Despite recent improvements, are timeshares worth the money?
Taverns and pubs in the 1800's used to carry signs warning patrons--"No Politics, No Religion"--the two topics of conversation so contentious that it was considered best to avoid them altogether. A current-day version of those signs might be expanded to include timeshares. Ask ten different travelers about timeshares and you will very likely get ten different responses; some love them, some hate them, some have been too scared by timeshare horror stories to even give them any thought. But timeshares have changed a great deal since their introduction in the 1960's, so they at least deserve a second look before we outlaw any further discussion of them.
The basic premise behind timeshares is simple enough--travelers make a one-time purchase in advance for the rights to use a property for a certain amount of time each year, usually in weekly intervals. Prices vary according to the size, location, season and amenities of the property, but the average cost for a new one-week interval timeshare is around $15,000.
In addition to the purchase price, owners pay annual maintenance fees which can range anywhere from $450 to $750. The sticker price for a new timeshare is a lot for most people to swallow, but stretch that cost out over a lifetime and--in theory, at least--owners pay a fraction of what a lifetime's worth of week's stays at a hotel would cost.
Of course, that is Timeshares 101. Things get more complicated when you get down to the fine print. There are fixed weeks, floating weeks, swaps, peak seasons, point systems, deeded properties, color codes and so on. Bill Rogers has been a timeshare owner for over ten years, he runs a website devoted to solving fellow timeshare users' problems, and yet even he admits that he doesn't have all the answers.
"There's no such thing as a timeshare expert," he says, "the rules are always changing and there is always something new to learn." The number one piece of advice Rogers gives to potential timeshare buyers is to do their homework. "There are countless stories of people who have had bad experiences with timeshares, but most likely, those are the people who didn't take the time to educate themselves before they bought," says Rogers.
Jim Cummings has been a timeshare owner for over twenty years. "Overall, I think timeshares are generally a bad idea," says Cummings. "Having said that, I own four," he adds with a laugh.
Cummings' sentiment is typical among timeshare owners. Even the most ringing endorsement of timeshares usually comes with a caveat. "Timeshares have allowed me to stay at some really great resorts at prices a lot lower than I would have spent on an equivalent hotel," Cummings says, "but they are a lot of work. You really have to work the system to make timeshares pay off."
Before signing on the dotted line
The most important thing to consider before buying a timeshare is whether or not they fit the way you travel. A person who prefers exploring a region and staying in a different hotel every night is probably not the best timeshare candidate. Someone who takes a more laid-back approach and enjoys having a "home base" while traveling might do well with the more residential feel of a timeshare.
Rogers says the best way to get acquainted with timeshare properties is to actually go and visit them, sitting in on a few timeshare presentations. Usually packaged as part of a discount vacation--travelers receive a free stay at a hotel if they agree to listen to a "property demonstration,"--these sales pitches are notorious for their hard sell techniques and have probably added more to the negative stigma of timeshares than anything else.
"They have actually been toned down a lot," says Rogers. "I've heard of presentations where you would have to sacrifice your first born just to get out of there, but there are not many of those around any more."
Jim Cummings disagrees. "They are worse than you can imagine," he says. "Having to sit through three hours of a presentation that was only supposed to last a half hour is about the worst torture I can think of." They may be a necessary evil, however, as some properties can only be viewed as part of a presentation package.
As long as buyers go into presentations with a firm resolve not to buy that day, Rogers says presentations can provide important information. Though presenters try to entice potential buyers with promises of special deals it's always best to research the options first.
Big bargains on the resale market
One option for "would-be time sharers" is to investigate the resale market before plunking down good money on a new property. Resales are timeshares sold by individual owners rather than a management company. "People who have bought resales have been making out like gangbusters," says Rogers. "A lot of resales sell for less then fifty cents on the dollar of the original purchase price." Of course, the resale market is flooded because people have had bad experiences with timeshares, but Rogers believes that the people looking to unload their timeshares are the people who didn't do enough initial research before they bought.
Jim Cummings bought two of his four timeshares on eBay, both in Cozumel. He paid $800 for the pair. "I only buy from sellers with a high rating and I either e-mail or phone them before I bid. Both people I bought from were people whose situations changed and they could no longer use their properties. I have friends who pay $4,000 for one week in the summer at the New Jersey shore, but I'm able to spend two weeks a year sitting on the beach in Mexico for a quarter of that."
A sentiment echoed by everyone involved with timeshares is that travelers should not think of them as moneymaking ventures. Cash cows they are not. Ed Kinney, vice president of corporate affairs, Marriott Vacation Club says,"Try to keep it in the right perspective. If you think of a timeshare as a commitment to a vacation lifestyle rather than a money-making proposition, you will be a lot happier."
The ins-and-outs of swapping
No matter how great the destination, visiting the same place year after year can start to lose its appeal. One of the nice aspects of a timeshare is that owners have the ability to swap a week at their home property for equal time at a different location. Of course, like everything else, there are fees involved and you will need to do your homework.
Swapping timeshares relies on the use of a timeshare exchange company. The two major players in this field are Interval International and Resort Condominiums International. For an annual membership fee, (RCI, $89 per year, $149 two-year special; II, $79 per year, $133 annual gold membership), these companies will do their best to match owners with available timeshares throughout the world. The catch is that your options are limited to properties on par with the value of your home timeshare. In other words, your off-season week in Orlando probably won't land you a week in Vail during the peak ski season.
Timeshare exchange companies have been working to make the swapping process easier to navigate. Many now employ a points system which quantifies the trading value of a given timeshare. Owners can bank their points by sacrificing their timeshare one year for greater trading opportunities the next.
Timeshares get a corporate makeover
The biggest change to occur in the world of timeshares has been the entry of major hotel chains into the market. Companies such as Marriott, Starwood, Westgate, Disney and Hilton have all made major investments into developing timeshare properties. Known as "branded properties," the competition between these chains has served to make the timeshare experience more customer friendly.
"Companies are applying the lessons they learned in the hotel business to the timeshare industry, making them more willing to cater to the needs of the customer," says Ed Kinney of Marriott. Many branded timeshares now offer floating time systems that allow users to choose a week within a certain season, rather than being handcuffed to a specific week. And whereas traditional stays had to be from Sunday to Sunday, some properties are now more lenient with their check-in days.
With branded properties, swapping has become a simpler proposition since the chains now have numerous timeshare locations under the same banner. Although most still require members to use an exchange company to facilitate swaps, either II or RCI, consistent point values makes trading within chains more convenient. Unfortunately, going with a chain won't eliminate the annual exchange company membership fees.
One of the other perks of choosing a branded property is that many are now allowing their timeshare owners to participate in the rewards programs typically reserved for their hotel customers. Owners at Marriott Vacation Clubs have the option every other year to exchange their timeshare week for Marriott Rewards points, which can be then be redeemed for hotel stays and discounts.
Despite all their frills, Bill Rogers still emphasizes caution in buying any timeshare, branded or not. "Think of branded properties as just another option," he says. "Just make sure they mesh with what you are trying to accomplish with your vacation destination."
The bottom line
A timeshare, either new or used, is a long-term financial commitment that requires some due diligence on the part of the buyer. New York State Attorney General Eliot Spitzer released a guide to timeshares entitled "Before You Buy A Timeshare" which canvasses all the potential pitfalls that go along with timeshare ownership.
He suggests consulting a financial advisor before purchasing a timeshare. The guide also points out that if a buyer borrows the money needed for a down payment, they must consider the financing costs will be in addition to annual maintenance fees required by the timeshare company. Timeshare owners might also be liable for any special assessments that the management company deems necessary for future operations. According to the guide, "these assessments are hard to predict and might arise when you least expect them." Travelers should also remember that they are still responsible for paying typical vacation costs as well, such as transportation, meals and miscellaneous expenses.
In spite of the improvements timeshares have undergone, there is still a great divide between supporters and detractors. Fans of timeshares say they enjoy having a week's vacation waiting for them every year. Naysayers insist that timeshares are too expensive, too confining and too much work. So who's right? Perhaps we better change the subject.