Timeshare Exchange Fair (a)

Abstract

This award-winning case series examines how optimization-based decision-making leads to a new business design for a timeshare exchange: an exchange fair. Students model a complex managerial problem as a linear program, identify the types of data needed, and use models to provide decision support. The series covers linear and integer programming, multiple-criteria decision-making, network flow problems, local search heuristics, and Pareto-optimality. The series demonstrates the advantages and difficulties involved in applying management science techniques to a real-life business environment. It teaches standard techniques of extracting relevant data from a mass of more- and less-relevant information and forces students to confront issues consultants face: How do you motivate management to even consider a management science approach? How do you build a “business case” demonstrating the shortcomings of the methodology already in place? The case provides background on the timeshare industry, exchanges, and the exchange fair, in which owners submit their existing intervals to a centralized pool, together with requests for the intervals they want to exchange; the exchange determines who gets which interval. Various aspects of a functioning exchange fair are presented, and, starting from a heuristic, the series effectively guides students toward the “better” optimization-based way of executing the exchange. This case series is a winner of the 2005 INFORMS case competition and received an honorable mention at the 2005 DSI case competition. (See also the B case, UVA-QA-0710 and the accompanying Excel spreadsheet, UVA-QA-0709X.) Suitable for both general MBA and executive education programs and as a basis for an exam or assignment, this series is also appropriate for specialized undergraduate and graduate programs in services management (e.g., tourism and hotel administration), logistics, and industrial and systems engineering.

Excerpt

UVA-QA-0709

Timeshare Exchange Fair (A)

Timeshare Business Overview

The value proposition of timeshare is rather simple: An individual or family purchases vacation time at a shared resort property and in so doing, guarantees quality vacations for a substantial part of their lifetimes—at effectively current prices.

Timeshares originated in the early 1960s, when Alexander Nette of Germany and his friends each wanted to purchase an apartment in a ski resort in the French Alps, but could not individually afford the cost. He realized that if the group pooled its money and shared the apartment it could afford the purchase; then one person would use the apartment one week, the next person another week, and so on. Nette's idea led to the development of Hapimag Company (http://; accessed 7 August 2007), which is still a major player in the European timeshare industry.

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Keywords: service operations, timeshare, optimization, mutli-objective, decision making, linear programming, integer, Pareto optimality