Fair and Flexible Usage Allocation

Fair usage allocation

In co-owned vacation homes, it is not uncommon for holidays plan to collide. Who gets August? Christmas? Half-term? Who gets the property when? This is one of the most common concerns of second home co-owners. DIY co-ownership can be challenging and disagreements over usage can have serious consequences over time. Fully-managed fractional properties powered by tech can mitigate this concern and can streamline complementarity across generations, lifestyle, and personal preferences to enable an efficient time allocation. Some owners want peak months, while others prefer the shoulder season when the destination is quieter and cooler. Some have certain weeks in mind, while others prefer short stays or last-minute trips. As fractional ownership of a vacation home is often more about usage than investment, it is paramount to have a well-managed scheme where everyone gets their fair share of time at the property. Ultimately, the goal is to ensure an experience as close as possible to whole ownership.

Scheduling made simple

Most, if not all, property managers have a proprietary scheduling system that guarantees fairness, reliability, and flexibility when it comes to booking stays. In theory, co-owners could use the property anytime they want (in proportion to the percentage of shares owned), subject to availability. However, in practice, there are some rules and restrictions in place to maximise the use of their home and to ensure all co-owners have equitable access during peak seasons.

The calendar opens for booking between 12 and 24 months in advance. In order to reflect the demand of the second home market, the calendar might be split between seasons (peak vs. off-season, or high, shoulder, and low seasons), with a quota system in place by period. For example, in the case of a 1/8th ownership (44 days usage per year), the split could be divided as follows:

14 days in high season and 30 days in low season, or
7 days in high season, 8 days in the shoulder season, and 29 in low season

The demand, and therefore the definition of peak season varies accordingly to the location of the second home. While the high season is in July and August for a seaside villa in Europe, it is more likely to be between December and March for a chalet. Popular local events, school holidays, and bank holidays might also enter into the definition of peak season.

Some other constraints on the minimum/maximum length of stay, number of open reservations, and the possibility to book consecutive stays ensure a fair distribution between co-owners. Finally, to offer as much flexibility as possible, last-minute short stays can usually be booked anytime from 24 hours to 60 days in advance.

Illustration of the distribution of nights between seasons for a seaside villa in Europe

$Distribution of nights between seasons for a fractional home$

Putting a monetary value on co-ownership usage

The below example is an attempt to put a theoretical monetary value on the usage an owner would get with the purchase of one share in a fractional home.

Farmhouse in South of France

EUR 166,000 per 1/8 ownership

Price = EUR 166,000 per 1/8 ownership
Usage = 6 weeks per annum
Annual maintenance cost = EUR 5,000
Rental value = EUR 4,250/week (renting the same house would cost 5,000 in the high season and 3,500 in the low season)
Usage value over a year = EUR 20,500 (EUR 4,250 rent x 6 weeks - 5,000 annual maintenance cost)

Source: Sojourn8, Jan 2023, all photo credits go to the agent