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This excerpt taken from the WYN 10-K filed Feb 27, 2009. Vacation
Ownership Industry Overview
The $11 billion global vacation ownership industry, which
is also referred to as the timeshare industry, is a component of
the domestic and international hospitality industry. The
vacation ownership industry enables customers to share ownership
of a fully-furnished vacation accommodation. Typically, a
vacation ownership purchaser acquires either a fee simple
interest in a property, which gives the purchaser title to a
fraction of a unit, or a right to use a property, which gives
the purchaser the right to use a property for a specific period
of time. Generally, a vacation ownership purchaser’s fee
simple interest in or right to use a property is referred to as
a “vacation ownership interest.” For many vacation
ownership interest purchasers, vacation ownership is an
attractive vacation alternative to traditional lodging
accommodations at hotels or owning vacation properties. Owners
of vacation ownership interests are not subject to the variance
in room rates to which lodging customers are subject, and
vacation ownership units are, on average, more than twice the
size of traditional hotel rooms and typically have more
amenities, such as kitchens, than do traditional hotel rooms.
The vacation ownership concept originated in Europe during the
late 1960s and spread to the United States shortly thereafter.
The vacation ownership industry expanded slowly in the United
States until the mid-1980s. From the mid-1980s through 2007, the
vacation ownership industry grew at a double-digit CAGR,
although sales are believed to have slowed in 2008 and are
expected to decline during 2009. Based on ARDA research,
domestic sales of vacation ownership interests were
approximately $11 billion in 2007 compared to
$6.5 billion in 2003. ARDA estimated that on
January 1, 2008, there were approximately 4.7 million
households that owned one or more vacation ownership interests
in the United States.
Table of Contents
Based on published industry data, we believe that the following
factors have contributed to the substantial growth, particularly
in North America, of the vacation ownership industry over the
past two decades:
Demographic factors explain, in part, the growth of the
industry. A 2008 study of recent vacation ownership purchasers
revealed that the average purchaser was 53 years of age and
had a median household income of $73,000. The average purchaser
in the United States, therefore, is a baby boomer who has
disposable income and interest in purchasing vacation products.
We believe that baby boomers will continue to have a positive
influence on the vacation ownership industry. However, we expect
that industry-wide gross vacation ownership sales will decline
during 2009 due to the current economic environment. According
to ARDA, the industry could see as much as a 20% decline in
sales if the current economic environment does not improve.
According to information compiled by ARDA, the four primary
reasons consumers cite for purchasing vacation ownership
interests are: (i) flexibility with respect to different
locations, unit sizes and times of year, (ii) the certainty
of quality accommodations, (iii) credibility of the
timeshare company and (iv) the opportunity to exchange into
other resort locations. According to a 2008 ARDA study, nearly
85% of owners of vacation ownership interests expressed a
general level of satisfaction with owning timeshare. With
respect to exchange opportunities, most owners of vacation
ownership interests can exchange vacation ownership interests
through exchange companies and through the applicable vacation
ownership company’s internal network of properties.
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