Property

A close-up of the Chinese 'timeshare' market

timeshare

With domestic living standards and disposable incomes on the rise, the demand for and development of hotels and resorts—for both accommodation and investment purposes—have been stimulated. This type of hotel service purchase, with divided ownership and user rights, is also known as a ‘timeshare’. First proposed by a Swiss entrepreneur, it has already gained popularity in Europe and America for over half a century. Although ‘timeshare’ has also been in China for more than twenty years, the general market has yet to be familiar with it as an investment concept. Simply put, a consumer buys out a hotel room and exercises the right to use the hotel for a certain period each year. These rights can be resold, transferred or even exchanged on the market. In addition, a holder can also enjoy a series of benefits, including gifting and passing on the rights as inheritance.

Before selling the rights of a hotel room to a potential buyer, the real estate developer will simply divide the rights into fifty-two shares, one for each week in the year. Apart from the right to use hotel-designated facilities, a holder for one such share is allowed residence in the property for one week per year for five years, ten years, or an even longer period depending on individual contracts. This means that customers are guaranteed usage of hotel and resort services with a one-off payment at a discounted rate—greatly advantageous especially during peak holiday seasons where amenities are often near impossible to book. In market terms, ‘timeshares’ can be regarded as an alternative investment channel for high-end customers, comprising of both investment and leisure elements. According to market sources, those who are participating in ‘timeshares’ overseas are mostly affluent and well-educated individuals, with an average age of 50.

With more than twenty years’ worth of history in mainland China, customer concerns are often centred around the after-sales services and ‘timeshare’ resale market. Broadly speaking, such a service could not only tackle China’s high vacancy issue in their real estate sector, but also revitalise a vast array of star-rated hotels and resorts. Since prospective user rights are sold to buyers in advance, developers can then cover their project costs and lock in profits early on. As such, if the concept of ‘timeshares’ can be implemented well, it could well turn into a mutually beneficial double-win for both investors and developers in the long run.