What’s the difference between a timeshare and hotel crowdfunding?
This is a commonly asked question for the team at HotelierCo. For travel enthusiasts, investing in a hotel or timeshare is an enticing opportunity. With equity crowdfunding presenting new ways to invest in hotels and real estate properties, vacation ownership has begun to evolve. This poses the question: what makes a timeshare different than a hotel investment? Here’s everything you need to know about timeshares, equity crowdfunding, and hotel real estate investing.
What is a Timeshare?
You’ve probably heard about timeshares often, if you don’t already own part of one. But what exactly is a timeshare?
To make it simple, a timeshare is a vacation real estate property owned by multiple people. As the name suggests, shareholders are guaranteed access to time spent at their vacation property. These properties are often located near popular vacation destinations like DisneyWorld and other famous resorts. Instead of booking a vacation and paying for lodging each year on your Disney vacation, some frequent travelers will choose to purchase a timeshare, which guarantees them a place to stay each year without the varying price. Timeshares are generally seen as expenses, rather than investments. They depreciate over time and are often difficult to resell.
How Do Timeshares Work?
Timeshares don’t all work the same way. There are different types of contracts and even different types of ownership.
Timeshare Contracts & Ownership
Your first option for timeshare ownership is the shared deeded contract, which means you’ll be part owner–alongside others. Technically each owner gets one week out of the year to visit the timeshare, so there could be as many as 52 owners. Ownership usually doesn’t expire with these deeds and you can sell if you choose to, although it is often extremely difficult.
Another common timeshare contract is the shared leased contract. This is similar to renting a hotel or an apartment, but for a very long time. Rather than getting the deed, you sign a lease for a certain number of years. You get guaranteed use of the timeshare, just like with shared deeded contracts. But you are not the owner. The hotel or resort holds onto the deed.
In terms of your chosen vacation time, there are different options for that as well. The fixed week option allows timeshare owners to choose a specific week of the year to vacation at their property. Changing your designated week can sometimes be a hassle. Another option, known as floating week, gives you a window of time to choose your week from. The point system is like an exchange program for timeshare owners. Exchange and access other resorts within your timeshare program. This is based on how many points your timeshare is worth.
Pros and Cons of Timeshares
-If you always vacation at the same spot every year at the same time, timeshares are awesome. You can guarantee that time with this type of vacation real estate without the hassle of making reservations.
-You know what you’re getting every year. With a timeshare, this will never change.
-Gain access to perks like fitness, hot tubs and other amenities.
-If you’re not using your timeshare, you can let friends and family use it. Someone gets a great deal on a family vacation, which always makes you feel good.
-Often ask for a large investment upfront – however, this can vary greatly based on location and whether you’re buying a new or used property.
-Timeshares are great for frequent travelers. But they don’t retain their value over time. They actually depreciate in value. Important to keep in mind.
-Maintenance and upkeep fees. You pay these annually. This is true even if you do not utilize the property in a given year.
-Guests are guaranteed, so great hospitality service is not always top-priority
Modern Hotel Investment: What is Equity Crowdfunding?
As the world continues to evolve, along with technology, investment is opening up to the public through digital channels. Equity crowdfunding is just one example of this. Essentially, equity crowdfunding allows startup businesses and entrepreneurs to raise capital for their businesses from the crowd, digitally. Unlike more conventional methods, accreditation is not always required to invest.
Raising capital through equity crowdfunding opens the door for more people to invest in businesses at the ground level. That being said, there are some guidelines pertaining to age, location, income and assets. These will vary depending on the platform.
HotelierCo, for example is an equity crowdfunding platform that allows anyone to build wealthy by investing in hotel real estate. If you live in the US and are over the age of 18, you have the ability to invest in a hotel property through HotelierCo.
Are Timeshares a Bad Investment Compared to Hotels?
The answer to this question will be different for everyone. Whether you’re just dipping your toe in the waters of vacation real estate or are looking for alternatives to timeshares–it’s important to understand the difference between the two. Here is a rundown of what makes hotel investment different from timeshares.
- -Traditional timeshares are usually at resorts, which means you may get a designated suite and larger area
- -Usually only available during certain times of the year
- -Timeshares depreciate in value, so they’re not a great investment
- -Could be considered a frequent traveler luxury or expense
- -Service and hospitality aren’t always top priority, since guaranteed guests have already paid
Hotel Crowdfunding & Investment
The terms and perks of your investment will vary depending on where you invest. Ultimately, with a platform such as HotelierCo, here are a few things you can expect.
- -Luxury VIP perks and discounted accommodations
- -Enjoy and book your stay at any point throughout the year
- -Your hotel investment gives you part-ownership of a valuable asset
- -Potential for return on your investment
- -The hotel will be open to the public, so world-class hospitality is top priority
- -With HotelierCo, there are no maintenance fees or upkeep with your investment
Which Option is Right For You?
Deciding which of these options is right for you ultimately comes down to what you’re looking to gain from your vacation property. If return on your investment is important to you but you still want travel perks, hotel crowdfunding presents a perfect solution. Hotel investment with HotelierCo gives you access to luxury boutique hotels, so if you’re looking for luxury, timeshares aren’t the only option anymore. You’ll also get some flexibility with travel plans and get to explore new destinations with unlimited potential.
If a large vacation space and guaranteed time at your favorite resort are your biggest concerns, timeshares can be a smart decision for some. Just keep in mind that as the property ages, updates are difficult to implement. And selling is not usually easy.
Whichever route you take to vacation ownership, make sure to do your research. If you’re leaning toward hotel investment, be sure to look for equity crowdfunding platforms that have done the necessary work to vet your investments.
HotelierCo properties come with plenty of information for investors to review which show how the development is being set up for success. The first HotelierCo property open for investment is a luxury boutique hotel in Cape May, NJ. The Ewing started as an old, elegant mansion and will feature exciting amenities such as a rooftop pool. Investments start as low as $2500, and will eventually lower to $500. Over time, HotelierCo plans to offer members opportunities to invest in global hotel developments.
Interested in learning more about hotel ownership? Explore a vacation investment that pays off with HotelierCo.
Click here to become a Hotelierco member today.