It’s interesting to me that we are debating something like this and think we all might be missing the point.
The fractional model has several options at several different price points and has existing for many years inside of family networks with the communal family cabin the woods.
Honestly for most people real estate vacation homes historically have been a huge money drain. In more recently with low interest rates and huge appreciation this has turned into an asset class and appreciated, so the mast is not quite as clearly negative. We could blame the Boomers for their retirement flight out of citied to the hills, beaches, and warm locals for much of this, but that’s not my point.
Here’s how I see the industry:
Timeshare replaces hotels- pure consumption
This is important and something in these discussions I've been struggling to express. I don't believe any vacation plan is a financial investment, and people looking at it via that lens always throw me for a loop. As soon as you make it "work", even if maybe you get some appreciation from a vacation home, I feel like it stops being a vacation. Just my definitions. And houses always need something. I want that leaky faucet to be "somebody else's problem" when I'm travelling.
The make money part of timeshares seems mostly dead now, so that leaves saving money as the main motivation.
Were timeshares ever
supposed to be about making money? I always thought that was sales peoples lies.
Personally, I think we spend more on timeshares than our standard camping trips in the past, but I must admit the accommodations are quite pleasant and to replace the timeshare with an STR or Hotel would not be any less expensive and would probably be 50%+ higher.
THIS remains the other important point. I honestly believe the mass market of travel, even at the TS $75k annual income average, is not financially buying fractional ownership forget about extra vacation homes where they want to go. Especially as most people seem to indicate they absolutely
DO NOT WANT a
single destination for future trips. So you're comparing Hotels, or AirB&B sorts of things.
Third Home, Airbnb, etc. have disrupted timeshares growth potential and now are cannibalizing aspects of what the developer brought to the table. Developers/Management Companies responded with pushing points and flexibility in their systems to fight this and seem be holding their own now.
AirB&B to me seems like way more widely applicable than Third Home (I heard Third Home exchange fee is ~$1k). The reason I think ABnB isn't eating TS like rideshare did Taxis is a couple things.
1) As a user, my risk in a rideshare is more limited. If I get a sketchy looking car pulling up, I'm out maybe $23 on average, and I'm 10 minutes at most from hailing a different one in most locations. I'm also only looking for a sub 1 hour (usually sub 20 minutes) trip, and I don't need to sleep or shower or go to the bathroom there. So even if it's sketch, I'm only dealing with it for a very short time. I can also actually call an official taxi, take a bus, etc as easy and near seamless alternatives in many many situations.
None of this is true with an AirB&B - so bigger risk, bigger issue potentially replacing lodging(are they likely
at all to have a different "unit"?)... So getting someone over the hump to "give it a shot" is a higher bar to clear, at least for me and my family.
2) AirB&B "got expensive". Because they also are competing against Hotel's - they often are posting $2k+ for a week, whereas in many locations that's more like $1k in the TS if I plan right. For me, even if the TS is == to AirB&B, TS then wins because it feels like the "safer" choice.
3) Familiarity - TS are more similar IMO to a Hotel than an AirB&B is. The amount of expected cleaning is mostly taking out trash and running a dishwasher at a TS. AirB&Bs really run the gamut from what I can tell, and then also charge extra cleaning fees much of the time anyway. Driving up to a "lobby" and "checking in" is far more comforting IMO on a dark night in a strange place (when we often arrive) vs hoping to find an empty house on a "random street" in a residential neighborhood and then ... IDK using a keypad? It's not horrible necessarily - if it all goes "right", but there's a fear level from news stories and such "if it goes wrong" that is another makes me not sure I want to bother.
4) TS have the zoning correct for the locality. AirB&B do not, and some are being shut down because of that. Far more people complaining to representatives and voting care about investors buying up houses and apartments for AirB&B vs Developers buying expensive property and building TS in the zoned locations. Not saying NO ONE is complaining about hotels and resorts, but just that I expect that the developers are way less affecting houses and apartments.