% higher today than they were in 2000.
Are there fractional properties that don’t appreciate in value? No doubt. So before you consider dropping money in the six-figure range, do the smart thing and do your due diligence—or pay someone to do it for you.
Because fractionals, like any other type of shared vacation ownership, should be considered an investment in many years of happy vacations, but definitely not a financial investment.