Table of Contents
Worldwide Timeshare Industry Overview
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- Definition
- Data sources and acknowledgements
- Industry evolution and growth
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- Figure 1: Locations of timeshare resorts worldwide, 2003
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- Figure 2: Growth of the timeshare industry worldwide, 1980-2002
- Figure 3: Estimated total timeshare projects worldwide by market with corresponding market share 2003
- The US – Market leader
- Other regions
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- Figure 4: Numbers of resorts and owners in remaining established markets, 2003
- Annual sales volume
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- Figure 5: Global industry – annual sales, 1990-2004
- The top 10 countries
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- Figure 6: The top 10 countries for timeshare projects, 2003
- Timeshare’s economic importance
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- Figure 7: Worldwide timeshare ownership, 1990-2004
- Resort location preferences
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- Figure 8: Industry recreational property trends
History and Development of Timeshare
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- The origin of timeshare
- A European concept
- Timeshare introduced in the USA
- The arrival of the exchange companies
- RCI established
- Interval international established
- Trade associations develop
- Resort quality rating system
- US industry pioneers
- Industry pioneers – Europe
- Hapimag
- Holiday property bond
- Club La Costa
- Resort Properties
- Industry pioneers – Southeast Asia
- Berjaya Vacation Club Berhad (BVC)
- Entry of the first major hospitality brand
- Exchange companies expand
- Protecting consumer interests
- European legislation
- EU timeshare directive
- Industry Evolution: Clearly defined phases
- Phase 1: Birth and infancy
- Phase 2: Childhood
- Phase 3: Adolescence
- Phase 4: Towards early adulthood
- Interest of investors and travel groups
- The industry today – well positioned for continued growth
Industry Structure
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- How the industry is structured
- Barriers to entry
- Increasing consolidation
- Impact of leading developers
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- Figure 9: Worldwide industry concentration, by annual sales volume, 1998, 2002 and 2003
- Owners
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- Figure 10: Worldwide industry concentration, by owner base, 1998 and 2003
- Resorts
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- Figure 11: Worldwide industry concentration, by numbers of resorts, 1998 and 2003
- Figure 12: Top ten timeshare resort companies, by annual sales volume, 1994
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- Figure 13: Top ten timeshare resort companies, by annual sales volume, 1998
- Figure 14: Top ten timeshare resort companies, by annual sales volume, 2003
- US non-branded developers
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- Figure 15: US industry’s leading non-branded developers, 2000
- Figure 16: US industry’s leading non-branded developers, 2001
- Figure 17: US industry’s leading non-branded developers, 2002
- Figure 18: US industry’s leading non-branded developers, 2003
- US domination
- Increasing globalisation
- Hospitality chains
- International expansion of leading companies
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- Figure 19: Top ten companies, by number of resorts, end 2003
- Owner bases
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- Figure 20: World’s top ten timeshare companies, by ownership base, end-1998
- Figure 21: World’s top 12 timeshare companies, by ownership base, end-2003
- Market segmentation
- The Industry’s two largest non-branded developers
- 1. Cendant Timeshare Resort Group
- 2. Sunterra Corporation
- Conclusion: consolidation and segmentation ahead
The US Market
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- Figure 22: Timeshare resorts within the US, 1975-2004
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- Figure 23: Spread of timeshare resorts, by key states, 2003
- Figure 24: Number of timeshare units within each of top ten states, 2003
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- Figure 25: Growth of timeshare accommodation units in US, 1975-2005
- Figure 26: US timeshare developer sales volume, 1975-2004
- Timeshare purchases
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- Figure 27: Timeshare purchase prices in the US, 2003
- Purchase prices
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- Figure 28: Timeshare price details and trends – US
- Financing of purchases
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- Figure 29: Purchaser financing percentages, US compared as between May 1999-April 2000 and August 2001-July 2002
- Consumer benefits
- Community benefits
- Size of unit purchased
- Number of weeks per purchase
- Type of use plan
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- Figure 30: Type of use plan
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- Figure 31: Average maintenance fees on recent acquisitions
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- Figure 32: Maintenance fees per week
- Figure 33: Average maintenance fee per week of annual use
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Markets in Europe, Mexico and Latin America
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- Figure 34: Growth in number of European timeshare resorts, 1981-2001
- Figure 35: Spread of European resorts, by country
- Figure 36: Europe’s top ten countries for timeshare resorts
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- Figure 37: Timeshare resort distribution within the Canary Islands
- Figure 38: Timeshare resort distribution within mainland Spain and Balearic Islands
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- Figure 39: European resort distribution, by location type
- Figure 40: Distribution of Spanish resorts, by resort size
- Figure 41: Resort ownership, by country of residence
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- Figure 42: Attraction of European resort location, by type
- Figure 43: Type of use plan, by European market region
- Headline figures for the timeshare industry in Europe
- Timesharing in the United Kingdom
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- Figure 44: Analysis of resort distribution in the United Kingdom
- Figure 45: UK owners, by ownership and location
- Latin America
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- Figure 46: Resort distribution in Mexico and Latin America, by country, 2003
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- Figure 47: Listing of resort projects by country with units per country and average resort size, by country
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- Figure 48: Showing owners owning in country and owners residing in country for Mexico and Latin America
- Summary of magnitude and distribution
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- Figure 49: Intervals sold by country in Latin America
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- Figure 50: Mexico’s largest vacation ownership companies measured by sales volume
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The Timeshare Product
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- The starting point – Resort location
- Feasibility
- Development process
- Creating the timeshare legal plan
- The timeshare use plan
- Vacation clubs
- Sales impact of purpose-built design
- Original use
- The physical product – bigger units
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- Figure 51: RCI Minimum Size Guidelines
- Figure 52: Interval International unit size guidelines – excluding Urban Sites
- Figure 53: Interval international unit size guidelines – urban sites only
- Unit design
- Role of the developer
- Resort management
- Basic product concepts
- Property law systems
- Multi-ownership
- Multi-use
- Rental for periods of time
- Periodic right-to-use
- Personal right or contract law systems
- Club trustee format
- Company share schemes
- Comparison of fee-simple deeded ownership and right to use
- Forms of deeded product
- Advantages of deeded ownership
- Disadvantages of deeded ownership
- Right-to-use products
- Duration of right-to-use product
- Advantages of right-to-use
- Disadvantages of right-to-use
- Variations in use offerings
- Fixed period
- Floating period
- Split weeks
- Points based products
- Biannuals or biennials
- Recent developments in product concepts and legal structures
- Vacation clubs
- New products
- Gaming
- Fractional interests
- Canal boat timeshare
- Catamaran and cruise timeshare
- Timesharing a single cruise ship
- Cruise based vacation club
- Fractional jet ownership
The Role of Exchange
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- Two types of exchange
- Profiles of the two principal exchange companies
- RCI – part of Cendant Corporation
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- Figure 54: Vacation rental group properties
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- Figure 55: RCI affiliated resort locations
- RCI Travel
- RCI Holiday Network
- RCI Resort Management
- Exchange – a key role
- Interval International
- Competition
- Dual affiliation
- How exchange works
- Advanced technology systems
- Ancillary services
- Resort categorisation and quality standards
- Performance levels – high level of satisfaction
- Monitoring customer retention
- Industry role of the exchange companies
- Exchange trends
- Wholesale inventory swaps
- Diverse strategies
- Technology a major asset
- Entry of industry innovators and new exchange companies
- International Cruise & Excursions, Inc. (ICE)
- Affiliations
- Membership
- Development and promotion of internet technology
- The San Francisco Exchange Company
- Dialanexchange
- The Abercrombie and Kent Registry
- The World’s Finest Resorts
Industry Approaches to Regulation and Legislation
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- Key principles of fair legislation
- Full disclosure sales process
- Cooling-off period
- Protecting purchasers’ deposits
- Assurance of occupancy
- 1. Exchange companies
- 2. Trustee companies
- 3. The trade associations
- The American Resort Developers Association (ARDA)
- ARDA’s organisational development
- Do not call
- SPAM
- Accounting standards
- The Organisation for Timeshare in Europe
- AMDETUR
- Canadian Resort Development Association (CRDA)
- La Federacion LatinoAmericana des Arrolladores Touristicos AC (LADETUR)
- Timeshare Industry in South Africa (TISA)
- The Thai Vacation Ownership Association (TVOA)
- The Malaysian Holiday Timeshare Developers Federation (MHTDF)
- The All India Resort Development Association (AIRDA)
- The Australian Timeshare & Holiday Ownership Council Limited (ATHOC)
- The Global Alliance for Timeshare Excellence (GATE)
- Early approaches to legislation
- THE US Alda/Narello Model Act 1979
- The Alda/Narello Model Act 1983
- International bar association paper, 1991 – international regulation of the timeshare industry
- The current regulatory approach within the US
- Timeshare registration
- Additional laws and legal issues
- Management regulation
- Sales and marketing laws
- Financing laws
- Construction/development laws
- Securities laws
- Europe
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- Figure 56: European legislation relating to the timeshare directive EC/47/94, as at January 2004
- Potential new legislation impacting the timeshare industry in Europe
- The Proposed Unfair Commercial Practices (UCP) Directive
- Aims of the proposed directive
- General prohibition of unfair commercial practises
- Misleading and aggressive commercial practises
- Continuing issues
- Holiday packages
- Australia
- Legal framework and history
- Structures of timeshare – Premanaged Investment Act
- Structures under the current legislation
- Overall impact of legislation
- Legal and tax complexities
The Impact of The Hospitality Brands
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- Hospitality industry interest aroused
- Profit and growth opportunities
- Focus moves from sales via product to customer
- Redefining the hospitality industry
- Customer equity
- The appeal of timeshare’s strong growth
- Mixed-use properties
- Marketing synergies
- Striking a balance
- The impact of the hospitality brands
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- Figure 57: Percentage share of the global timeshare market, measured by sales volume, achieved by the leading participating hospitality brands, 1998-2003
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- Figure 58: Percentage share of the global timeshare market held by hospitality brands, measured by sales volume, when also including Cendant Timeshare Resort Group
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- Figure 59: Percentage share, measured by sales volume, of the US market achieved by the major hospitality brands, 1998-2003
- Segmentation
- Sub-brands
- Rating systems
- Main hotel brands involved in timeshare
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- Figure 60: Hospitality brands and the timeshare industry
- Marriott Vacation Club International
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- Figure 61: Marriott’s brands
- Segmentation
- The Horizons product
- Marriott Grand Residence Club
- The Ritz Carlton Club
- The travel trade and timeshare
- Tour operator challenges
- Cannibalisation
- Fear of competition
- Opportunities in timeshare
- Early entrants from the tour operating environment
- Airtours vacation ownership
- Thomas Cook
- TUI AG
- The key to broader market acceptance
The Economics of Timeshare
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- The timeshare business model
- Basic industry economics
- The timeshare business model
- Primary operations
- Economic drivers
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- Figure 62: Timeshare economics
- Figure 63: Timesharing economics – preliminary project pro forma – hypothetical resort
- Constructing a project pro forma
- The factors which will influence success or failure
The Marketing and Selling of Timeshare
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- Perceptions of the product
- Public image
- Changing the image of timeshare
- How timeshare is sold
- Traditional commercial strategy
- Core marketing methods
- Sales techniques
- Resale activity
- Affinity marketing
- Owner/member referrals
- In-house programmes
- The sales process
- Post-sales – cancellation/rescission
- Post-sale consolidation and follow-up work
- New distribution channels
- The secondary market
- Resale options
- Marketing resales
- Unwanted timeshares
- Supply and demand
- The impact of the internet
Points and Vacation Clubs
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- Vacation Clubs
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- Figure 64: Multi-faceted club structure
- Points
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- Figure 65: Inventory bucket concept
- Rationale
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- Figure 66: Comparative advantages and disadvantages of points
- Key capabilities
- How points systems work
- Operating challenges
- Start-Up Costs
- Automation
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- Figure 67: Points Management
- Extra staffing needed
- Pricing of points
- Points allocation
- Inventory management
- Practical operating challenges
- How points are presented
- History of points
- The South African experience
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- Figure 68: Examples of vacation clubs and points systems, 2003
- The response of the exchange organisations
- RCI Points system
- CRI Points and RCI Points
- Interval International’s different approach
- Legal Issues associated with Points
- Development
- Branding and product differentiation
- Sales and marketing
- Need for controlled sales process
- Points systems - further issues
- Benefits of points systems for the consumer
- Industry regulation
- Industry consolidation and polarisation
Financing Within the Timeshare Industry
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- Developer financing
- End loan financing
- Hypothecation and sale/purchase of receivables
- Hypothecation
- Sale/purchase of receivables
- Securitisation
- Key participant
- Static pool analysis
- Loan servicing and collections
The Timeshare Consumer
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- No longer an unsought product
- Public image
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- Figure 69: The public image of resort timeshare
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- Figure 70: Hesitations before purchasing resort timeshare
- Research indicates contented purchasers
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- Figure 71: Satisfaction of existing resort timeshare owners
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- Figure 72: Timeshare owner satisfaction levels around the World
- Consumer profiles
- US timeshare purchasers
- Demographic characteristics of US timeshare owners
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- Figure 73: Key demographic characteristics of US timeshare owners
- Top five timeshare purchase motivations
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- Figure 74: Top five timeshare purchase motivations
- Satisfaction with timeshare ownership
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- Figure 75: Overall satisfaction with timeshare ownership
- Utilisation of timeshares
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- Figure 76: How US timeshare owners utilised time during prior year
- Awareness and opinions of timesharing among public
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- Figure 77: Awareness and opinions of timesharing US households, never owned timeshare, income $25,000+
- Europe
- Consumer demographic characteristics
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- Figure 78: Demographics of European timeshare owners(1)
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- Figure 79: Demographics of European timeshare owners (2)
- Motivations for purchasing
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- Figure 80: European timeshare purchaser motivations (1)
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- Figure 81: European timeshare purchaser motivations (2)
- Hesitations about purchasing
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- Figure 82: How European timeshare purchasers utilise time
- The consumer benefits of resort timesharing
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- Figure 83: Satisfaction with timeshare ownership in Europe
- Latin America
- Consumer demographics
- Timeshare owner satisfaction levels
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- Figure 84: Satisfaction with timeshare amongst Latin American owners
- Future timeshare buyers
- Customer valuation
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- Figure 85: Cost of customer acquisition
- What are the key elements of customer value?
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- Figure 86: Lifetime value of client
- Added value potential
- What is the approach to valuation methods?
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- Figure 87: The value of customer loyalty
Urban Timeshare
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- Urban timeshare in Europe
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- Figure 88: Spread of European urban resorts, 2001
- Figure 89: Spread of Hapimag’s European urban resorts, 2002
- Established urban projects in the US
- The Manhattan Club, New York
- Examples of other US urban projects
Fractional Interests and Private Residence Clubs
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- Fractional interests market profile 2003
- Industry size
- Product characteristics
- Purchasing process
- Satisfaction, use and future plans
- Consumer characteristics
- The supply side
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- Figure 90: Geographic spread of fractional projects within North America, 2003
- Private residence clubs
- Background
- Product concept
- Product characteristics
- Pricing
- Marketing and sales
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- Figure 91: Differentiating characteristics of timeshares, fractional interests and PRC’s
- Examples of established luxury fractional and private residence club products
- The Ritz-Carlton Club
- Ritz-Carlton Club – competitive advantage
- Development focus
- Ritz-Carlton Club resorts overview
- Exclusive resorts – an alternative approach
- The demand side
- Outlook
Key Issues and Future Prospects
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- Legislation
- Industry consolidation and polarisation
- Pricing
- Marketing and sales costs
- Human resources
- Consistent service delivery
- Technology and the Internet
- Changing consumer demographics
- Access to finance
- Ageing physical timeshare product
- Inadequate reserve funding
- Longer annual vacation entitlements
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- Figure 92: Vacation days per year by country
- The secondary market
- Impact of low-cost airlines
- New and prospective entrants to the industry
- The vacation ownership company of the future
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- Figure 93: Key components for a successful vacation ownership company
- Remaining market potential in key established markets
- US market potential
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- Figure 94: US market penetration rate
- Europe
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- Figure 95: Ragatz Associates – 1995 study
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- Figure 96: Remaining European market potential
- Figure 97: OTE European timeshare industry, 2001 study
- Latin America – Potential remaining market depth
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- Figure 98: Latin America – estimated remaining demand for resort timeshares
- Future prospects
- Conclusions
Company Profiles
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- Cendant Timeshare Resort Group
- Marriott
- Westgate
- Starwood Vacation Ownership
- Bluegreen Corporation
- Hilton
- Sunterra
- Disney Vacation Club
- Shell
- Number of countries: 2 (US, Canada).
- Consolidated Resorts
- Villa Group
- Club La Costa
- Orange Lake
- Pacific Monarch
- Anfi Sales SL
- Tempus
- Hyatt
- Royal Resorts
- Island One
- Intrawest
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