Is timeshare ownership an investment product?

Hovey, Martin (2002) Is timeshare ownership an investment product? Journal of Financial Services Marketing, 7 (2). pp. 141-160. ISSN 1363-0539

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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.


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Item Type: Article (Commonwealth Reporting Category C)
Refereed: Yes
Item Status: Live Archive
Additional Information: Reproduced with permission of Palgrave Macmillan. This extract is taken from the author's original manuscript and has not been reviewed or edited. The definitive published version of this extract may be found at http://www.palgrave-journals.com. ISBN 1363-0539
Depositing User: epEditor USQ
Faculty / Department / School: Historic - Faculty of Business - Department of Finance and Banking
Date Deposited: 11 Oct 2007 00:19
Last Modified: 02 Jul 2013 22:31
Uncontrolled Keywords: timeshare, economic benefit, Ziobrowski, liquidity risk, political risk, counterparty risk
Fields of Research (FOR2008): 15 Commerce, Management, Tourism and Services > 1502 Banking, Finance and Investment > 150205 Investment and Risk Management
URI: http://eprints.usq.edu.au/id/eprint/361

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