Does the South African timeshare market provide financial institutions with an opportunity to enter the industry to extend its product range thereby increasing its loan book?
Date
2009-02-26T11:31:20Z
Authors
Mania, Enrico Vittorio
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Abstract
The research question enquires if the timeshare market provides financial
institutions with opportunities to adapt the timeshare market offering as an
extension of their product range thereby growing the loan portfolio which it
can hold as an income producing annuity or securitise this debt to realise
profits.
The timeshare market has grown substantially from modest beginnings in
Europe in the early sixties to a world wide multi billion US dollar industry by
the turn of the century. Despite a tarnished image and an industry associated
with hard sell techniques, it continues to enjoy acceptance amongst
consumers as a way of ensuring future holidays by fixing the cost, up front.
The research showed that timeshare which is an entrenched concept is
viewed as a consumer product and not as an investment. International
literature highlights various risks associated with timeshare as well as the high
cost of sales, high maintenance costs [levies] and exit costs. The literature is
unanimous that if these costs could be reduced there would be more
investment in timeshare thereby attracting a wider audience.
The research also indicates that a business needs to conduct value chain
analysis not only to look at its costs and performance in each value creating
activity but also on ways to improve thereupon. Although the managing of
core processes is vital to a company’s survival it also needs to scan the
market environment to identify competitors. A company should have a
competitive intelligence system that allows it to recognise the threat of new
technologies and / or emerging products. Integration (backward or forward) is
a grand strategy available to a business enabling a company greater control
of the value / supply chain.
The research report has tried to quantify the opportunities available to
financial institutions to implement backward vertical integration in a market
that they have steered clear from due to the “high risk” tag it carries.
Due to the lack of up to date information the research report is mainly
qualitative. It should be treated as a pilot study, highlighting what is of
importance and which areas are to be treated with care when entering the
timeshare market.