Is timeshare ownership an investment product?

Article


Hovey, Martin. 2002. "Is timeshare ownership an investment product?" Journal of Financial Services Marketing. 7 (2), pp. 141-160.
Article Title

Is timeshare ownership an investment product?

ERA Journal ID19815
Article CategoryArticle
Authors
AuthorHovey, Martin
Journal TitleJournal of Financial Services Marketing
Journal Citation7 (2), pp. 141-160
Number of Pages26
Year2002
Place of PublicationUnited Kingdom
ISSN1363-0539
1479-1846
Web Address (URL)http://www.palgrave-journals.com/fsm/index.html
Abstract

In this paper the question is addressed asking, 'Is Timeshare Ownership an Investment Product?' After some discussion, the conclusion is that the purchaser outlays funds for economic benefit, thus timeshare fits well within the definition of an investment product. The paper also adds
to the literature in that it advances the discussion regarding the risks associated with timeshare and
the methodology applied in timeshare valuation. As investment is based on the notion of risk and
return, thus firstly the risks associated with timeshare are discussed. Following, an analysis is conducted from a consumer's perspective considering the viability of investing in timeshare versus that of simply renting a holiday unit for one week per year. The notion that the purchase of timeshare can lock-in at least a portion of vocation expenses to today's rates is tested. The case is
based on real figures taken from an offer made on a particular timeshare resort from a popular
timeshare location and tourist destination. The viability from an economic perspective of investing in these timeshare investments was not supported by the analysis. The scenario that a capital gain could make up the shortfall was considered, but it was demonstrated that this was not probable in the cases presented.
Based on the cases discussed, there are three aspects highlighted in the paper as contributing to the costs of ownership of timeshare that are considered as factors that could be addressed to make timeshare ownership a more feasible purchase. They are the cost of sales, maintenance costs and exit costs. If the industry were able to take up the challenge of reducing these costs in particular, it is likely that investment in timeshare would be more feasible and attract a wider market.

Keywordstimeshare, economic benefit, Ziobrowski, liquidity risk, political risk, counterparty risk
ANZSRC Field of Research 2020350208. Investment and risk management
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Byline AffiliationsDepartment of Finance and Banking
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