Travelling is about more than simply picking the ideal resort pool or Michelin Star. Vacation time is when memories are made, where shared experiences bring families together. And the right investment, such as a vacation home or a travel club membership, could pass these meaningful experiences to the next generation.
The question that often arises is, what is the best way to ensure a legacy of adventure is part of your transfer of wealth plan?
Here, we weigh the pros and cons of 3 viable options: a vacation club membership; a flexible timeshare; and purchasing a more traditional vacation real estate, like a second home.
Option 1: A club full of memories
"We had a family cabin at the lake when we were little, but it didn't really translate into a space [where] we all fit comfortably as we got older and had families of our own," says Amy James, as she dots sunscreen on her baby, poolside at the Hilton Waikoloa Village in Hawaii.
A Toronto native, James, instead opted for the Hilton Grand Vacations Club for her, her tech rep husband, and their three children. A typical buy-in like the one the Jameses chose, usually begins around $15,000 to $18,000 and offers 4,800 annual points, which is equal to one week per year in a premium resort one-bedroom suite (this doesn't include annual maintenance fees that usually run around $159-304). With this Hilton option, families can select the same destination say, Hawaii, every year, or have the option to stay closer to home at a Canadian Hilton.
"We still wanted the kids to grow up with one spot they felt like was home, a place they could anticipate and look forward to coming," she said. The membership, James notes, is deeded, so she and her husband can pass it to their kids or add up to four names to the deed so the kids can go on their own once they hit 18.
"It's pretty cool to think we "own" a piece of Hawaii," she said.
This type of vacation membership program allows families to adjust as they grow and generations build. It doesn't lock members into a specific layout, and allows for upgrades in both time spent and lodging size. Of course, the Jameses can't leave anything behind a physical keepsake when they pass, or make back their investment by renting out a home, but for them the club option left room for tradition.
"We loved the idea of having traditions – the favorite shaved ice place after the beach, the same sea turtles in the snorkel lagoon, the pilgrimage to hike the volcanoes," says James — she just didn't want to lock her family into on set space.
Option 2: Sharing time around the world
Cassandra Elyse of London, Ontario, bought a membership based at the Vidanta Riviera Maya, a 1,000-acre oceanfront property in the Yucatan, facing the Caribbean Sea. It has four resorts, 15 restaurants and bars, a Jack Nicklaus-designed golf course, spa and "Joya," the only Cirque du Soleil show in Mexico.
Unlike a club membership tied to a specific franchise, timeshare memberships such as Elyse's can directly transfer their privileges to multiple destinations in Mexico, or make use of the association with RCI, one of the world's largest timeshare programs, to trade vacation time at resorts around the world. Non-members can also book at the resorts, making it easy for friends of extended family to visit at the same time.
"What better way to make sure we get plenty of time with the grandkids than "living" in paradise," she said. "It's a lot easier to entice them into visiting when we have a gorgeous sunny beach, waterslides, spas and ruins to explore."
Parents also get a break with options like an on-site kids' club and babysitters vetted by the resort. Bribery notwithstanding, Elyse had a bigger picture reason for choosing the Vidanta Membership Club for her family.
"While I had success in my career, my kids have veered toward a more free spirit path," she said. "Experiencing other cultures is an important part of life, and I wanted to make sure regardless of finances, my loved ones would always have the opportunity to explore."
Option 3: Second home, sweet home
For many, the desire to own a vacation home, to decorate and make their own and to create memories with their families, is important. And while this is generally a larger upfront investment, rental programs like Airbnb and HomeAway mean that the owners of vacation homes have the option bring in some rental income to offset the cost of owning a home away from home.
Monica Raphe of Montreal, for example, opted to buy a two-bedroom second home in an idyllic Hudson Valley village in New York state.
"I specifically bought the house because it could also be a rental property in a desirable location," she says. She uses Airbnb to rent the property when she and her family are not there. The ability to earn some of her investment back made the purchase a good fit for her financial plan — and this profit potential can add up.
Owning a family vacation home creates a personal legacy to hand down to the next generation. Depending on location, desirability and the initial down payment or investment, some vacation rentals might provide an income stream that can help boost money available during retirement. In some areas, that income might continue to help the next generation, too, as part of their inheritance.
"I'm using the income [from the second home] to help put my children through college," says Raphe, "and it will offer a steady retirement income for me that doesn't require a day-to-day stretch in an office."
For others, the "snowbird" lifestyle is another motivation to buy a home in a warmer location. According to the Miami Herald, among all international buyers, Canadians spend the most cash on South Florida real estate. Some purchasers of second homes use the property as a business perk for colleagues or clients. Whether snowbird or snow bunny, offering your ski chalet or seaside cottage can sweeten a deal or cement a business relationship.
For Raphe, having a property with plenty of room for guests and the feel of a home rather than a hotel room was key. "It is nice to offer the space to visiting family and friends. It is a true personal touch to be able to share your home."