Lifetime club membership through holiday timeshare

By Ferdinand Mwongela

The need for innovativeness cannot be overemphasised in an ever-changing and dynamic business world and the holiday resort industry understands this better than most.

Timeshare, also known as vacation ownership, is a relatively new concept to the majority of Kenyans but is not so new to industry insiders who say it is the new wave in the holiday industry.

This unique holiday first came up as a concept in the 1960s and has been in Africa for about 20 years. To date, 5,400 resorts in 95 countries are part of this grand global partnership, which has embraced about seven million owner families. In East Africa, about 1,400 families are members of this product.

Kenya has nine timeshare resorts so far — six in Malindi and one each in Kilifi, Watamu and Kikambala. They include Bush Baby Resort, Palm Tree Club and Coral Key Beach Resort among others in Malindi, Mnarani Club in Kilifi and Aquarius Beach Resort in Watamu.

Janette Graham, the director of Kenya’s representative agent company of Africa Vacation Club (AVC), says timeshare has been gaining acceptance around the globe with the epicentres being the US and Europe.

"The Africa Vacation Club has over 200 affiliated resorts," says Janette. "A member of the club would have access to all these as well as enjoy international exchanges through Resorts and Condominiums International (RCI)."

RCI, according to Janette, is the "biggest timeshare vacation exchange network" followed by Interval International. In Africa, the majority of timeshare companies operate in South Africa where they even have a regulatory body. Currently, there is just one AVC-affiliated resort in Kenya — Mnarani Club in Kilifi. The others are standalone clubs whose members can access exchange networks as RCI just like AVC members can access the other Kenyan resorts via the exchange system.

Janette explains that in the timeshare concept, a person buys membership into a vacation club. This is with a one-off payment, which will then be followed by yearly subscriptions.

"Once you pay the initial amount, you only have to pay subscriptions which will then go into the maintenance of the resorts and administration of the club," she explains.

David Irungu, the sales director, adds that membership of AVC is valid until 2078 — a 70-year membership.

Timeshare involves a lot more than just paying up the membership fee, according to Wilson Graham, Managing Director of AVC’s representative agent in Kenya. The club operates on the basis of points where one point goes for about 75 dollars. The number of people taken on holiday, choice of destination and the season (whether high or low) determines the points purchased. While there are no minimum points, one would need at least 30 points to qualify for an international exchange.

In the Kenyan resorts, for instance, a family or group of four would need about 62 points for a one-week vacation in the high season. This would translate to a membership fee of about $4,650 or Sh362,700. The yearly subscription is currently $320 (about Sh24,960).

On the other hand, in Sun City and Cape Town, South Africa, where the demand is high all year round, one would need up to 120 points. In Europe where the concept is more entrenched, membership can cost as much as $15,000 (approximately Sh1.17 million).

The membership fee is not, however, affected by inflation as it is only paid once in 70 years. It is a clever way of guaranteeing future holiday accommodation at today’s price, so to speak.

Further, points are never forfeited if unused in a year. Instead, they are carried forward to the following year. Thus, if a person has 62 points and chooses not to go for holiday this year, he or she can combine the points with those of next year to gain a cumulative 124 points, which can then be used to either take a personal holiday at a more expensive resort or take more people on holiday.

Floating weeks

Members can also borrow points from the following year. Thus, if one needed more points this year for a holiday, he or she can borrow some or all of next year’s points on condition subscription is paid in advance.

When timeshare began, fixed weeks’ ownership was commonly used. This is where a member pays to have his or her holiday at a certain week of the year. Under this arrangement, one had to go for their vacation during that specific week every year. This concept is, however, changing slowly and floating weeks and point clubs are more common, where one can freely pick the week of choice to take his or her holiday.

However, this is restricted by membership such that, if membership is paid for the low holiday season then one is restricted to that.

"You cannot move up," explains Janette, "unless you choose to upgrade your membership."

High demand weeks like Easter, Christmas and New Year are sometimes sold as fixed weeks in some resorts. In certain countries, regulatory bodies have been set up to oversee the operations of the clubs, regulate sales practises, safeguard members’ interests as well as handle complaints regarding the clubs.

AVC, for instance, operates under the Vacational Ownership Association of South Africa (Voasa) as it was constituted there. Rules within Voasa regulate the activities of the club and guard against any shady dealings.

"There is total transparency," says Wilson.

Cooling period

In Kenya, however, apart from the existing criminal and civil laws, there are no specific regulations to govern the activities of timeshare clubs, resorts or marketing companies. In Europe and the US, timeshare regulation is entrenched in the legislation.

Hotels wanting timeshare facilities can opt to have just a section dedicated to timeshare, which must be well maintained.

"RCI inspects these resorts or facilities," explains Wilson. "If any aspect is found wanting, the management will be required to bring it up to standard or face disaffiliation, in which case members of the disaffiliated resort will not be able to access exchange facilities with other clubs."

Hotels on timeshare are guaranteed income from members’ annual subscriptions.

"Timeshare is not a money making investment," Janette warns potential members who might think there is profit to be made by becoming a member.

Anyone who joins is initially given a cooling period during which time they can pull out of the membership. Companies governed by Voasa regulations give five days cooling period.

"In Europe it is as much as 15 days," Janette reveals.

Timeshare ownership remains in the family since it can be bequeathed to dependants. Alternatively, one can resell his or her membership privately or through special resale agents. East Africa, however, has no such agents.