Timeshare Consumer Guide
Monthly News Letter

January 2006

Welcome to the January edition of the Timeshare Consumer Guide monthly newsletter. The aim of the newsletter is to provide current information that may be of interest not only to buyers, owners and sellers of timeshare but to the consumer in general. We aim to provide information regarding exchanges, resorts and up to date OTE News and other reliable sources.

IN THIS EDITION

OTE News

During the year OTE stepped up its lobbying programme and extended its network of political contacts.  The Enforcement Strategy in Spain was also given a new impetus.

The Vacation Owners’ Independent Coalition in Europe (VOICE) was transformed from a UK-based entity to a pan European operation with an infrastructure in place in Brussels.

Another significant milestone was the launch of an independent arbitration service – officially termed the Alternative Dispute Resolution (ADR) scheme – that was produced in partnership with the Chartered Institute of Arbitrators.

2006 -- OTE will implement new policies embrace the growing range of new products and services that are associated with shared ownership which include fractionals, private residence clubs, destination clubs and condo-hotels. The OTE is consolidating a trade body with a credible presence, knowledgeable and influencial in Europe.

OTE TO STAGE A LOBBYING SEMINAR IN MARCH

The Legislative Council of the Organisation for Timeshare in Europe (OTE) is to hold a special lobbying seminar in Brussels, currently planned for the first week of March.  More details will be published later.

The seminar will have two distinctive parts: a discussion on OTE’s lobbying strategy and a meeting with members of the European Parliament and the European Commission.

Although only in the early stages, a new legislative round impacting timeshare is already underway and OTE believes it is crucial to step up its activities on this front in the coming months.

COURT ORDER RESTRAINS FIRM’S PYRAMID-SELLING SCHEME

The Office of Fair Trading (OFT) has obtained an interim injunction against Gurdeep Singh concerning his involvement in a pyramid-selling scheme known as the VIP Club.  The High Court granted the interim injunction under the Enterprise Act 2002 to prevent him from continuing activities the OFT believes are breaches of a series of UK laws.

Mr Singh had previously given undertakings to the OFT regarding a similar business he ran called OMI Club.  However, the OFT believed that he had breached – or was likely to breach – those undertakings through his involvement in the VIP Club.  Both clubs claim to provide significant discounts on travel and leisure services in exchange for a £1,695 membership fee.  They also offer members the opportunity to earn large amounts of commission for introducing other people who become members.

Potential recruits are invited to attend high pressure sales presentations that can last up to six hours and are held in luxury hotels across the country.

The OFT has worked closely with Trading Standards Services and the Department of Trade and Industry (DTI) in collecting evidence for this case.  It is continuing to investigate the involvement of other individuals in schemes operated by both clubs.

The OFT said the VIP and OMI clubs "use slick, high pressure sales presentations to deceive the public about the benefits of becoming members".  According to Christine Wade, director of consumer regulation enforcement, "New members were encouraged to recruit family and friends based on misleading promises that they would enjoy large discounts on travel services and have the opportunity to earn large amounts of commission."

The Rise of New Shared Ownership Products

Fractional and Private Residence Clubs (PRCs) are said to be ‘Huge’ in Europe and the Middle East in the coming years.
Already one of the fastest growing segments of the resort property industry in the United States it is designed as a ‘viable’ alternative to second home ownership with the added value of Amenities and Privileges of luxury resort.

This system is said to offer multiple benefits to both developers and consumers alike.
In 2004, sales of fractional interests in the States surpassed $1.5billion, a huge improvement of 300 per cent on the previous year.

The main target for the Fractional Ownership product is high-earning clientele conducting business is key areas where prices for whole-ownership resort property and hotel room are high.
For developers the Fractional Ownership product allows huge amounts of profit to be saved as the Marketing and Sales costs are reduced by about 60 per cent and the product sold is, larger and less involved. 

At present re-sellers of a timeshare are expected to receive a substantial loss as the resorts charge large amounts to cover large sales and marketing expenses, the Fractional Ownership product ‘enhances resale value and investment potential’, due to the size of the product which is to be more like Housing than Timeshare.

I would recommend that any consumer looking to purchase such a product, look carefully at the on-going cost of maintaining such a property and that they will require the area in which they purchase for many years to come.

New Vacation Club launched in Cyprus

The Amathus Vacation Club is now open - - Situated at the Aphrodite Hills resort, first integrated golf, leisure and residential development of its kind on the Island.

The Club will comprise of 78 one-, two- and three- bedroom apartments and villas. The resort has been designed with a traditional Cypriot Village in mind and boasts amenities such as a split-level swimming pool, poolside restaurant, a separate children’s swimming pool and indoor/outdoor children’s activity area.

There are Special privileges for club members which include access to facilities such as 18-hole championship standard golf course a health-spa, tennis academy and shops and restaurants.

The Lanitis Group – owner of the developer, Amathus Vacation Ownership have interests which include two five-star hotels in Cyprus and Rhodes.

Landmark Venture for Cyprus

One of the biggest property developers and hoteliers in South Eastern Europe is set to make an impact on the timeshare industry.  The Leptos Group launched its shared ownership arm in October 2005 when Vesta Vacation Club opened Paphos Gardens Holiday Resort.

This is the first timeshare property in the group and has been affiliated to RCI.
Further plans to incorporate other group resorts throughout the island are in hand.  This is to include the Basilica Complex Resort.

The move into timeshare is yet another signal that the timeshare industry in general has been cleaned-up and the product widely accepted by consumers and a sound investment and viable purchase.  The Leptos group originally deliberated over the timeshare concept more than 10 years ago, but due to public conception, waited for the image change.

The Leptos Group proceeded to form the Vesta Vacation Club once they were sure the product offered was of true good value for money.  Many more major developers are expected to enter the market in the future due to the success of Marriott’s, Hilton and other major brands.

Tourism in Cyprus has developed rapidly with a new international airport due for completion is 2008. Legislation governing tourism development demands high standards of accommodation.

Vesta Vacation Club, still in its infancy will operate a weeks-based system at the two new resorts.
The travel arm of the group – Leda Travel, will be used to enrich the Vesta Vacation Club product.

The resorts ‘walk before you run’ approach means they will perfect the timeshare weeks strategy before committing to larger more ambitious projects emerging in the timeshare industry at present.

Starwood Completes Acquisition of Le Meridien Brand

Starwood Hotels & Resorts Worldwide has completed the purchase of the $225million Le Meridien brand.  They have now purchased all related management and franchise businesses for the portfolio of 130 hotels and resorts around the world.

Starwood who are looking to increase their African, Middle Eastern and European presence as well as Asia Pacific operations, have now significantly done so.

With 43 properties in Europe, 47 in the Middle East and Africa, 28 in Asia Pacific and India and 12 in the Americas, the brand is a perfect complement to Starwood’s current geographical footprint.

Le Meridien properties are located in many markets where Starwood has no strong presence.

The acquisition supports Starwood’s strategic shift from property ownership to a management and franchise fee focused model.

The future of timeshare in the UK

As expected with all markets, the timeshare market in the UK is changing.  With the US having invested in condo-hotel and fractionals, it was obvious that Europe and the UK would eventually follow suit.

For many well- established resorts in the timeshare industry, the traditional timeshare will continue to work, as it has done, for many years to come.

Investors in property now want more from developers and not only demand holiday luxury, but actual financial commitment.  Condo-hotels (mentioned in our newsletter last year) offer investors in the property itself and benefit from capital appreciation and receive returns on rental rates.

This has been grasped by both consumers and developers as a win-win situation.  After the initial investment in the condo-hotel, investors can use the room for a set amount of nights each year, with only a nominal fee to pay or no fee at all.  If at anytime the investor wishes to sell, they can do on the open market.

For investors, the possibility of losing money is reduced by the amount of investors involved.
Although this does seem like a win/win situation investors should be satisfied that the underlying value will increase. Location is key as investors need to sell their rooms as often as possible to maintain rental income.

Fractional ownership as mentioned in this newsletter is a larger investment with the investor owning between 21 days and three months.  Ideal for business users visiting high priced areas, with high demand for availability.

Fractional ownership is not particularly good news for holiday investors that require only a small amount of time each year.

The rejuvenation of Lanzarote

Lanzarote is to receive a helping hand from the Canary and Spanish Government who have pledge 50 per cent of it’s entire tourism budget to the canaries and the Balearics.
In addition Lanzarote’s tourism authority has new promotional campaigns aimed at both the UK and German markets.

With two more 18-hole golf courses being built at Puerto del Carmen and Playa Blanca the island will attract more visitors.

Airlines are being encouraged to reduce prices to Lanzarote as well as planning greater exposure on the internet, with the internet being the shop window for as many as 60 per cent of shoppers.

Lanzarote is keen to maintain it’s tourism figures but with competition from emerging markets such as Croatia and Bulgaria, Mexico and the Dominican Republic, they need to get the message across that they have more to offer.

Location wise, Lanzarote is the most easterly of the seven major Canary Islands and lies in the Atlantic Ocean 1000 km off the African coast.
Climate wise Lanzarote boasts a year-round pleasant climate with an average temperature of 24°C.

Population of 111,000, increasing by 70 per cent over the last decade.

EYE ON ……… Clowance Estate and Country Club

Welcome to the luxurious world of Clowance, where history and old-fashioned quality meets modern needs and comfort.

Situated in 97 acres of lush landscaped parkland, Clowance really is one of the finest UK destinations. Since receiving RCI’s Gold Crown award in 1992, Clowance has never let it’s standards slip, and falls into an exclusive club of just 26 European resort to have received the Gold Crown award every year since it’s inception. Each of the 108 self-catering holiday homes have been placed to provide maximum privacy and at the same time, providing stunning views.

Each home or self catering accommodation is exceedingly well equipped, tastefully furnished and surprisingly spacious, and nearly all feature a patio or balcony so that you can make the most of the fresh air and freedom in this exclusive and unique resort.

Children are very well catered for with a kid’s club during the school holiday periods.

Indoor facilities

• Swimming pool heated to 84 degrees all year round
• Extremely well-equipped, air-conditioned Life Fitness gymnasium
• Relaxing Jacuzzi whirlpool spa, solarium, and sauna

Outdoor facilities

• Eighteen-tee, nine-hole par 67 golf course (green fees apply)
• Two full-size and two half-size tennis courts (ideal for children)
• Badminton court, croquet lawn and putting green
• Trim-trail running through the Clowance Woods
• Four acre lake for rowing or trout fishing
• Basketball, giant chess/draughts
• Children's play area, with tree house and faerie dell grotto
• Regular guided tours of the Clowance estate
• Professional coaching in golf and other sports

Accommodation

With various styles of accommodation, there really is something for all tastes and requirements.

The quality of the accommodation and service earns Clowance every inch of it’s Gold Crown status, the question to ask yourself is which of the above types of accommodation you want.

In August 2004, Clowance invested £1.2million on the refurbishment of their exclusive-to-owners restaurant giving owners two choices.
The Lakeview Brasserie for informal meals and Caesars-, a Mediterranean style restaurant for special occasions or for spoiling yourselves.

Owning at Clowance allows you to exchange with RCI or II, the resort code under RCI is 2828, II CTS. Have dual affiliation offers wider choice when exchanging.
Clowance Estate & Country Club scores highly with RCI Points, owners can expect to receive more points here than at many of the other UK resorts.

Plus and Minus

Plusses for Clowance are obvious from the information above.  Minuses for prospective purchasers are the level of management fees. With fees ranging around the £500 mark, many people consider this to be too high. The reality is that you get what you pay for. Consumers are demanding better quality accommodation and developers are providing it, but it all needs to be paid for. As an owner you will be able to rent your week through the resort and if you compare the rental costs against the management fees, the difference is obvious.
For example an average fee of £500 for a 2 bed sleeping 6, rental prices are at least £700 - £1,200 for mid-peak season.

Each of the subjects in this publication are based on various facts provided by trusted sources including the OTE.

Editor: David James

Previous Editions:
July 2005 Newsletter
June 2005 Newsletter
August 2005 Newsletter
September 2005 Newsletter
October 2005 Newsletter
November 2005 Newsletter