Timeshare market inertia
Published:Sunday | January 15, 2012 | 12:00 AM
Avia Collinder, Business Writer
Vana Taylor, the president of the Jamaica Association of Villas and Apartments (JAVA), says local villa and strata property owners are missing out on business in the timeshare market, because of delay legislative delays.
The timeshare law has been under discussion for about seven years.
Taylor says if property owners were allowed to sell accommodation in time-blocks, it would open a new and reliable income stream for small players in the tourism and grow room utilisation rates above the current average of about 30 per cent occupancy throughout the year.
“If even a limited number of units on a property are in timeshare, the money paid for 20 years can provide quite a bit of capital. It’s a huge market in a number of other islands and Jamaica needs to tap into it,” she said.
JAVA has 400 villas and apartment owners as members, while the Strata Commission counts 1,532 strata corporations across Jamaica.
Multiple owners
Timeshare builds on the concept of a number of owners having a piece of a property, purchasing usage for a minimum one week for set periods into the future.
“Right now, not many properties are involved,” said Evelyn Smith, president of the Jamaica Hotel and Tourist Association (JHTA). “However, there are many strata or condominium properties which have the potential to participate,” she said.
Strata-registered resorts which are participants in timeshare tourism include Fisherman’s point, Sea Castles Resort, Sandcastles, Point Village, Negril Beach Club and Sunflower Villas, among others.
RCI international, a timeshare company which sells vacations worldwide, indicates on its website that there are currently nine million owners at 7,500 resorts worldwide.
Prior to the economic recession of fall 2008, the industry was reported as one of the fastest growing segments in international tourism products, earning US$10 billion in the United States in 2006 alone.
Taylor believes that regulations defining timeshare operations in Jamaica will mean higher usage of apartment and villa rooms. And while former Tourism Minister Edmund Bartlett had been touting progress on the policy, it emerged last week that the process has stalled.
“Occupancy rates for our sector is currently 27 per cent. Timeshare could move it 50 per cent and beyond,” said Taylor.
Timeshare vacationers pay upfront fees plus yearly maintenance, while other income opportunities arise from the use of restaurant, bar and housekeeping charges which, Taylor said, are separate.
The JHTA appears to back JAVA’s timeshare ambitions but with its own provisos on standards, especially in relation to stratas. Smith is concerned that the small properties may not be able to upgrade their properties to standards required by law.
“Regulations must not be developed in isolation of the non-traditional sector. It can improve their lot in terms of their ability to generate revenue,” she said.
But: “The issue is that stratas are not currently positioned to maintain properties to levels desired by the Ministry of Tourism. From a JHTA standpoint, a number of them already have tourism accommodations and these need owners to maintain to required standards.”
Smith notes that the recently revised Strata Titles Act allows for action to be taken for delinquent owners, but that stronger regulations may be needed under the timeshare law.
“Regulations must be relevant to stratas that want to enter the market. For these properties, standards will have to be legislated as opposed to the current practice of, for example, deciding on the number of lifeguards by majority vote.”
Citing an example, Smith said tourism regulations for swimming pools require that they be of a certain depth.
“We now run the risk of saying that we need to build new properties for timeshare,” she said.
Not all villa-based properties see the absence of timeshare legislation as a disadvantage to business.
Round Hill
Josef Forstmayr, who runs the luxury property, Round Hill, says the resort, which sits atop a bluff overlooking the sea, has developed its own business model for multi-owner usage and profit.
“Having a strict ‘Round Hill Lease’ which regulates how often you may occupy your own property, how the rental income is split and how the overall cost and benefit relationship between the owners of the cottages and Round Hill Development Limited ensures the viability of the resort and therefore protects the value of their original real estate investment. Round Hill property values are among the highest in Jamaica,” said Forstmayr.
Round Hill Development is the company which owns all the resort facilities and open lands. Its shareholders are the owners of the cottages.
The drafting of a timeshare law, under way for at least seven years, was said by Bartlett in November to have made progress, and that the ministry was pursuing the feasibility of introducing the Vacation Ownership & Timeshare Programme in ‘non-traditional’ resort facilities – the market segment that encompasses JAVA members.
Director general in the tourism ministry, Carrole Guntley, now says there is more work to be done.
“Timeshare legislation is still a work in progress,” said Guntley. “It is on the legislative calendar.”
The business end of the market, industry representatives have been pushing for legislation to deal with concerns that vacation homeowners have no legal basis now on which to force a developer or principal in a shared complex to consult with them before selling out to another party; and protection for investors against the transfer of certain liabilities, such as liens or mortgages, from a developer to a purchaser of timeshare property.