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The timeshare industry was born in the early 1960s when Alexander Nette, of Germany, developed the concept at a hotel he managed in Ticino, in the Swiss Alps. His creation led to the development of Hapimag Company, which is still a major player in the European timeshare Industry. As part of a group of friends who wanted to purchase an apartment in a ski resort in the French Alps but could not individually afford the cost, Nette realized that if the group pooled its money and shared the apartment it could afford the purchase. The friends decided to share the unit in weekly time intervals. One person would use the apartment one week, the next person another week, and so on. The number of weeks assigned to each partner was determined by that person’s contribution of the purchase. Although there are now many variations on the weekly interval approach (e.g., points clubs, fractional properties, split weeks) this shared ownership approach is essentially how timeshares still operate today. Units in this industry have come to be called villas. Unlike most hotel rooms, timeshare villas include kitchens, at least, and usually other extended-stay-related amenities that distinguish them from hotel rooms.
Timeshare development in the United States began in Florida in the late 1960s. The first timeshare developer adapted the model from the French Alps and sold the weekly use of condominium units. He marketed the project as “buying a prepaid vacation”, essentially the same marketing approach used throughout the industry today. Each week’s use was a fee-simple purchase that is, the owner of the week owned that period of time in perpetuity. This method allowed the developers to sell out their condominium development.
After that promising beginning, however, the timeshare concept languished throughout the 1970s and the early 1980s, the victim of boiler-room tactics applied by some unscrupulous developers. Those operators’ high-pressure sales and management methods gave the business a deserved negative reputation. Those developers too frequently promoted the timeshare purchase as a “can’t miss” investment-a way to make money on the purchase of a week’s use of a resort. While recent research has indicated that timeshares may, indeed, be a reasonable investment, the real-estate market has not always been friendly. “The high-pressure sales tactics caught the attention of state legislators, and promoting timeshares as an investment is illegal in most states today.
Copyright ©2001 Cornell Hotel and Restaurant Administration Quarterly; Robert H. Woods
