Television Programming Helps Worldwide Timeshare Hypermarket Lead the Resale Market

Worldwide Timeshare Hypermarket, Europe’s leading timeshare resale company, is blazing a trail for televising programs about timeshare. First, the company partnered with TATOC, the Timeshare Association, to broadcast a 30-minute informational program that aired on the Travel Channel. Now, Worldwide  Timeshare Hypermarket is creating 60-minute programs that focus on the offerings from particular timeshare resort developers. First up: Macdonald Resorts.

This past November, Worldwide Timeshare Hypermarket joined together with TATOC, the Timeshare Association, to launch their first television broadcast, “Timeshare – History in the Making” – a 30-minute program explaining all the benefits associated with owning a timeshare – which has aired multiple times on both the Travel Deals Direct channel (Sky 647) and the Travel Channel. The program also is available to view on demand at www.traveldealsdirect.com.

“Timeshare – History in the Making” is split into several sections covering all aspects of timesharing and is interspersed with footage of typical timeshare resorts located on the Costa del Sol (Club La Costa, Marina del Sol), Cyprus (Paradise Kings Club) and Scotland (Macdonald Hotels & Resorts, Forest Hills).

Here’s an excerpt from the segment on Macdonald Forest Hills: “Forest Hills lochside resort is beautifully set in landscaped gardens and woodland on the shores of Loch Ard, ideal for exploring the magnificent Trossachs, Scotland’s first national park.” While any brochure or website can relay flowery prose and descriptive words, there is no substitute for the complementary video footage of Forest Hills and environs that accompanies them.

The broadcast also explains how exchange programs and memberships work, detailing the concepts of banking, trading and even bonus weeks and cruise exchange.

The presentation is the result of a combined effort between Philip Watson, managing director of Worldwide Timeshare Hypermarket and Harry Taylor, the CEO for TATOC. Throughout the half-hour, Taylor offers his insight on things such as management fees and the beauty of being able to exchange worldwide. He also shares his experiences as a timeshare owner. What’s more, Taylor explains the basic premise of timeshare so that even someone without any timesharing experience can understand.  The idea behind the show is to educate people about timesharing in the comfort of their own homes.

This special program was the first of what is to be many, says Watson. And now, he says, Worldwide Timeshare Hypermarket is introducing longer programming, announced in December 2009 at The FORUM event in London, with Macdonald Hotels & Resorts as the first client to participate. Rather than focus on just one Macdonald property, the show will be much broader. “We will create either two half-hour programs or an hour-long program that will promote Macdonald in total,” explains Watson, “so you would have all their hotels, their resorts and their rental program – and maybe even a fly-buy program in there – so that you’re concentrating on one group of resorts” and all that they have to offer.

Of course, by the time you read this, Worldwide Timeshare Hypermarket may have already finalized additional deals to create further 60-minute television specials. “We’re also discussing the possibility of creating such an hour-long program with Club La Costa and one or two other major groups,” Watson says, noting that another program launch is likely for March.

Key to all this is Worldwide Timeshare Hypermarket’s relationship with television outlets; while any decent marketing agency could create a video, Worldwide Timeshare Hypermarket’s agreement with the appropriate channels and networks turns a video into an actual television program. “We’ve increased the sponsorship contract with the Travel Channel for a further year,” says Watson. “We’re in discussions with Sky Travel at the moment to do exactly the same thing, but I can’t say any more than that at present.”

The Worldwide Timeshare Hypermarket Difference
Worldwide Timeshare Hypermarket is proud to be one of the market leaders in secondary timeshare resales, providing to both buyers and sellers a very safe and professional service. With Worldwide Timeshare Hypermarket’s parent company being a developer, they have found from experience that among some of the main reasons why people do not buy timeshare direct from the developer is either the product is too highly priced for them, or they do not like the sales tactics/environment used.

Therefore when it came to resales, Worldwide Timeshare Hypermarket take a step back and allow both the buyer and the seller to approach them, which leaves buyers and sellers feeling relaxed and in control. Under no circumstances does Worldwide Timeshare Hypermarket cold call, so the client never feels under pressure from the staff at any time.

Instead, the company advertises extensively on international and national television and in the press, which means the client first has to call if they wish to either purchase or sell a timeshare. Worldwide Timeshare Hypermarket is then able to offer a full service for clients from beginning to end. The company advertises sellers’ weeks in the press as well as on their website; once a buyer is found, Worldwide Timeshare Hypermarket completes the transfer on the seller’s behalf, taking all the hassle out of having to sell privately.

For the purchaser, Worldwide Timeshare Hypermarket determines which product would suit their requirements and budget – and again, the company conducts a full transfer service where all the client needs to do is sit back, relax and when they become the legal owner enjoy their timeshare along with the family.

All monies are held in trust by Resort Fiduciary Services until the transfer is complete so the client knows they can relax happy with the knowledge that their money is safe until they become seen as the legal owner. Worldwide Timeshare Hypermarket does not take deposits and allows a full 14-day cooling off period; should the potential client be unable to afford the cost up front, Worldwide Timeshare Hypermarket is able to assist them with membership to WorldWide Plus, which is a club card allowing them to purchase with 6 months interest free and nothing to pay for 6 months.

Afterwards they can use this card on a similar basis to purchase further Worldwide Timeshare Hypermarket products if they wish. This club card is supplied by H.M.C Funding and Barclay Partner Finance – Worldwide Timeshare Hypermarket was the first European timeshare company to be offered this product.

Being a member of RDO (Resort Development Organization, which formerly was OTE/Organisation for Timeshare in Europe) is integral to Worldwide Timeshare Hypermarket’s beliefs and methods of working. RDO has provided a solid framework upon which Worldwide Timeshare Hypermarket has built a  professional and efficient procedure in assisting their customers, be they buyers or sellers, and this provides those customers with the confidence that they deserve when they are dealing with a reputable and trustworthy organization.

Macdonald Hotels & Resorts is the first shared-ownership developer to take advantage of Worldwide Timeshare Hypermarket's 60-minute TV programming offer

RDO not only ensures that its member companies are operating correctly, but it also works tirelessly to promote the image of timeshare throughout Europe. In this regard Worldwide Timeshare Hypermarket shares a common purpose and they are extremely proud of their involvement with RDO. They are also proud to add to the company’s close association with TATOC, whom they support and assist in every way that they can.

Future Collaborations
“I think it is absolutely vital that resale companies and developers have a good working relationship and provide a good level of service for their customers, both old and new,” Watson says. “This is one of the key reasons why I am always looking at ways to improve the developer’s understanding of who we are and how we operate.” In addition to the television programming, Watson says that another result of this has been Worldwide Timeshare Hypermarket’s “Indulgence” trial membership package, which allows the company to tap into the large market of new-to-timeshare customers while providing good quality leads to their partner developers.

“Other than this mutually beneficial relationship, it is key that we work closely with both the developers and trustees when we are processing a transfer of ownership and the flow of information between all parties involved and a speedy and efficient process serves to enhance our reputation and that of the resort,” notes Watson.

“We also offer wholesale purchases for developers and marketers; in some instances certain resorts have the ability, through using our stock, to sell additional exchange member resort week(s) to exchange members when they exchange onto their resorts, which works very well,” he says. “We can also come to arrangements with developer resorts that take in exchange weeks through their sales teams whereby we can take these weeks off their hands.”

For more information about creating a television program about your resort(s) or otherwise working with Worldwide Timeshare Hypermarket, call +44 870 443 1466 or visit www.timeshare-hypermarket.com.

About Worldwide Timeshare Hypermarket
Worldwide Timeshare Hypermarket is a highly professional company with an excellent reputation for customer care. We have been trading in timeshare resales for more than 12 years and currently have the largest database of timeshare weeks available, plus a long waiting list of buyers who are eager for specific weeks when they become available.

Our European Headquarters are located in Bournemouth, Dorset in the United Kingdom, so we conduct our business strictly in line with the Timeshare Act of 1992. We specialize in matching buyers to sellers and handle over 1000 such transactions each and every week, so when you are dealing with us, you can rest assured that you are dealing with the best in the business.

When buying through Worldwide Timeshare Hypermarket, you can be sure that you are in safe hands, with full protection provided. Your monies are deposited in an escrow account, administered by Resort Fiduciary Services Ltd. This means that no funds will be released until title has been transferred to the purchaser’s name, ensuring both parties to the agreement of sale are fully protected at all times.

We are full members of Resort Development Organisation (RDO), the governing body for timeshare in Europe. This association allows us to offer a safe and professional service to all our clients, ensuring that all legal obligations are adhered to every step of the way.

We are also Platinum Affiliates with TATOC the Timeshare Owners Association that is run on behalf of Timeshare owners by Timeshare owners.

By Paul Mattimoe, President & CEO, Perspective International

Over the past couple of years I have sat at conferences and listened to many sessions about Social Media and Internet Marketing with speeches from marketing gurus trying to explain why the shared ownership industry should jump on board – but even now in 2010 we still have sessions such as “Social Media: Is it just Hype?” which shows that many people are just not understanding the importance of implementing these powerful tools, and so I thought I would share with you some statistics, guidelines of how to get involved and some defining results we have achieved by using internet marketing and social media, so we can all move forward faster as an industry.

With old-style marketing methods consistently providing less volume or less quality results whilst becoming extortionately more expensive than in the past there is an urgent need for a more cost efficient way to produce qualified tours or sales leads throughout the timeshare and fractional industry. Finally some of the
larger companies are venturing into TV advertising as this is no longer as expensive as it used to be and reaches a mass market, providing results that usually are very satisfactory on a per prospect cost. But for
many this may still not be the way to go yet – however online marketing is, and is scalable to meet all budgets and volume requirements.

But before I tell you how fantastic online marketing is, which it is, I first need to explain, as a magazine publisher, that I am not suggesting that online marketing is the answer to all your problems, you will still need to use other marketing channels and recently print and online have become extensively intertwined to complement each other perfectly in a way that is only noticeable (to the detriment of your bottom line) when one is removed, and I’ll give examples of this shortly, but for now understand that online marketing should be looked at as an additional, affordable spend, not a replacement for other marketing channels in an attempt to reduce overall spend.

So why should you take internet advertising and social media marketing so seriously? Well for the price of one new employee; yes just one person is usually enough for most companies – but the right one, that’s  talented in online marketing, not just SEO (Search Engine Optimisation) as this is not the same thing, but someone that can draft out and execute ongoing and interlinked marketing campaigns who by default implements SEO strategies anyway, you will be able to significantly change your online presence.

Alternatively, you can outsource this, it is more expensive but sometimes more convenient, usually a web specialist company will only allocate one person to do the work also. Therefore, in either case, this one  person can then begin to build your online presence amongst the masses:

• 234 million – The number of websites as of December 2009.
• 47 million – Added websites in 2009.

As you can see there are a phenomenal number of other websites on the internet, but the good news is that means there are many, many more internet users:

• 1.73 billion – Internet users worldwide (September 2009).
• 18% – Increase in Internet users since the previous year.
• 738,257,230 – Internet users in Asia.
• 418,029,796 – Internet users in Europe.
• 252,908,000 – Internet users in North America.
• 179,031,479 – Internet users in Latin America / Caribbean.
• 67,371,700 – Internet users in Africa.
• 57,425,046 – Internet users in the Middle East.
• 20,970,490 – Internet users in Oceania / Australia.

And this is why you should be concentrating on the internet as one of your marketing channels, as with the right marketing campaign you could target your share of the rapidly rising millions of prospective clients.

Where are you going wrong?
Well, hopefully you are not, but unfortunately if all you have is a corporate / resort website or two and they are not on the first page of the search engines for search terms such as timeshare, timeshare resorts, timeshare resorts in (your region), or similar for vacation ownership, fractional ownership etc and all you rank for is your own company or resort name then I’m afraid you are going wrong.

Also, if you buy email lists to send email blasts you are probably wasting time and money – why?
• 90 trillion – The number of emails sent on the Internet in 2009.
• 247 billion – Average number of email messages per day.
• 1.4 billion – The number of email users worldwide.
• 100 million – New email users since the year before.
• 81% – The percentage of emails that were spam.
• 92% – Peak spam levels late in the year.
• 24% – Increase in spam since last year.
• 200 billion – The number of spam emails per day (assuming 81% are spam).

That’s why – if more than 4 out of 5 emails are considered SPAM (regardless of whether you bought opt in email addresses or not) then the recipient is unlikely to read it let alone respond to it. This did work quite well a couple of years ago, but with recent growth it just doesn’t now.

Internet Advertising
Internet advertising is predominantly made up of buying banner advertising on selected websites or Pay per Click advertising with companies like Google on their search pages.

Firstly Pay per Click, this does work but is becoming increasingly expensive as companies continue to try to out bid each other for the top spots thus hiking up the prices for each keyword. There are also suggestions that more than 30%-50% of all clicks are not genuine visits for one reason or another and although not yet substantiated either way you do need to weigh up the cost of what you spend on this to the actual results you get very early on to determine whether this is a profitable route for you to take.

Banner Advertising is another strange one – Do you choose another industry related site to advertise on that may well not have that much traffic but results should be targeted, or advertise on a high traffic site such as a news website or comparison site and get a larger flow of traffic to your site that are not targeted at all?

Well, that’s trial and error depending on your marketing campaign style and more importantly budget, it’s a numbers game after all, so the more you have the more sales you may well make – well that’s all OK if you
are paying for the number of click thrus you get to your website, but if you are paying for the number of banner ad impressions (the number of times your ad appears on the screen) regardless of who sees it and
who clicks on it can get very costly as average online click thru rates for banner advertising are just 0.5% of the number of ad impressions.

In all cases try not to buy packages based on impressions, but on results (click thrus) and then base your long term decision on conversions of those click thrus and your new employee or web agency can monitor and track this for you.

Social Media Marketing
Welcome to the new Wild West, where anything can happen and you can win or lose depending on how you conduct your business online – the only sure thing is that you need to play this game.

There are two main reasons why the shared ownership industry are slow to get involved with Social Media Marketing, one is that it’s quite hard to make it work and even harder to explain how to make it work to a novice – so get that expert involved; and two is the fear of drawing the wrong attention to themselves and
encouraging a barrage of negative reviews.

This second reason needs addressing here – there are already plenty of negative reviews relating to our industry in general (and most of the individual companies involved) on the internet, many are inaccurate but damaging all the same. However, take a look at all other industries and they get the same treatment, browse around TripAdvisor.com and you will see fantastic major brand 5* hotels with amazingly positive reviews and right next to them another visitor to the hotel on the same week says it’s the worst place they have ever
been and recommend against going.

Now, I am not going to use the saying “All publicity is good publicity” in this scenario, but whilst the hotels on TripAdvisor.com have no control over what is written on that website, it is beneficial for you as a developer for example to distribute regular positive content onto the internet about your resort(s) and you can do this using social media such as Twitter, Facebook etc for consumer centric marketing. Facebook, Twitter, YouTube, Flickr These are the best social media channels, particularly for the shared ownership industry and here’s a few more interesting statistics for you:

Social Media Sites
• 126 million – The number of blogs on the Internet (as tracked by BlogPulse).
• 84% – Percent of social network sites with more women than men.
• 27.3 million – Number of tweets on Twitter per day (November, 2009)
• 57% – Percentage of Twitter’s user base located in the United States.
• 4.25 million – People following @aplusk (Ashton Kutcher, Twitter’s most followed user).
• 350 million – People on Facebook.
• 50% – Percentage of Facebook users that log in every day.
• 500,000 – The number of active Facebook applications.

Images
• 4 billion – Photos hosted by Flickr (October 2009).
• 2.5 billion – Photos uploaded each month to Facebook.
• 30 billion – At the current rate, the number of photos uploaded to Facebook per year.

Videos
• 1 billion – The total number of videos YouTube serves in one day.
• 12.2 billion – Videos viewed per month on YouTube in the US (November 2009).
• 924 million – Videos viewed per month on Hulu in the US (November 2009).
• 182 – The number of online videos the average Internet user watches in a month (USA).
• 82% – Percentage of Internet users that view videos online (USA).
• 39.4% – YouTube online video market share (USA).
• 81.9% – Percentage of embedded videos on blogs that are YouTube videos.

Here is where you realise that just having someone in the office tweeting away or running a Facebook page about your company (as many of you do) is not going to work for you.

It’s all about volume – if you don’t have thousands of fans on Facebook and you are trying to market to a few hundred or less you will not make any impact. There may be 14.5 million Twitter Users, but recent stats show that a staggering 73% of those users are no longer actively tweeting and 74% of those have less than 10 followers. This is because many give it a go because someone said they should, don’t understand it and so then don’t use it. However, that means that 17% of all Twitter users (nearly 2.5 million) are responsible for
27.3 million tweets per day, an average of 11 tweets each per day.

In our own company, after several months we have mastered Twitter and now have nearly 30,000 twitter followers over five accounts (with numbers rising daily) which successfully generates both traffic to our websites and subscriptions to our trade and consumer magazines. We have yet to master Facebook though which we find is hard to attract consumers to Owners Perspective Magazine when our wall (area to post comments) is full of comments from industry professionals on all manner of subjects and we have little or no
control over it.

How do you attract the right demographic?
Well it’s obvious that not all 1.73 billion internet users are prospective clients, it’s more like a fraction of that usually based on age, location, interest and income, but you can target marketing campaigns to all of these factors and more. For example, you may have dabbled with Twitter, but did you know there were external programs you can use to attract twitter followers based on specific keywords or interests within a specific mile radius of any city? A properly structured social media campaign could be concentrated specifically
on potential clients within driving distance of your resort, and then filtered to those that like golf, spas, fine dining, skiing, water sports etc.

Once again though, this is where I would encourage you to spend the money on a social media expert. But imagine the power and difference in cost of this over direct mail advertising and all the while you are also creating an online footprint of positive content about yourselves and your resort(s) which over time builds up your brand awareness and credibility to the generations that turn to the internet for answers, assurances and comparisons before they buy anything.

Is Social Media The Answer To All Your Prayers?
There are many other things you can do with Social Media which I will detail in later editions of Perspective Magazine, such as using it to communicate with just your members to encourage referrals, rentals and upgrades. Social Media will certainly be King on the internet for several years to come at least…

According to comScore, total social networking access via mobile browsers on all mobile phones rose to 11.1% at the start of 2010 — this was up from 6.5% in 2009. Most of this growth was in the uptake in smart phone usage. When it comes to specific social networks, Twitter and Facebook both had increases in mobile browser usage in the triple digits. Twitter usage via mobile browsers was up 347% while Facebook mobile browser usage was up 112%. It’s important to note that these figures are just from mobile browser statistics — they don’t even take into account the use of mobile applications for Twitter or Facebook that have been released recently which are now propelling usage ever higher.

…But, despite all of this the answer to the question is no, social media is not the answer to all your prayers when it comes to lead generation, you still need to market to your existing owners and invest in offline advertising – but you should ensure that social media is added to your core marketing campaigns moving forward.

What We’ve Done So Far With Social Media

Owners Perspective Magazine
Website traffic attributed to:
55% Offline Marketing
26% Search Engine Traffic
19% Social Media Marketing
In this case our offline marketing is the strongest element, but this is because we have our consumer magazine in 150+ first class airport lounges and selected hotels, resorts, golf clubs and spas worldwide as well as individual print subscription which drive people to our website for the latest content and to register.

Our search engine traffic comes from high rankings achieved over the past year. But nearly 20% of our traffic is from Social Media, most of which can be attributed to Twitter on which we post our latest news, articles and reader offers for our advertisers.
Visit www.ownersperspective.com for more information.

Perspective Magazine
Website traffic attributed to:
42% Offline Marketing
34% Search Engine Traffic
24% Social Media Marketing
Offline marketing is from our trade magazine which is distributed to 9,572 industry professionals around the word and again search engine traffic comes from Number 1 rankings for terms such as “timeshare news”.
The social media element is higher here as news related content tends to do really well and attracts a lot of new traffic.
Visit www.perspectivemagazine.com for more information

Perspective Forums
61% Email Marketing
39% Social Media Marketing
Perspective Forums is our shot at creating a B2B Social Networking site which after just one month has become the largest online social media group for the Shared Ownership industry with more than 1,000 registered users and rising fast. The first two weeks saw the site process more than 2,000 friend requests.
For this we emailed our Perspective Magazine database and used social networking sites such as Twitter, Facebook and LinkedIn to attract the rest, as our site incorporates the best features of each all on one website. In the coming months the search engines will also contribute to our traffic, as will our print magazines.
Visit www.perspectiveforums.com for more information.

As we all know, the past year or two have been some of the most challenging our industry has seen in a very long time. And while not every company around the globe suffered from the credit crisis, scores did, and the ripple effect meant that many suppliers and other industry-related companies paid the price as well.
By Matt McDaniel, editor

Today, though, the consensus is that the shared-ownership industry is stabilizing and regaining its footing. And, along the lines of “whatever doesn’t kill you makes you stronger,” the still-standing operators are lean and hungry to regain some semblance of their previous sales revenues.

In this edition, we’ve asked several influential EMEAA market leaders to talk about the state of the industry, its biggest challenges going forward, the availability of finance and the impact on exchange. Each  shared-ownership industry leader was individually asked to respond to the same five questions. The participants, in alphabetical order, are Mark Attwood, group sales and marketing director, Karma Royal Group; Paul Gardner Bougaard, chief executive, Resort Development Organisation (RDO); Ramy Filo, president of the Australian Timeshare and Holiday Ownership Council (ATHOC) and CEO and managing director of the Classic Group; Peter Hutchinson, Group Chairman, Citadel Trustees; Shaun Lamont, managing director, Club Leisure Group; Bryan Lunt, chairman, Absolute Group of Companies; Leslie McCann, group marketing director, Seasons Holidays; Richard McIntosh, chairman of the Resort Development Organisation (RDO) and managing director, Hilton Grand Vacations; and Nick Turner, vice president & head of new business development, The Registry Collection.

From your perspective, what is the current state of the shared-ownership industry?

Mark Attwood: I can’t really comment about outside Asia. In Asia, timeshare activity is very small. There is not much developer activity. The industry surged in the last decade but there are few reputable developers left.

Paul Gardner Bougaard, chief executive, Resort Development Organisation (RDO)

Paul Gardner Bougaard: From the RDO perspective, I think the industry in Europe is in remarkably good shape, bearing in mind that the world’s economies have been through the worst economic crisis since the 1930s. Whilst we’re not yet out of this and many countries in Europe have yet to announce measures to deal with the debt incurred in supporting their economies, I think it’s apparent that consumers continue to value the certainty of their shared ownership and see this as an important element of their lifestyle. I am therefore confident that the timeshare product continues to have a strong future even though we still have a lot of work to do to educate the media and public in Europe. I think the fractional side of the industry is still very much in its infancy in Europe and there is a huge task ahead in educating the public and media as to the attractions and advantages of the product. The fractional industry desperately needs to organize itself under a trade association in order to speak with a unified voice and get those messages out. We have set FSOTA up for that purpose and will work hard this year to recruit new members to support this education program.

Ramy Filo: The past 12 months have been challenging for companies in Australia. Some companies were quick to react to the situation and resulted in maintaining the momentum or increasing volumes. Other companies struggled in the current market conditions. All companies looked at their own backyard and restructured and focused on core businesses while maximizing revenue from their current member base.

Peter Hutchinson: The propensity of the public to commit to high ticket value leisure products in a recession is heavily reduced. However, in these days of tiny returns on funds invested with banks, some resorts can benefit from a switch of emphasis to investment returns. This cannot work in the conventional timeshare model of 50%+ sales and marketing costs, but it can work with a lower markup fractional product. There are other criteria which need to be fulfilled, such as a long high season, good rental income, etc. Also, there is the need to guard against the product being classified as a Collective Investment Scheme, which can severely restrict the sales potential. However, addressing these issues will potentially open the door to a significant alternative sales source.

Shaun Lamont: The Southern African Vacation ownership industry continues to flourish in both the fractional and points-based sales. We experienced market penetration and growth in 2008 of 27% and 6% in 2009, which I believe is phenomenal considering the current economy.

Bryan Lunt: In Asia we can only see the growth we are experiencing and the influx of quality staff due to recent downturns in the European and American markets and the closure/downsizing in Australia of several [sales lines] of Accor and Wyndham. I have seen and heard about a huge slowdown in the U.S. fractional markets as well as downsizing of many timesharing companies due to restricted cash flow.

Leslie McCann, group marketing director, Seasons Holidays

Leslie McCann: At industry events there’s a sense of gloom and despondency at the moment, which could turn out to be a selffulfilling prophecy. Really, we at Seasons feel very positive about the future – the  industry’s usually very good at adapting and evolving. There’s the uncertainty regarding consumer finance; as a result of the credit crunch having consumers who want the product but are rejected at the finance stage is a serious issue we haven’t had to face before. So the industry must evolve internal finance packages to support the very valuable external unsecured consumer loans that are available.

Richard McIntosh: Everything goes in cycles, and the shared ownership industry is no different. The ability to purchase for many may be slightly reduced at present, but this is only temporary, and as sure as the sun rises, so will demand return. Shared ownership is about holidays and leisure time, and in future we will see an even greater demand for our products as leisure time and life expectancies continue to grow.

Nick Turner: From my personal experience, in the last six months, lifestyle based products continue to be marketed with the emphasis on the best value and the best quality. People are still buying and are looking for great units with equally great specs, and want to know what the annual cost is going to be.

What are the biggest challenges facing the industry now and going forward?

Attwood: In Asia the biggest challenge is to create consumer desire for the product. In India it is to stop “pack companies” from wreaking havoc as they did in Europe.

Bougaard: I think timeshare faces two sets of challenges. Firstly the issues over resales and maintenance fees remain areas where the industry has to do more work. There are no easy answers to the resale issues but RDO will continue to work with its members to educate the public on this and to urge sellers to use resale companies who are RDO members. On maintenance fees I think we have failed to get the message across on
the influences at play on maintenance fees in general and although RDO’s 2009 industry survey demonstrated that fees had not risen disproportionately, we will be getting more information out on this during the year in our social network media program. The second set of challenges relate to the unscrupulous elements at the fringes of the industry seeking to take advantage of those consumers struggling in these current economic difficulties. The expansion of the Internet and the currently relatively low cost of TV advertising, particularly in the UK has led to a huge rise in the numbers of these organizations and RDO needs to and will defend consumers and its members against these people.

As to fractionals, the biggest challenge they face is getting the word out about the product in Europe. I am aware that individually, RCI and II are working on this, but as RDO speaks for the timeshare industry, so FSOTA should speak for the fractional industry and provide a focus for the media and a source of education and information for the public. That can only happen if developers and others in the industry join FSOTA and thereby provide it with the funds to pursue these programs. If they don’t then I am worried the industry will remain fragmented and not gain a foothold in Europe.

Ramy Filo, president of the Australian Timeshare and Holiday Ownership Council (ATHOC) and CEO and managing director of the Classic Group

Filo: The industry in Australia faces similar challenges that are faced in other markets such as regulation and compliance, cost of sales and marketing, and consumer finance. Moving forward there are similar challenges with the addition of the competition from other lifestyle products; products need to change to meet consumer expectations and competition from other lifestyle products.

Hutchinson: High annual costs of usage, in the form of maintenance and exchange costs. The winners will be those who address these areas and include them, as far as possible, in the capital sum. We need to recognize that, in times of recession, people who are still in employment are actually better off than previously! They have the capital to buy the product, but not the confidence to commit to long term annual expenditure. Addressing and reducing or capping these annual costs is crucial to ongoing success.

Lamont: The age of the traditional timeshare owner is of concern. Generally these are owners that purchased their traditional timeshare 20 to 25 years ago. Their needs have changed and they are well into their retirement. Continued affordability by this income bracket and the knock on effect maintaining resort standards needs to be carefully monitored.

Lunt: Industry challenges are the need to keep products real. I guess pack companies don’t help doing justice to the industry when product is smoke screened and not real compared to this companies who have invested real $$$$ into projects.

McCann: Generally the timeshare industry itself has got an undeserved poor reputation mainly caused by the activities of non-asset-based, unregulated holiday clubs. Thankfully there’s new legislation coming in, which puts us all on the same level playing field. But the attacks on the television and in the papers encouraging dissatisfaction among timeshare owners are sometimes creating the impression in owners’ minds that there must be something wrong with the product. But generally speaking, decades into the purchase, most timeshare owners in Britain and throughout Europe are satisfied with their purchase. So a challenge to the industry is how we’re going to react to this unfair attack on us by certain bogus resale companies and compensation groups.

Richard McIntosh, chairman of the Resort Development Organisation (RDO) and managing director, Hilton Grand Vacations

McIntosh: We must remember that every year we accommodate millions of shared ownership owners at our resorts, members who are enjoying today the decision they made to buy yesterday. We must continue to focus on looking after these guests by enhancing their holiday and leisure experiences, as their advocacy is critical to our future.

Turner: If I base this answer on fractional, in the UK now, there is reasonable awareness from middle-high income families. The challenge is to engage with the consumer/buying public especially in Europe. For the UK buyers, we should see a steady rise in fractional products post General Election.

Are we set to return to normal, or to a new normal?

Attwood: There has been no normal in Asia!

Bougaard: I think we are facing a period of economic difficulty and also environmental challenges so it’s probably a new normal. As a result consumers will be looking for value for money and products that meet their own perception of the environmental challenges ahead. I am confident our members can and will meet that challenge.

Filo: We are set to return to normal, but, there is an opportunity to forge niche opportunities as a result of what we all have learnt over the last 12 months.

Hutchinson: As and when consumer confidence returns we will see a return to previous sales performances. When will that be? In my opinion, it will be gradual over at least 5 years, by which time, I am sure the product will have evolved further to reflect the joint issues of high maintenance and exchange costs.

Lamont: I don’t believe their will ever be a “normal” again, but rather greater opportunities to introduce niche market products into the industry rather than the traditional approach of the past.

Bryan Lunt, chairman, Absolute Group of Companies

Lunt: What is normal? Business always has cycles and on downturns the tough get tougher and weaker ones crumble, whereas in good markets everyone finds it easy and then we have too much competition… Of course now everyone seems to be much more careful how they spend their hard-earnt money and this gives in general the shared-ownership industry even more sales opportunities.

McCann: A new normal. I think overall for the industry, 2010 is not going to be an easy one, especially for people in start-up situations and single-site resorts. I think it will be a steady one for the established hotel brands and strong independent brands – I suspect they will manage to maintain reasonable returns – but for new start-ups it’s challenging to get funding, development finance from banks and to sell consumers a pre-construction real estate product right now when’s there’s some uncertainty about property values. People are less likely to take a risk. I think there are a lot of challenges to see new growth in traditional timeshare – I think the new normal will be better targeting. We need to target more accurately what our market is, spend less on reaching that target market, and make sure we’ve got a product that’s appropriate for that market.

McIntosh: In my 25 years in this business, I have never known “normal” – all I have known is change. Change usually delivers things for the better, for our guests and in turn for our businesses, but only if you focus on the guest. For me it’s positive and all about change.

Turner: It is the beginning of a new normal. The days are gone when people threw money into buying second homes, etc. The new normal is all about the value-conscious lifestyle buyer. The emphasis is on more value, less cost and tailor making the second-home ownership.

How would you describe the current state of the availability of finance – for consumers and developers – and how do you see things going through the rest of 2010?

Bougaard: In 2009 the industry in Europe saw a withdrawal from the market of one consumer finance provider, but during that year there has also been at least one new entrant to the market and a continuance of lending by another. In general I believe lenders see the timeshare product as a good lending line with low default rates and high consumer satisfaction. I do not therefore have great concerns over the availability of consumer finance in Europe for UK buyers, who are still the biggest buyers of timeshare in the EU, but it would be good to see more finance available for other EU nationalities.

Filo: Australia was not hit as hard by GFC on finance in our industry directly on consumer finance; however, banks have tightened up their conditions. The low interest rates provided by traditional banking institutions have opened up new sources of funding from investors wanting a higher return.

Peter Hutchinson, group chairman, Citadel Trustees

Hutchinson: The availability of finance for developers and non UK + Irish consumers in Europe has always been very limited and hence the recession has brought little change! For UK + Irish consumers, however, there is now only one major credit provider in the industry for this key market and the fallout from their withdrawal would be cataclysmic! The only way developers can cater for this potential hit to sales is to prepare to provide in-house consumer finance: This entails preparing the necessary paperwork (a not-inconsiderable task), which will need to cater for the loans being transferable to a new lender without further reference to the buyer. The developer will also need to look at the cashflow implications and prepare revised release rates of sales commission and incentives to buyers and salesmen alike to achieve as many cash deals as possible. In the long run, those that can cope with this setback will benefit substantially from the income from high interest rates.

Lamont: Southern Africa is in a “fortunate” situation – we experienced what the global market experienced in 2008/2009, 15 years ago. This forced us to change the rules of the game and slowly introduce “self funding” to sustain growth. The first few years were extremely challenging but we are reaping the rewards thereof now, 12 years down the line where the management of “in house” funding and a mature debtors book alleviate the need to outsource finance.

Lunt: There is no finance available for us so we went out and created our own Absolute Finance Worldwide and we have been forced to finance our own products to help sales reach this year’s targets. The banks are not lending – as I said everyone is more careful these days so to offer finance, customers are seeing this as a great opportunity. We’d all love to drive a new Ferrari, Bentley or Rolls Royce – it’s just a matter of how much will it cost me per month … if it’s affordable we’d do it! That’s what we have created with Absolute
World products.

McCann: I think the outlook is pretty gloomy for 2010. All of us who are fortunate enough to have an unsecured consumer finance facility should do our absolute utmost to protect that facility by making sure that the clients are sold in a professional, responsible way to ensure that the institutions that are currently in the market don’t suddenly get cold feet. It only takes one developer to sell in an irresponsible way for us to lose a major institution and that would have a devastating consequence for the whole industry because, in the British market at least, we’re in the hands of one main lender. The established players with a good track record will continue to be able to draw down loan facilities. If people are not able to demonstrate real success in our industry in the last 12 months, it’s going to be harder to borrow money to build new. Certainly as a start-up it will be very difficult. The irony is this is a time of opportunity with real estate being keenly priced – now is the time for developers to get in. But unfortunately, it’s not just about the acquisition costs.

Nick Turner, vice president & head of new business development, The Registry Collection

Turner: Regarding consumer finance: The current state of finance availability is frustrating and slow. There are only a small amount of financial institutions offering finance at the moment. We need to see a broader adoption of fractional products by the high street banks in the next 12 months and interest rates from some lenders coming down. Regarding developer finance: There have been a number of large institutions sitting on the fence for the past 18 months watching asset values drop. Mixed-use developments such as hotels with golf, spa facilities, etc. seem to have more comfort for the institutional investors.

Are people exchanging more or less? How has exchange demand been affected?

Mark Attwood, group sales and marketing director, Karma Royal Group

Attwood: In India we find members are exchanging abroad more than before.

Filo: There is no doubt the GFC has a dramatic influence on every part of the industry, including the exchange patterns of the timeshare owners. Long-haul exchanges literally disappeared faster then what the international airlines were able to reduce the number of their international flights. The demand for domestic and short-haul exchange space increased to compensate, and the number of owners deciding to go back and use their hone resort during 2008 and early 2009 was also very evident from all reports. Having said that, the timeshare community is fairly resilient, or at least that’s the experience certainly in Australia and New Zealand. Having paid their annual levies, the majority of owners went ahead and made use of their entitlements either using within their home resort or club, or exchanging to other local destinations. By mid-2009, the exchange demand for the longer-haul destinations had gone back to pre-GFC times and the start of 2010 has been nothing but highly surprising at the number of owners looking for exchange holidays again.

Shaun Lamont, managing director, Club Leisure Group

Lamont: Based on our statistics, exchanges have continued to increase over the last few years. I believe this is as a result of the value of and advantages of owning a timeshare product for vacations rather than looking at more expensive alternatives like hotel accommodation or owning a private condo. The consumer has been forced to watch every cent as a result of the economy, and is realizing the value and competitive pricing of their timeshare acquisition versus the more costly alternatives.

Lunt: Definitely – people have committed to the shared ownership industry, whether via fractional ownership or vacation club memberships, and these owners will use their time wisely looking to get the most out of what they have bought. Exchange demand has surprisingly risen – albeit a small amount during the last year or so.

McCann: Slightly less. There was certainly a higher demand for our UK sites last year. I think this is a reflection of owners, particularly last year, frightened off by the strong euro. I think there’ll be more of that this year – families will tend to stay in country or go to drive to European destinations if they can. For us, the number of exchange guests in the UK last year was lower than normal because there was more space taken up by members wanting to holiday within the UK. There was a slight decrease in exchange activity and a slight
increase in members using their own resorts within the British Isles.

Turner: All exchange platforms are robust models. People are trying to utilize all their second-home time instead of wasting it, as every penny counts. They want to get the most out of their exchange. Exchanges are continuing – especially in The Registry Collection – more members mean more exchanges.

A Final Word
Overall, it seems that the shared-ownership industry is on the path to recovery. But it is important to learn the lessons from the events that brought us to our knees if we are to minimize the effects of the next cycle. And the next cycle will come – it may be 25 years from now or it may be much sooner, but it will come.

South African Group Touts Successes, Including a Portfolio Valued More than R5.1 Billion

Club Leisure Group, a leader in vacation ownership, points and fractional sales, resort management and administration in South Africa, recently held its Annual Group Recognition Awards at the International Convention Centre in Durban, South Africa. More than 1,000 of their top achievers, back-office staff and other invited guests attended. The evening was a massive success, highlighting and confirming the successes experienced by Club Leisure Group’s sales and service delivery over the past year and hinting at even greater achievements to come.

Victory!!

Club Leisure Group is the largest leisure management vacation ownership organization in Southern Africa, with its head office in Durban, KwaZulu-Natal, South Africa, and a network of offices worldwide, including London (UK), Brussels (Europe), Bulawayo and Harare (Zimbabwe), Grand Baie (Mauritius), Gold Coast (Australia) and Mbabane (Swaziland), as well as over 40 marketing outlets throughout Southern Africa.

Personnel are employed worldwide, and the various points clubs affiliated to or managed by the group own the majority of and have access to over 150 resorts in Southern Africa. Currently, the group’s property portfolio equals in excess of R5.1 billion. Reciprocity agreements with all the major exchange groups worldwide enable Club Leisure Group to continuously enhance and expand the destination options available to its members.

Reservations are conducted in several languages and all member requests to any continent anywhere in the world are handled directly by Club Leisure Group’s multilingual central reservations department.

L to R - Shaun Lamont, Tony Ridl, Stuart Lamont and Manny Testa congratulate one of the top sales achievers

The Group services the needs of 17 destination clubs, including the prestigious Golf Resorts Club, and the foremost being Flexiclub. Clubs have also been designed to cater exclusively to the needs of members of the National Defence Force and the South African Police Service.

The group’s philosophy is “Superior in All that We Do” – which goes from initial membership enrollment and sales, to worldwide reservations and related hospitality services.

With a policy of “Quality Always,” without exception, Club Leisure Group continues to acquire holiday and business properties around the world to closely match the Group’s accommodation needs.

L to R - Manny Testa, Shaun Lamont and Tony Ridl with the top sales consultant for 2009.

Noteworthy Remarks
In his speech to the awards gala attendees, Stuart Lamont, executive chairman, Club Leisure Group, detailed many amazing facts about South Africa’s progress, its production and its economy.

Lamont noted that the World Bank reports that South Africa has the 27th biggest economy in the world, with a gross domestic product of US$254 billion. In fact, South Africa accounts for almost 25% of the gross domestic product for the entire African continent, with an economy more than double the size of the second biggest contributor – Algeria.

Furthermore, the JSE Securities exchange is the 14th largest equities exchange in the world with a market capitalization of R2.3 trillion. South Africa has over 55,000 high-net-wealth individuals, each holding more than US$1million or R8 million financial assets. Financial gain is not limited to the wealthy, though. Between 2001 and 2004 there were 300,000 new black entrants to the South African middle class. This trend continued, increasing by 30% in 2005, and with current estimates indicating that these figures exceed 2,000,000.

There are many impressive facts regarding size and scale in South Africa. For instance:
• The country generates two-thirds of Africa’s electricity.
• The Chris Hani – Baragwanath Hospital in Soweto is the largest hospital in the world.
• Durban is the largest port in Africa and the 9th largest in the world.
• There are 39 million cell phone users in South Africa.
• Since 1994, 500 houses have been built every day for the poor and 1,000 houses per day are wired to receive electricity.
• South Africa has the world’s largest deposits of gold, chromium, platinum and manganese.
• South African Breweries is the 2nd largest brewing company in the world, supplying China with 50% of its beer annually.

Regarding tourism, in 2002 South Africa was the world’s fastest growing tourist destination.

What’s more, the number of tourists visiting South Africa has grown by a whopping 200% since 1994, from 3 million to more than 9 million in 2007 – that’s three times the global average.

And, lest we forget, South Africa is the first country in Africa, ever, to be chosen to host the FIFA Football World Cup, which promises to do even more for tourism and the shared-ownership industry.

“The CLG Annual Awards was very professionally coordinated and well received by all in attendance. It was uplifting to see such a large number of staff members recognized for their contributions to the industry and I am convinced that this magnanimous gesture by the management of Club Leisure Group can only enhance the culture of service excellence which is so vital to the vacation industry.” —Assistant Commissioner Danny Pillay, CEO, Offbeat Holiday Club

“This was the first Club Leisure Annual Awards that I have ever attended. From entering the venue to the dinner and presentations, I was very impressed. The vibe was awesome and the ‘carnival’ atmosphere most fitting. How inspiring to see the enthusiasm, positive outlook and ‘can do’ attitude which seems to permeate and uplift this ever-growing industry.” —Neetesh Vanmari, relationship executive, ABSA Corporate and Business Bank (a subsidiary of Barclays Bank)

Stuart Lamont

Stuart Lamont – Executive Chairman, Club Leisure Group
Pretoria-born Stuart Lamont, a leading property developer from Kwa-Zulu-Natal’s South Coast, joined Club Leisure Group in 1994. With the support of a handpicked, common-vision management team, the Group has successfully progressed to develop a portfolio of leisure and business accommodation clubs with inventory in over 150 resorts, as well as a number of service companies to provide the full spectrum of services to members and partners.

Today Club Leisure Group serves more than 200,000 members throughout South Africa, the United Kingdom, Europe and Australia, and employs over 2,500 trained personnel.

Hotel-Stays Program Works as an Incentive or Reward for Customers or Employees

The Connex Marketing Group, which has been providing incentive programs for the past 23 years, offers pan-European leadgeneration and sales-incentive programs that can be tailored to the needs of individual resort developers, regardless of how many or few countries they have operations in.

Connex provides a hotel product that provides free accommodation in 1,500 quality hotels (mostly 3- and 4-star establishments) throughout Europe. Resorts can offer a membership of any length for their owners as a sales package benefit or first-day closing tool, provide individual certificates for one-stays as a tour gift, or use either the membership or one-off certificate as part of an exit program. The hotel stays are the perfect add-on for two key reasons:

• Program inventory available for short breaks throughout Europe is plentiful, even in areas traditionally known for having extremely limited exchange activity
• Program inventory is at hotels rather than timeshares, so that you’re not providing leads to your competition.

Participating developers receive a customized website carrying their own branding that is accessible in eight main European languages. The multilingual approach is essential for today’s European resort developers. Connex has the experience and ability to serve whatever regions your resort(s) market to – and may even help you expand to other European markets.

What’s more, the hotel certificates are perfect for use as sales incentives, employee appreciation gifts or customer-referral rewards.

Barbara Laws

“The Connex Marketing Program focuses on the three key areas of sales promotion, customer loyalty and employee motivation. Connex products have proven themselves over more than 22 years, particularly in conjunction with sales and appointment setting incentives in the new customer acquisition process, but also as valuable enhancement of existing programs,” says Barbara Laws, managing director of Connex UK & Ireland. “We offer incredibly effective solutions to suit every budget.”

Laws also emphasizes the extraordinary cost-effectiveness: “Our unique sales promotion programs cost a fraction of their real value and the developer/marketer offering them incurs no costs at all.”

Connex partners include major shared-ownership resort operators throughout Europe, with expansion into the Far East and Australia planned:
• Holiday Club Hungary
• Seasons Holidays
• Petchey Leisure
• Ambassador Club at Amadores
• Regency Resorts
• Absolute Vacation Club
• Resort Properties

“We were really impressed with the Connex hotel booking plan, which forms a critical part of one of our premium upgrade products,” says Leslie McCann, group marketing director for Seasons Holidays. “We have seen so many different bolt-ons over the years in our industry; it is refreshing to find a product to see that many of our clients find easy to use and appreciate.”

Additional to these incentive products, a range of other programs are available, with prices to suit every budget. Numerous current projects demonstrate the ongoing effectiveness of these programs, including highly cost-effective sales promotion tools for wide-ranging promotions. Custom-made programs for targeted implementation through developers and sales and marketing companies can also be designed in no time.

Privacy of client information and exclusivity of Connex Marketing Group’s products also are core elements of the company’s business model. “It is essential that our business partners know that Connex only operates on a B2B basis and as a result will never contact their database. All programs are only available through the selected group of Connex business partners and cannot be purchased by the client directly,” explains Laws.

Multiple Resort Solutions
The range of use of the Connex Marketing Group’s services and products is just as wide as the sales and marketing goals of their customers are manifold.

Customers
Sales enhancement
Promotions
Product enrichment
Customer loyalty
Complaint management
Cancellation avoidance
Internet communication

Employees
Rewards, anniversaries
Christmas

Sales Partners
Address collection
Recommendation schemes
Appointment setting
Sales promotions
Enhanced customer services
Cross selling
Sales contests

Public
Opinion formation
Image campaigns

For more information, contact Barbara Laws or Louise Knott on +44 (1428) 749 569 or by e-mailing officeuk@connexgroup.net.

In 2001, Intrawest introduced the Resort to Resort program, an exclusive exchange network for whole ownership and the emerging fractional and condo-hotel markets.

The program was well received by participating homeowners from the Intrawest resorts, which include some of the most well-known resort destinations in North America, and in 2003, recognizing the scalability of the model Intrawest took the opportunity to expand Resort to Resort to include a portfolio of carefully selected partner resorts. What was once a small project for Intrawest has seen continued growth in membership and partnerships with further opportunities on R2R’s horizon.

Dean Kneider, director of Resort to Resort, has overseen the company’s expansion in both the number of R2R properties from 47 resorts to over 200, as well as more than 14,000 extended memberships. The program’s growth isn’t slowing down as over the past few months Kneider and his business development
team have solidified partnerships with an additional eight properties including:

• Taheima Wellness Resort & Spa, Nuevo Vallarta, Mexico
• DayStar Properties, Jaco Beach, Costa Rica
• VIVO Resorts, Puerto Escondido, Mexico
• Palmetto Bay, Maya Beach, Belize
• Cape Codder Residences, Hyannis, Massachusetts, USA
• 901 Fernie, Fernie, British Columbia, Canada
• Mayne Island Resort, Mayne Island, British Columbia, Canada
• Rundle Cliffs at Spring Creek Mountain Village, Canmore, Alberta, Canada

“We are thrilled to have so many diverse and exclusive properties join our network,” says Kneider. “As resort real estate continues to grow and value-added partnerships like these are offered, resort home owners get an opportunity to expand their vacation possibilities.”

Having an established a portfolio of attractive properties throughout North America means R2R can focus more on the Caribbean, Mexico and South America. Expansion isn’t restricted to this hemisphere alone as the company looks at expansion opportunities in Europe as well. As the growth of fractional, whole ownership and condo-hotel resort offerings expand, they dovetail with R2R’s business model perfectly.
When outside developers are calling to be affiliated with R2R, it’s clear that they have a successful business
that is continuing to grow.

North America has been a pioneer in the field of fractional, whole ownership, condo-hotels, destination clubs and private residence clubs, and over the past few years there has been real growth in this sector. According to an article in the February 23, 2004 issue of Insurance Journal, “The economic boom of the 1990s created an unprecedented amount of personal wealth in America – currently estimated at more than $33 trillion … an estimated $40.6 trillion will change hands as Baby Boomers and their parents pass on their accumulated assets to their heirs.”

The aging of the North American baby boomer population will create an increase in demand for leisure travel, real estate ownership and unique lifestyle experiences.

The need for an exclusive exchange program outside the timeshare world emerged from resort owners’ desire for reciprocal trade and the guarantee that the other destination would be of like quality and finish.
Intrawest created Resort to Resort to accommodate this exclusive group of whole, fractional and condo hotel owners that have invested anywhere from $100,000 for a fractional home to well over $2 million
for a home in whole ownership.

In yesterday’s comparatively low interest rate and real estate frenzied market, projects would often be sold quickly prior to starting construction. Projects were being pitched as investment tools to real estate speculators that had little interest in ever visiting the resort.

Those times have changed and we are seeing more user buyers purchasing resort homes as a lifestyle choice. This buyer that plans on frequently visiting their resort home finds tremendous value in added services and amenities. Resort to Resort offers these owners greater flexibility and choice of vacation possibilities beyond their own home.

Resort homeowners are looking for ways to maximize their return on investment. As an owner there are only
a few things to do with your resort home: use it and get 100% of its value; let it sit empty and receive no value; let friends or family use it and recoup some value; rent it and split the proceeds with a property manager, or exchange it and get full value for the time deposited. The greatest return on investment is found in using the home or exchanging it for a home of like quality in another much sought-after destination.

The greater the amount of flexibility and choice that a developer can offer, the more the resort will appeal to a larger target market of buyers in the sales and marketing phase. The happier those owners are will greatly impact their desire to include their like-minded friends in the project.

Property management companies need not fear that their rental program will be replaced by an exchange
company. The average resort home owner takes three, four or even five weeks of vacation annually and looks to only deposit one to two weeks annually or bi-annually. Those deposited weeks represent the time that the owners would have spent in their own unit had they not chosen to travel elsewhere – and therefore doesn’t diminish rental inventory levels.

How R2R Works – Delivering Opportunities to Members
The most compelling thing about Resort to Resort is how it works and the opportunities it delivers. With the
purchase a resort home in a R2R-affiliated property, you purchase more than just a home. As a Resort to Resort member, you gain access to an expanding network of vacation opportunities in sought-after ski, golf and beach resorts, as well as cruise vacations.

The Resort to Resort system is beautiful in its simplicity and ease of use – it is designed around credits. When you’re not using your resort home you simply deposit the use of the resort home with R2R. This deposit means you are putting your resort home into the R2R pool and you will receive resort credits. These credits are based on the size and location of your property, along with time of year and length of stay, and have a lifespan of 2 years. To take advantage of the accumulated credits, R2R members choose a vacation destination or cruise itinerary they wish to enjoy from the extensive R2R portfolio of vacation options and make a reservation request. Once R2R has received the reservation request, their dedicated team of exchange consultants will work to search for and confirm your vacation.

A point of pride for Resort to Resort is putting their members’ needs first. As a member of Resort to Resort,
their priority is to ensure you receive first class service and they do all they can to fulfill your vacation requests.

A Strong Network
Resort to Resort is powered by Intrawest, a world leader in the development and operation of experiential
destination resorts. The Intrawest resort network ranges from the tops of towering mountains to  championship golf courses and pristine beaches around the world.

Founded in 1976, Intrawest began as a residential and urban real estate firm. In the mid-1980s, Intrawest
developed a unique marriage of mountain resorts and real estate expertise. Today, Intrawest has interests in
11 resorts at North America’s most popular mountain destinations, including Whistler/Blackcomb, a host venue for the 2010 Winter Olympic and Paralympic Games.

The Intrawest network also includes Canadian Mountain Holidays, the largest heli skiing operation in the world, Sandestin Golf and Beach Resort in Florida and Club Intrawest – a private resort club with locations
throughout Canada, the United States and Mexico.

Have a look at the growing world of R2R: www.resort2resort.com.

Nusbaum: VacationBetter.org Is All About – What Else? – Better Vacationing

VacationBetter.org is an educational website of the American Resort Development Association designed to reinforce the value proposition of vacation ownership in all its forms by touting the benefits of simply taking a vacation.

While many Europeans take six weeks’ vacation or more, most Americans are lucky to have two weeks’ paid vacation. What’s more, an Expedia study showed that 70% of those people didn’t use all the vacation time they had earned. “Even in our own industry, I’ll come back from vacation and I’ll hear from my peers, ‘Must be nice,’ says ARDA President Howard Nusbaum. “Excuse me, but I work for the vacation industry. Why do we feel guilty?”

Nusbaum mentions the “Do You Have GVS?” buttons that were all over the place at the 2009 ARDA annual meeting, explaining that GVS stands for Guilty Vacation Syndrome.

“I’ve talked to time-management gurus that worked for companies like Proctor & Gamble who’ve told me that people should take a week a year unplugged from everything they’re doing … that’s what time management’s about: work-life balance,” says Nusbaum. “It’s not about whether you make Johnny’s soccer game on Tuesday.”

As a result of taking vacations and therefore balancing your life, he says, “your boss will like you better, your spouse will like you better, your kids will like you better – and you know what? You will like you better.”

Nusbaum also cites a U.S. Department of Education study, the results of which are prominently featured on VacationBetter.org. “Kids who go on a family vacation with their parents do better in school,” Nusbaum states. “Now I can tell you there is some self-selection there – if you’re affluent enough to go on vacation with your kids, you’re probably affluent enough to have good nutrition, to have books in your home, to help instill in your children the desire,” he says. “At the same time, tourism is the global village; it is experiencing other culture and seeing the world, which make for natural curiosity and openness, a love of learning and a love of reading.”

Nusbaum and the website also promote the interpersonal-relationship benefits of vacationing, especially in the larger units afforded by shared-ownership resorts. “People will tell you their marriages got better – this is a product that allows everyone to rejuvenate and take time as a family,” he says. “Mom and Dad have the privacy of their own bedroom and the kids can get up and have a bowl of cereal.” Likewise, he says dinner times can be wonderful times of conversing about the day’s events over an actual dinner table rather than eating pizza on a double bed and then fighting over who gets to use the bathroom first. “It’s a better way to vacation and also enhances your life.”

There are even medical studies, Nusbaum says, about your ability to avoid a heart attack being greater if you take a vacation. He sums up the site’s intent as serving to explaining to people how vacation-deprived we all are and showing how the shared-ownership product can help you have better vacationing.

A primary way VacationBetter.org, which soft-launched in 2008, accomplishes these goals is through owners’ own stories and pictures.

Nusbaum says ARDA didn’t publicize the site until 2009 because they wanted to populate it with good owner content first. He says what they’ve tried to do is capture the zeal and enthusiasm of these owners: “It’s amazing – we kind of ran into this by accident,” he explains. “When we started doing owners’ pictures, videos and stories about their vacations, we realized it’s their passion – they have better vacations. It’s a powerful message, and I think timeshare salespeople have known this for generations, but maybe those of us who are advocates have just had the a-ha moment.”

Industry Benefits
So how does VacationBetter.org benefit specific companies within the industry? “Any good timeshare salesperson will tell you this: Owners sell potential owners,” Nusbaum explains, offering up an allegory: “If I were selling cars, I might be proud that I was a Mercedes dealer, but if I go to a population that doesn’t have a driver’s license, what good’s it going to do me? So if people don’t know that they need to vacation, how can I sell them vacation ownership? So, really ARDA, through VacationBetter.org, is really selling the idea of vacations and all its benefits.”

In addition, because it’s from a non-profit third-party entity, resort developers and marketers can use the site as a credibility tool, directing unsure prospects to check out the benefits of shared ownership and resort life. VacationBetter.org clearly state’s the site’s mission and provides links to ARDA, so curious surfers know who is in charge of the site and that it’s not a lead-generation tool. “We’re not about one company,” adds Nusbaum, “we’re about the whole industry of vacationing.”

Nusbaum also likes to direct various non-consumers seeking information about timeshares, fractionals and other sharedownership interests. “It’s also a great place for us to send the media,” he explains.

“I have a place on the web I can send government officials, financial market people, and consumer media and financial press to educate them on the passion of owners. So it gives us a window into that world.”

According to Nusbaum, resort developers and HOAs can help ARDA and the industry by linking their own sites to VacationBetter.org, which will raise the ARDA site’s Google rank and help in overall search-engine optimization.

Nusbaum sees growth ahead for VacationBetter.org (“I see it as in its infancy right now”) and is ready to nurture and develop it in the coming years. “I am committed to the site and I’m committed to its message,” he says. “I am very proud of it.”

The Vacation Ownership Calculator – a handheld device that calculates Future Vacation Cost and provides precise estimates of the cost of vacation ownership versus nightly hotel rentals – is a salesperson’s best friend and a valuable closing tool.

Every vacation ownership salesperson knows the importance of representing the costs of rentals versus ownership when presenting a timeshare or other shared-ownership vacation product. But it is indeed a rare individual who can do all of the required math in his or her head – an even so, it’s important to show the prospective owner the calculations as they are being done.

The Vacation Ownership Calculator™ does just that, and is easily kept in a pocket for ready availability. No more putting off the calculations – you can do them exactly when you need to without the need for a desk, paper or a computer.

The Vacation Ownership Calculator is the industry’s first ever handheld calculator designed with specific functions used in the sale of timeshare or other vacation ownership products. It does all of the normal functions of a real estate calculator, including loan amount, interest, term, and payments, but also will accurately perform a rent versus own, including the rate of inflation. The Vacation Ownership Calculator will give any customer an exact figure of their Future Vacation Cost™ over time including Inflation. This is what sets our calculator apart; 95% of all timeshare sales reps are unable to accurately give a customer the exact figure for the Future Vacation Cost, including inflation.

At the low price of only $29.99, The Vacation Ownership Calculator is priced below an average mortgage or real estate calculator and can do all of the following:

• Make sure your sales representatives are providing accurate rent-versus-own estimates to prospective buyers. Rent versus own is made simple and easy!
• Accurately compare the cost of owning a timeshare versus the consumer’s current form of vacation over time with inflation and all fees.
• Performs equations to provide basic loan amounts, payments and interest that a sales manager needs to close deals.
• Determine the cost of food and beverages spent over time while vacationing.
• Perform any other equations as needed.

And by doing all of that, the Vacation Ownership Calculator can also:
• Increase sales.
• Increase closing percentages.
• Increase volume per guest (VPG).

Even if your company already has expensive computer programs or touch screens, the pocket-sized calculator can complement them by being handy for use by the reps whenever needed, such as by the pool, in the model, at the desk, on the front end, on the back end, or by the TO when closing a deal.

How the Calculator Works
The Vacation Ownership Calculator has a trademarked function that will ask your clients the number of nights they will vacation per year, the amount per night they spend on accommodations, the number of years they will vacation and the rate of inflation on these accommodations, giving you a fully customizable and accurate answer to the cost of their future vacations.

This gives your staff the edge they need to get a commitment on vacation dollars at a much-higher amount. Sales representatives using the Vacation Ownership Calculator will see immediate results with larger sales, raising your VPG.

The Vacation Ownership Calculator in Action
The following is a scenario in which a potential vacation owner’s numbers are calculated – in the first case using traditional methods, and in the second using the Vacation Ownership Calculator:

Traditional Calculations:
Number of nights per year: 21
$ per night: $100
Years to Vacation: 20
Future Vacation Cost: $42,000

Vacation Ownership Calculator:
Number of nights per year: 21
$ per night: $100
Years to vacation: 20
Rate of Inflation: 7%
Future Vacation Cost: $86,090.53

With our calculator just look at the difference of the level of commitment in money – the difference is clear to the salesperson and the potential owner, and will increase sales, raise closing percentages, and raise VPGs. It almost goes without saying, but it is definitely much easier to sell vacation ownership with a huge difference in a rent versus own and Future
Vacation Cost. What’s more, says Vacation Ownership Calculator CEO Bryan Phillips, “any new sales tool can also simply motivate your line.”

The Vacation Ownership Calculator is used by individual salespeople throughout the industry, including sales staff members at the following resort developers:

• Aviawest
• Bluegreen Resorts
• Coral Resorts
• Diamond Resorts
• Disney Vacation Club
• GeoHoliday
• Hilton Grand Vacations
• Holiday Inn Club Vacations
• Marriott Vacation Club
• Palace Resorts
• Shell Vacations Club
• Spinnaker Resorts
• Starwood Vacation Ownership
• Summer Bay Resorts
• Westgate Resorts
• Wyndham Hotels & Resorts

“All sales reps carry a calculator, so why not have one designed specifically for the industry?,” asks Phillips, who has been in the industry eight years and was part of a team of sales reps and managers in Hilton Head, South Carolina who created the Vacation Ownership Calculator.

In addition to aiding in new sales, the Vacation Ownership Calculator is popular with vacation club, in-house and other trade-in and resales reps, who appreciate the fact they can use the calculator to show the amount of money people will be spending on maintenance fees over time with inflation.

The bottom line is this: If you’re a salesperson, get the Vacation Ownership Calculator today and start seeing increased sales tomorrow. And if you’re a sales manager or director, purchase Vacation Ownership Calculators for your entire sales staff and start seeing better numbers across the board right away.

The Vacation Ownership Calculator is one of the simplest, most-straightforward and least-expensive ways to improve sales and closing percentages – plus, there’s no training required and no learning-curve lag time. Just results and a great return on your investment.

The Vacation Ownership Calculator is available direct from the manufacturer at www.vacationownershipcalculator.com, as well as on Amazon (www.amazon.
com) for only $29.99.

For more information on the Vacation Ownership Calculator, visit www.vacationownershipcalculator.com or contact Bryan Phillips, an ARDA-certified supplier, at 843-385-9836 or bpphillips@yahoo.com.

Remember when Radio Shack was the big “technology store” where you could get all of your VCR and Satellite TV accessories? Well, if you do, then you understand the divide between the “baby boom” generation and the world that is swallowing it.

In 1950, the population of the world was 2.5 billion. By the year 2000, it had nearly tripled to 6.5 billion. That is an astronomically huge explosion. The majority of that explosion came from what every business and advertising company since has referred to as the cherished “baby boomers,” a market that everyone craves. The baby boomers consist as the remainder of a bygone era, the first people to see television and use a dial phone. They are now the age group that dominates the vacation-home ownership industry. The rub is that they are used to driving Model T’s and the world is cruising past them in Ferraris.

Many studies have shown time and again that babyboomers largely shy away from the technological wave that has crashed onto their shores. A widget to them used to open up boxes, now it opens up the world and gives anyone with a computer access to it.

Anyone with a grandma can tell you, baby-boomers quickly exit any kind of site or program that they cannot easily figure out – and we at The Interval Group don’t blame them. In fact, we have kept them in mind as we designed our website and programs to manage their online experience. For the billions of babies these boomers nursed along the human chain, The Interval Group offers them this same gentle bedside manner, helping them to enjoy their golden years.

How did we at the Interval Group cater our software, aptly named “Schedule and Go™” to include this massive market of baby-boomers?

First, we designed our “boomer friendly” screen: more colors, pictures and larger fonts. Secondly, we simplified steps to make navigating the online experience more simple. Finally, we have crafted and perfected an online video tutorial system, which easily guides even the most challenged user through the website.

Like no other training form, the online tutorials provide a single method that accommodates any learning style:

• The tutorials are more efficient than a live instructor, because the tutorial teaches the lessons the same way, each time, every time.
• Each tutorial offers individualized instruction, which can target specific needs and individual
learning preferences.
• All the tutorials are self-paced.
• Advanced learners are allowed to speed through or bypass instruction that is redundant, while novices can progress through content at the rate that is comfortable for them and encourages optimal results.
• All tutorials are available online anywhere and anytime. There is no need for the user to feel they are inconveniencing the local staff.

The Interval Group’s Schedule and Go™ offers its clientele the easiest, most readily manageable mode of operations of any Internet-scheduling system. Our customers can easily access and control their schedule. They can check to see what is available and with such features as hyper search, they can search all locations or inventory of their fractional. As fast as their schedule can change, Schedule and Go™ can change. With a couple of clicks of the mouse, they have the freedom to say when, where, and how. Furthermore, if they have trouble, the many informative and easy-to-understand tutorials are there to assist at the click of a button.

No matter what stage a project is at, budgets always seem to be tighter than expected. Given current market conditions, it is impractical for a project owner to compensate for up-front service expenses when only operating on the capital of just a few owners. However, without an on-site administrator, a cleaning staff, a maintenance crew or a concierge, it would be all but impossible to keep owners satisfied and to attract new ones. Even existing owner associations want the services of 5-star vacationing, but with the least amount of cost. The only answer is to increase efficiency by having owners manage their own time. The great advantage is the user gets immediate information regarding their schedule and the owner association or project owner doesn’t incur any expense.

Does this all sound too good to be true? It’s not. The foundation of any project is management. Having the right tools gets the right results. The quality of operations has a direct correlation on sales. It is necessary to have detailed profiles that showcase the most important and relevant aspects of each specific, potential owner. Knowing their activities, recreation plans, upcoming birthdays and even their preferred brand of peanut butter is essential. Knowing common details produces uncommon results.

No other online scheduling and reservation program is as all-encompassing as Interval Group’s. By limiting needless communications, current management can assist with larger, more important tasks. “Your software has not only made the job of our member’s services manager a breeze,” says Interval Group client Nancy Bishop, director of South Pacific Fractional Real Estate, “but it also has made it a seamless way for our members to manage their own time, naturally freeing up our staff to do what they are supposed to … ’the people stuff.’”

Our simple email confirmation process communicates every aspect of sales, service, maintenance and administration. Whether your asset is a plane, home or a condo, Interval Group’s email system automatically updates all parties involved, keeping everyone synchronized, at every step along the way.

Envision the opportunity to communicate your message to your owner or potential owner at five different intervals (at time of reservation, confirmation, 14-day reminder, seven-day reminder and one-day reminder) each time with a customized, personal approach. The benefits of changing the email messages in a few short minutes are immeasurable. Additionally, in this rapidly changing marketplace, individually tailored messages go much further in embracing all participants, including the elusive buyer. Technology is speed and the more speed with which you can serve existing customers, while connecting and staying connected with prospective new owners, propels your project to the forefront of success.

Owners always have high expectations. It’s simple: rapid and quality service when it comes to their purchase. Time is of the essence, in communication, regarding their wants and needs. The Interval Group helps developers operate with more efficiency and less effort. Just what a resort developer serving the vast babyboomer market needs.

For more information, contact Chad Olsen, CEO, The Interval Group, at 208-921-5252 or chad@theintervalgroup.com, or visit www.theintervalgroup.com.

Lessons from Case Studies Can Benefit Legal, Finance and Marketing Professionals

By Paul Stewart

Paul Stewart is a director of indirect tax services at KPMG in the UK and has been involved in advising on VAT in the vacation ownership sector for over 16 years. In such a colourful and interesting sector the last thing most subscribers will want to read about is tax! However, more than ever businesses are conscious of the need to manage tax risk whilst maximising the opportunity for savings. In this regard this article is not just aimed at those in-house people in finance and legal, but also at those involved in marketing.

The majority of countries will have some form of indirect taxation, be it a type of VAT or sales tax on transactions. This article focuses on two important cases in the European Union (“EU”) VAT system. The principles established could be relevant in other similar VAT systems.

First of all, in the interest of keeping you all with me its worth having a little refresher on the basic rules of VAT. It is the main form of indirect taxation in the EU and is a tax based on transactions rather than profits. It is important to understand “who is providing what to whom, when, where and for how much.” This helps establish the rate of VAT and the place and timing of when VAT is due. The fact that developers enter into different types of transactions, particularly in relation to property, and often on a multi-jurisdictional basisretailing to the end consumer means that the VAT consequences of transactions are not always straightforward.

VAT is a tax on consumer expenditure and is collected on business transactions. It is charged at each stage in the supply of goods and services where these are subject to a positive rate of VAT. If the customer is registered for VAT and uses the supplies for his taxable business activities, then he will be able to reclaim this VAT. In many cases (but not always) VAT simply “washes through” businesses and is ultimately borne by the final consumer. Particular rules apply to determine in which county transactions should be treated as taking place for VAT purposes. In the case of services, relevant factors can include the precise nature of the services, the place where the customer belongs and whether the customer is acting in a private or business capacity. As a general rule, services relating to immovable property are taxed in the country where the property is situated which seems straightforward. The difficulty in some instances is where the line is drawn between services that do and services that do not relate to property. The position is complicated further for those involved in cross-border transactions. Standard VAT rates vary from one EU state to another; for example, last year the UK standard rate was 15%, whereas the highest standard rate in the EU was 24%.

Added to this, member states have the right to use a lower rate although there is no consistency across member states. In southern Europe, the lower rate typically applies to hotel and touristic related services.

It is clear that in recent years the tax authorities in the EU have been focusing more closely on the vacation ownership sector – particularly in the UK, where two specific cases have reached the European Court of Justice. The cases involve RCI Europe Ltd (“RCI Europe”) where a ruling has been given and Macdonald Resorts Ltd (“MRL”) where a ruling of the European Court of Justice is still awaited. The RCI Europe case relates to the VAT treatment of enrolment, subscription and exchange fees whilst the MRL case relates to the VAT treatment of the sale of points. The services are multi-jurisdictional in nature and the common denominator is establishing the place of supply; i.e., in which country the services are to be taxed for VAT purposes. In view of the fact that VAT rates vary significantly within the EU and indeed certain non-EU jurisdictions do not have VAT systems, it is no wonder that businesses operating on an international level are keen to understand the most tax efficient structure from both a VAT and corporate tax perspective having regard of course to the key commercial and business drivers.

It all sounds complicated and quite frankly it is. What is clear is that in order to manage the tax burden and maximise the scope for lower rates and exemptions businesses in the vacation ownership sector need to understand how the tax impacts on their business. In particular, savings and a competitive edges could be obtained depending on how on how products are designed and marketed.

Case Study 1: RCI Europe
RCI Europe is a UK company which of course facilitates and organises the exchange of timeshare usage rights held by its members in holiday accommodation, the vast majority of which is located outside the UK. The case concerned the ‘RCI Weeks’ programme. Individuals make a number of payments to RCI Europe:

• An enrolment fee which covers one to five years
• An annual subscription
• An exchange fee on request for an exchange

The key issue was where the services provided by RCI Europe were treated as taking place. The UK VAT authorities (“HMRC”) took the view that UK VAT was chargeable on all enrolment and subscription fees. This was because in their view the service was not sufficiently connected with immoveable property and the place of supply for VAT purposes defaulted to the country where RCI Europe was established, which was conveniently the UK. With regard to the exchange fee, HMRC considered this as falling under an alternative VAT accounting method typically used by tour operators. Under this method, to avoid the administrative burden of multi jurisdictional VAT registrations, VAT is due under the gross margin earned only in relation to EU accommodation. Again this meant that all the VAT was payable in the UK where RCI Europe is established. To complicate matters (if you think that’s possible!) the Spanish authorities took a different view. This was that the services were connected with immovable property and therefore liable to Spanish VAT in the country where the property subject to the timeshare usage rights is located. Effectively, two EU countries were squabbling over the tax cake and the business was caught in the middle of the crossfire. Since ultimately double taxation should not arise, the case was referred to the European Court of Justice.

The Decision
The court had to define precisely the service being undertaken and came to the view that the enrolment and subscription fees must be regarded as constituting payment for RCI Europe’s service of providing participation in a system to enable each member to exchange his or her timeshare right.

In terms of its assessment of the VAT place of supply rules, the court concluded that the service between RCI Europe and the consumer is connected in its entirety to the property over which the consumer has a timeshare usage right. Interestingly, the court did say that if such services were treated as taking place for VAT purposes where the supplier is established, then it would then be easy for an operator to relocate to a place outside the EU and avoid paying any VAT at all. This almost certainly played in part in the court’s decision. In answering the questions referred from the UK, the court responded that the place of supply for all the exchange services provided by RCI Europe is the country where the customer holds his existing timeshare usage rights – i.e., there is an obligation to charge and account for VAT is on a multi-jurisdictional basis rather than accounting for UK VAT on all the services. On the face of it, the decision gives rise to multi VAT registration requirements. Once again this raises the question of the extent to which the nature of services can be adapted to achieve a more advantageous tax result without comprising from a commercial perspective.

Summary
The judgment is slightly surprising and was not fully anticipated by the parties and other contributors to the case. The judgment refers to the logic of taxing services as far as possible in the place of consumption but many would have considered this to be in the country where the timeshare obtained is enjoyed.

The decision does provide more of an insight to the approach by the courts in assessing whether services are connected with immoveable property. In this case they were considered to be sufficiently linked to the timeshare usage right be held by the member, such that it did not matter where the supplier of the services was established. This takes us neatly onto the MRL case.

Case Study 2: MRL
MRL is a developer which sells timeshare usage rights in resorts located both in the UK and in Spain. The majority of inventory and the place where most sales are concluded is Spain. The sale of timeshare weeks in Spanish accommodation is subject to 7% Spanish VAT whereas in the UK the sale of timeshare weeks is exempt from VAT if the accommodation is more than three years old. MRL is registered for VAT in the UK and Spain. MRL subsequently introduced a pointsbased system for timeshare sales which was designed in such a way to preserve the VAT treatment for more traditional timeshare sales. MRL attributed income on all points sales to the UK and Spain by reference to the inventory mix.

HMRC challenged the basis for VAT accounting contending that VAT (at 17.5%) was due in the UK on the full sales value of points including upgrade fees, irrespective of the age and location of the inventory mix and where the contracts were concluded. MRL considered that under the terms of the constitution of the points club, members were granted occupancy rights (right to exclusive use and occupation) of the club accommodation. MRL considered that the introduction of the points system should not result in a significant increase in VAT due on what simply amounts to the sale of timeshare usage rights. MRL has designed its product to address any challenge from HMRC so that the Spanish and UK authorities would continue to each get a slice of the VAT cake.

The UK VAT authorities, however, want UK VAT on all sales just as they did in the RCI Europe case. It seems that they have not even contemplated the fact that if they were correct all businesses may restructure operations in such a way to fall outside the VAT net. The Spanish authorities have not been consulted but one suspects that they are once again not likely to agree to the UK’s view!

The finding of the court in the RCI Europe case that the services related to immovable property and the fact that the court commented specifically that off-shoring would lead to an irrational result points (no pun intended) to the MRL case being decided in favour of the taxpayer. Those affected should be aware of the implications arising from both a taxpayer win and taxpayer loss. The current status of the case is that MRL and HMRC have agreed the wording of the questions referred to the European Court of Justice and a hearing will take place later in 2010.

The options are that the court will rule that the sale of points represents (i) a supply which should be apportioned based on an inventory mix basis (ii) a supply which is taxable in its entirety where the supplier has established his business, i.e., in this case the UK.

Summary
The evolving case law is, particularly in borderline cases, leaning towards services being linked to immoveable property. This can affect businesses established outside the EU if the immoveable property to which their services relate is located within the EU. It can also affect the established businesses in terms of managing the place and rate of indirect taxation on their services. Depending on the impact businesses may wish to explore whether service can be adapted to achieve a better tax result both from a financial perspective or simply to reduce the administrative burden.

Paul Stewart is a Director of VAT services at KPMG. The views expressed are those of the writer and not necessarily those of KPMG.

For more information, contact Paul Stewart, director, KPMG LLP at:
Indirect Tax
St James Square
Manchester M2 6DS
Direct line +44 (0) 161 246 4917
Mobile +44(0) 7801 522 308
Fax +44 (0) 161 246 4026
paul.stewart@kpmg.co.uk