Timeshare rentals: the pre-internet sharing economy business model

The $335B sharing economy has roots in a post-WW2 luxury vacationing setup — timeshare.

Vacation home sharing, aka timeshare, involved 4 families that would purchase a vacation cottage jointly, each having exclusive use of the property for one of the four seasons. They rotated seasons each year, so each family enjoyed the prime seasons equally.

The concept essentially allowed shared ownership of an asset for utility purposes — an idea that might sound very familiar in today's world of Uber, Airbnb, and WeWork.

Timeline of timeshares:

• '60s-'80s: Timeshare vacation rentals became a business in Western Europe. The idea of fixed week ownership was introduced. Every owner had their designated week.

• '80s-'90s: Flexibility came in with floating timeshares. Owners could choose any week within a particular season and trade weeks with other owners if they had a change in plans.

• Late '90s-Present: Points-based systems let owners redeem stays at various different properties associated with the company. They weren’t limited to using just one property. The foundation for the sharing economy was being set.

Today, the global sharing economy is projected to hit $335B by 2025, an incredible leap from the early timeshare days. With the internet, the principle found its way into various industries:

• Transportation: Car shares & ride-hailing.

• Luxury Assets: Timeshare for private jets, yachts & luxury cars.

• Agriculture: Fractional ownership of farmland with returns in produce or revenue.

• Real Estate: Co-living/working spaces, fractional ownership in commercial properties

• Goods & Services: Shared tools, equipment, or even high-fashion garments.

At the heart of both timeshares and the sharing economy lies a business principle, Economies of Scale. Pooling resources and sharing assets means reduced costs due to higher purchase volumes, better purchase terms and higher operational efficiency. This becomes a moat as new entrants have to seed higher capital at the outset to compete on price.

These business are typically selling access to a luxuries that were previously too expensive or complicated to attain. With rapid growth in quality of life, the timing was perfect to position luxury to an audience that had an aspirational mindset.

Countries with a growing middle/upper-middle class tend see successful aspirational/lifestyle businesses. India is seeing one right now and is perfectly positioned to build in the “aspirational sharing economy” space.

I think this decade is a great time to build NetJets for X businesses in India!

In retrospect, timeshares were ahead of their time. Today, as we ride our Ubers to WeWork, it’s interesting to know where it all began. The first story might just lie in an obscure beachside villa from the '60s.