Study: Baby Boomers, Empty Nesters Lead in Vacation Ownership
The study of 938 recent timeshare buyers was conducted by Ragatz Associates and will be officially released in August
RISMEDIA, July 20, 2006—The American Resort Development Association (ARDA) International Foundation has released preliminary results of the new 2006 Timeshare Resort Owners: Who They Are Why They Buy study. The study of 938 recent timeshare buyers was conducted by Ragatz Associates and will be officially released in August.
Of recent buyers, only 18.5 percent are under 40, whereas 30.4 percent are 60 and over (and 8.8 percent are 70 and over), according to the study. Another 23.0 percent are in their 40’s, and 28.1 percent are in their 50’s. By comparison, among all owners, 9.3 percent are under 40, 40.2 percent are 60 or over (15.5 percent are 70 or over), 21.0 percent are in their 40’s, and 29.5 percent are in their 50’s.
Only 31.4 percent of recent buyers have children under 18 years of age living at home. For all owners, this proportion is even lower at 24.9 percent. This figure is down from 36.4 percent for those purchasing in 1996 and 34.3 percent of those purchasing in 2002, in accord with the aging baby boom generation.
The study showed a dramatic increase in the number of single females as recent buyers with the proportion of single females increasing from 8 percent in 1996 to 12.7 percent in 2005, a 58.5% increase. At the same time, the percentage of single male buyers has remained fairly consistent, with 4.1 comprising new buyers in 1996 compared with 4.3 percent in 2005. Overall, nearly one in five new buyers is single (17%).
The study also showed:
• 83.0 percent are couples, whereas 17.0 percent are singles;
• 31.4 percent have children under 18 living at home; and,
• 41.5 percent are in their 40’s or younger, whereas 30.4 percent are in their 60’s or over.
“With the profile of the average timeshare buyer becoming increasingly diverse across population segments, this study underscores the flexibility and value of vacation ownership products for a broad range of consumers and lifestyles,” said Howard C. Nusbaum, ARDA’s president and CEO. “This study will be of great interest to those in the industry in terms of how timeshare is marketed and to whom. The owner base is shifting in accordance with the general population with an increasing number of empty nest couples and single women.”
Findings are based on two surveys conducted of resort timeshare consumers, including:
Consumers who purchased timeshare during 2005, or “recent buyers:” This survey involved mailing and e-mailing 10,000 questionnaires to a random sample of recent buyers who purchased in the U.S. in 2005, with names and addresses being obtained from RCI. A total of 938 responses were obtained for a response rate of 9.4 percent. This provides a 95 percent confidence interval of +3.2 percent for results overall.
Consumers who purchased their timeshare prior to 2005, or “all owners:” This survey involved mailing and e-mailing 10,000 questionnaires to a random sample of RCI members who have owned their timeshare in the U.S. for at least one year. A total of 1,547 responses were obtained for an overall response rate of 15.5 percent. This provides a 95 percent confidence interval of + 2.5 percent for results overall.
The American Resort Development Association is the Washington D.C.-based professional association representing the vacation ownership and resort development industries. Established in 1969, ARDA today has nearly 1,000 members ranging from privately held firms to publicly traded companies and international corporations with expertise in shared ownership interests in leisure real estate. The membership also includes timeshare owner associations (HOAs), resort management companies, and owners through the ARDA Resort Owners Coalition (ARDA-ROC).
The ARDA International Foundation (AIF) conducts research and develops education programming for the timeshare industry. The Foundation’s mission is to “support, conduct, and disseminate research and technical studies that will enhance and improve knowledge for the public and the industry, and develop educational resources that will optimize value, operations, acceptance, and service for the industry and the public.”
Boomers' New Retirement Option: Condo Hotels
Despite national reports citing the real estate frenzy is approaching a freeze, Baby Boomers will continue to heat the market
RISMEDIA, July 21, 2006—Despite national reports citing the real estate frenzy is approaching a freeze, there is a rising demographic that will continue to heat the market: The Baby Boomers. As they pursue their ideal vacation or retirement home, analysts suspect that this equity-rich group of retirees will keep the momentum of the market at a steady pace.
Research indicates the number of second homes purchased between 2000 – 2004 has nearly doubled. The value of homes doubled as well, with the average home rising 55% during these 4 years. Keunwon Chung, a statistical economist at the National Association of Realtors, says the Baby Boomers, especially those with above-average incomes, are primarily motivating the second home market.
Tax-friendly retirement states such as Florida, Arizona, and Nevada have witnessed an explosive growth in both home construction and appreciation. Florida experienced a 25% increase in home prices last year, with one in five of those homes being a second home purchase. The U.S. Census Bureau expects this rate to steadily continue and predicts second home purchases from Baby Boomers will reach 6.4 million units by 2010.
Most Baby Boomers are seeking luxury in their second homes. According to a Coldwell Banker survey, the Boomer generation "...wants luxurious homes and wants to remain active." And this generation can afford their desires. From the accumulation of wealth through the stock market, home equity, and inheritance, Boomers have more money than any previous retiree generation. Studies from Harvard, NAR, and NAHB agree that Boomers will most likely use their resources to purchase multiple residences that focus on location and amenities.
While condos traditionally filled this requirement, a growing number of Boomers are now turning to condo hotels.
Condo hotels appeal to Boomers because it markets luxury and location. "Why buy a condo in town that sits empty for 3/4 of a year when they can own a condo hotel, have five-star amenities available to them, be centrally located in a top vacation destination, and receive rental income?" says Steven Roszell, owner of CondoHotels.com and HotelsForSale.com.
The rental of the condos, provided by the hotel management company when the condo is unoccupied, is another main attraction of condo hotels for Boomers. Bob Waun, of Vacation- Finance.com , says condo hotels offer "subsidized luxury" for Boomers. Waun also believes sheer Boomer demand will motivate the condo hotel market. He cites, "if only 1% of this generation demands condo hotel as a second home option, 1.45 million units will be needed. That's 96,000 condo [hotel units] per year, every year..." for the next fifteen years that Boomers will be retiring. Considering that currently the U.S. has only a handful of markets for condo hotel resorts, it is probable that that demand will supersede supply.