Timeshares poised to capture the holiday market (page 1 of 2)

The concept of timeshares has been around for more than 30 years in Europe and the US, but it is a relatively new industry in the Gulf.

A timeshare is the purchase of an increment of time - typically one week - at a resort, condominium, or luxury home, often with the option to exchange this time period to stay at other resorts worldwide.

These rights are sold to consumers either in perpetuity or for a set period of time, such as 20 or 30 years.

Currently, the Middle East holds less than 5% of the world's timeshare developments, but that figure is expected to grow rapidly.

One catalyst for this growth is the increasing number of standards that are being created to regulate the industry in the region.

New timeshare standards

In March, the Dubai government passed new regulations for vacation ownership, which include time sharing fractional ownership, private residence clubs, and destination clubs.

'Now there is a solid platform that will allow the industry to grow and prosper,' said David Clifton, Managing Director for Europe, Middle East & Africa at Interval International, a leading global vacation exchange company.

The regulations are aimed at giving timeshare consumers greater protections, and ensuring that developers take more responsibility for their projects.

For example, if a project is not delivered on time, the developer would be responsible for finding an equivalent hotel or resort for the guests to stay in. Previously, the property management company would have been held responsible.

Clifton acknowledges that timeshares used to have a poor reputation in Europe, where they were first launched in the 1960s.

Timeshares were often sold through unscrupulous promotional offers, leaving buyers unable to sell their units for anything near what they paid for them, let alone at a profit.

Since then a number of changes have taken place to enhance the credibility of the industry. 'For one thing, about 15 years ago the major hospitality companies recognized that this is going to become a mainstream hospitality product, which it has. With names like Disney, Four Seasons, and Marriott entering the business, these groups have brought an incredible amount of credibility to the industry,' he argues.

The industry is also benefiting from a desire to attract more end users into the real estate market. 'Dubai's real estate market has been fuelled by speculators, many of whom have come in and bought whole buildings, floors, etc. I think there is a real movement and interest by not only government but also developers to bring end users into the market. And that is exactly what vacation ownership does,' Clifton says.

Dubai drives growth

In terms of growth of the industry, the 'single most dramatic' global location will be the Middle East and Dubai in particular, Clifton says. The emirate's timeshare market could one day even rise to oust Florida from its number one position as the global leader in timeshare sales.

'We believe the timeshare market in Dubai will be number one, two, or three in the world in the not so distant future. We are seeing record numbers of new entrants getting ready to come into the business, and now that the regulatory platform is in place, you will see major announcements taking place over the next six to 12 months, and some have already taken place,' he predicts.

One of the most recent companies to announce a timeshare development in Dubai is Emaar Hospitality Group, a subsidiary of Emaar Properties, which plans to develop and operate a timeshare portfolio that will include serviced residences and custom-designed resorts in the emirate.

"The timeshare market in Dubai is poised for exponential growth with booming inbound tourists driving the demand for spacious accommodation that hotels cannot fully meet," said Mohamed Ali Alabbar, chairman of Emaar Properties.

Emaar plans to expand its timeshare business to other countries in the region, where it is developing communities with hospitality and leisure components.