Dubai Prepares To Pass First Timeshare Legislation

The Dubai government’s Department of Economic Development (DED) is preparing to pass the emirate’s first timeshare law later this year. The groundbreaking legislation will pave the way for international timeshare brands such as Marriott Vacation Club International (MVCI) to enter the burgeoning hospitality sector in the emirate, and will provide yet another revenue avenue for would-be investors.

Timeshare professionals from 19 companies, including the two largest timeshare exchange companies RCI and Interval International, have been working with the DED since 2003 to create a first draft of the timeshare legislation, which was submitted for approval at the end of June.

“The DED asked [the timeshare] industry to form a work group to take a look at the first draft legislation and make comments. We have just completed that. It is a very good draft. We made suggestions on how to change the draft to tighten it up,” said Vivienne Noyes-Thomas, managing director of RCI Middle East.

“We are making a unified effort from an industry standpoint to create a timeshare legislation that protects the consumer’s rights as well as offering the legitimate developer the right to develop their business,” added David Clifton, managing director, Europe, Middle East, Africa & Asia, Interval International.

The aim of the legislation is to avoid some of the mistakes made in Europe in the 1980s and 1990s with regards to timeshare marketing.

“The EU got it wrong. The developers there never embraced regulations early on. Instead they fought it. The EU overreacted by bringing in legislation against taking deposits,” Clifton told Hotelier Middle East.

“With the Dubai regulations, this will stop the bad people from coming in. Also the quality of product here will be superior. It is an upscale vision. Then there is Dubailand, which is aiming at a younger audience. There is no question that we will see timeshare there. We will see it all over Dubai,” he stated.

The first DED draft looks at how to protect the consumer, by offering a cooling-off period on all contracts, while enabling sales teams to still take deposits. The law will also provide protection for purchasers investing in properties still under construction, in the form of an Escrow account or bank guarantee.

Operators will have to get a licence to run a timeshare resort and to sell it. They have to be bonded to the amount of AED1 million (US $275,000).

“There has to be disclosure in all documents: disclosure of what you are selling, and if you are offering an inducement to join. This legislation is great; it is very laudable. We hope to get it ratified as soon as possible,” said RCI’s Noyes-Thomas.
Operators are also keen to see the legislation get passed. MVCI has been in negotiations with Al Futtaim to sign an agreement to operate and market a timeshare resort at Dubai Festival City for the past 12 months, but is holding off on inking the deal until the timeshare legislation is passed.

“Our Festival City announcement is dictated by legislation,” admitted Ed Kinney, vice president, corporate affairs and brand awareness, MVCI. “That [will be] determined by the ability for the legislation to be formalised and executed as quickly as possible. Without that, the ability for companies such as us to commit to that market is damped somewhat.”

When the new legislation will come into effect is still not certain, although Interval’s Clifton is hopeful that the new law will be in place by the new year. “We are hopeful that we will see timeshare legislation as soon as possible. However, the reality is that Dubai has to finish its land law first,” he said.