What started as four families jointly sharing the purchase of a vacation cottage, each having exclusive use of the property for one of the four seasons has blossomed into a multi-billion dollar industry populated by such hospitality giants as Wyndham, Hilton, Marriott, Diamond Resorts and others.
The initial idea was that the four families would rotate seasons each year, so that each family enjoyed the prime seasons equally. This concept was mostly used by related families, however, enterprising minds in England decided to go one step further and divide a resort room into 1/50th ownership, with two weeks each year for repairs and upgrades.
The first timeshare in the United States was started in the mid 70's by Florida company that offered 1974 offered what it called a 25-year "vacation license" which allowed licensee's the right to travel to resorts in Florida, St. Croix, St. Thomas and the Virgin Islands.
The concepts was simple and straightforward. The timeshare developer promised to maintain and provide the specified accommodation type (a studio, one bedroom, or two bedroom unit) for use by the "license owner" for a period of 25 years (until 1999 from 1974, for example) in the specified season and number of weeks agreed upon, with only two extra charges: a per diem (per night) rate, frozen at that cost for the life of the contract and a switching fee, should the licensees decide to use their week(s) at one of the other resorts.
The presentation's logic was based on the fact that the cost of the license and the small per diem, compared with the projected cost of hotel rates climbing in the next 25 years to over $100.00 per night, would save the license owner many vacation dollars over the span of the license agreement. The license owner was allowed to rent or give his week away as a gift in any particular year. The only stipulation was that the per diem must be paid every year whether the unit was occupied or not. This "must be paid yearly fee" would become the roots of what is known today as "maintenance fees."
This concept caught the eye of many entrepreneurs due to the enormous profits to be made by selling the same room 52 times to 52 different owners. Shortly thereafter, the Florida Real Estate Commission stepped in, enacting legislation to regulate Florida timeshares and mandated that the timeshare developers offer fee simple ownership. This meant that in addition to the price of the owner's vacation week, a maintenance fee and a homeowners association had to be formed. This fee simple ownership spawned timeshare exchange companies like RCI and Interval International so owners in any given area could exchange their week with owners in other areas.
Today the fee simple ownership concept has given way to a point system that allows timeshare owners to travel to multiple destinations. Like most innovative ideas, the goal of timeshare has not evolved over the years. The need for affordable vacations from consumers and the greed from resort companies is still in place. The resulting multi-billion dollar global timeshare resort sales operation was spurned by the quest for a convenient and affordable vacation getaway.
As the founding pioneer of the timeshare exit business, Mitchell Reed Sussman of Timeshare Legal Action is one of the few timeshare attorneys in the United States who has successfully won multiple cases on behalf of timeshare owners.
More Blog Articles: