After I wrote about the English Fractal – apartments in parts, a lot of people wrote that it was a regular timeshare. To demonstrate the difference, today’s startup of the day is a classical timeshare – Disney Vacation Club, even though it’s by no means a startup.
Just like with Fractal (of course, it’s more correct to say that with fractal it’s just like with a timeshare), the club member buys a bit of real estate. But this is where the similarities end. Instead of a quite feasible one-eighth of an apartment, the client gets a share of one percent of an enormous hotel. The amount of the investment is measured in tens and not hundreds of thousands of dollars.
Aside from the microscopic share, it is also not transparent at all. A hotel is a profitable commercial enterprise and it is supposed to hand out returns on investment to its owners depending on the results of the past year. Timeshares don’t hand out those, instead they charge club members about 100 dollars per month for taxes and administrative issues, – and it’s difficult to understand what influences the amount of this fee in each given season other than Disney’s greed.
The investor’s benefit is a free vacation. They get a fixed amount of points that they can spend in any hotel of the ‘proprietary’ brand or even ‘in roaming’ in several other chains.
Supposedly, inflation will increase the dollar prices of resorts, but the price in points remains unchanged forever. Thus, the club member pays now for the long years of their future vacations, and gets wholesale- and pre-payment-related discounts, but keeps partial freedom of choosing when and where they go. Disney takes back its share in 50 years.
Summing up, a timeshare is a super expensive vacation certificate. The fact that it is legally shaped as real estate ownership is at best insurance against the operator’s bankruptcy. Regular certificate owners wouldn’t get anything, and here you can hope for some payouts. Club members won’t have any feeling of ownership, they may never know the address of the hotel they ‘own.’ And for sure, nobody will show them ‘their’ corner there.
Large American chains have hundreds of thousands of shareholders, which means tens of billions of dollars and huge businesses. What’s curious is that all their websites that I looked at look like cookie-cutter copies of something straight out of the nineties. No idea how to explain this.
#invetments #fintech #travel
Translation: Kostiantyn Tupikov
Alexander made his career in Russian internet companies including Mail.Ru, Rambler, RBC. From 2016 to 2018 he was Chief Strategy and Analytics officer in Mail.Ru Group. In this position, he worked on M&A, investments, and new project launches. In 2018 he became Deputy CEO in Citymobil, a Russian Uber-like company that was invested by Mail.Ru Group and Sberbank (the biggest Russian bank), then he left the company to launch his own projects. Now Alexander is a co-founder of United Investors – the platform for co-investments in Russian early-stage startups. His blog #startupoftheday (#стартапдня) is one of the most popular blogs about startups in Russia.