Vacation ownership resilient in tough economy

2012-05-15 12:33
Vacation ownership products have enjoyed very healthy occupancy rates compared to other forms of vacation accommodation, mainly thanks to its good value proposition.

According to a study done by Grant Thornton on behalf of the Vacation Ownership Association of Southern Africa (VOASA), vacation ownership resorts – e.g. timeshare, fractional ownership and private residency clubs – had an average annual occupancy rate of 80,5% in 2010. This figure remained fairly stable from 2009 when occupancies were 81,4%.

The results of the study are based on surveys conducted on 99 timeshare resorts and 12 410 existing timeshare owners between November 2010 and March 2012.

“Vacation ownership is a major player in the domestic tourism market, especially for families. This is one of the main factors that made it so appealing in the period under review, which was characterised by economic hardship for many around the world,” says Bernadine Galliver, Senior Consultant at Grant Thornton Strategic Solutions.

She explains that consumers with families would often opt for holiday options that offer the best value for money. “Non-vacation ownership accommodation can become very expensive for families especially at times when discretionary spending is low,” she says.

It takes 3,8 years on average to sell out a resort and 40% of resorts sell out within a year. New developments are also very encouraging. “From data gathered, we know at least 30 new resorts were either being developed or completed in the last ten years at an average of five resort developments per developer,” says Galliver.

She ascribed this performance in part to the South African consumer’s resilience. “Local consumers’ purchasing power was not hit as hard as in other countries, with income increases staying relatively healthy in a low interest rate environment.”

These consumers did not disappoint in their spending patterns either. The average total trip spend for timeshare holidays in 2010 was R7 358, compared to the much lower R1 650 on average for domestic holiday tourists in the same period.

“New resort development potential exists in the Western Cape and North Coast of KwaZulu-Natal, as well as within urban/city areas. While we have seen a source of growth from fractional ownership products in recent times, we expect this to remain a niche market. We are however seeing a trend towards mixed use developments which incorporate hotels and vacation ownership,” says Alex Bosch, Executive Director at VOASA.

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