Monday, October 12, 2015

Timeshares the good and bad

An explanation of timeshares might be in order.

Timeshares were a big deal in the 80’s. All the used car salesmen that had been fired for lack of integrity got hired by the timeshare industry. Huge money was involved and resorts sprang up everywhere. It was a major pain visiting anywhere that there was a tourist attraction. You’d be mobbed by timeshare people offering free gifts if you sat in a 60 minute sales presentation.

In 1983 Barbara and I were living in New Orleans and got roped into a presentation in Abita Springs. Barbara fell in love with the place and I wasn’t so keen. The more I said no the lower the price dropped. Eventually we bought in. 

The price got real low when I said I’d pay cash.

We didn’t know anything about comparable prices, annual maintenance fees, trading weeks, red weeks, green weeks, points verses weeks memberships and a host of other related things.

But we were lucky, and we got luckier later. First they played up the maintenance fees were low.

Every resort makes money on maintenance fees. The initial sales price goes to the resort developers and sales people. Once the resort is sold out the only income they have is exchange fees, rentals and maintenance fees. Some resorts the fees are reasonable some are extortionate. At the time we bought ours the annual maintenance was $200 a year and even now 30 yrs., later it’s only $400 a year. A friend bought into a high end resort and the fees are $1500 and rising every year.

Next they played up that the resort was a year round destination and all the weeks were Red Weeks. At that time there were three levels, red, blue and yellow (I think). Red were easy to trade, blue less so and yellow impossible.

That brings up trading. There are some organizations that you can join. Interval International and RCI were the 2 back then. They act as a clearing house for timeshare resorts. You pay them an annual membership and that allows you to trade your week at your home resort for a week in any of thousands of other resorts around the world provided there is availability there and you trade for a week equivalent to your home resort. Effectively you can trade red for red, or blue for blue. What you can’t do is trade blue for red or yellow for blue or red, so having a red week in a resort in demand gets you a much better chance of an exchange. If you find an exchange you have to pay RCI etc., an exchange fee.

Weeks and Points. After the timeshare market became totally saturated and sales dropped, the industry had to come up with a way to regenerate sales so they invented “Points Resorts”. In high traffic tourist areas (Orlando etc.,) they began building high end resorts. To prevent people who owned at lesser resorts trading for weeks there, they came up with points. Instead of Red etc., the new system had “Trading Points” based on how fancy the resort was. With points you could trade one week at a very fancy resort for say 2 weeks at a less fancy resort. The beauty of this system was that it excluded all the previous timeshare resorts so if you wanted to play you had to buy another MUCH MORE EXPENSIVE timeshare.

One of the big players in timeshares is Fairfield Resorts. They came in and bought derelict resorts (Of which there were many after the bubble burst and there was no more money to make in sales). As they got bigger they saw a way to corner the market. They bought RCI who were the big exchange company and changed everyone’s resort trading power from weeks (Where you traded a week for a week) to their own new points system. Better yet they made the points decrease in value the closer you came to the actual week you owned, then they offered to make your “Points” come back again for a fee! Brilliant for them but a major thorn on the side for owners.

We discovered another timeshare trading organization DAE. People sick and tired of RCI had another way to go, the fees are lower, the points went away and there were just as many resorts to trade for.

HINTS FOR POTENTIAL TIMESHARE PURCHASERS:

Don’t fall for the timeshare sales pitches! They employ every dirty nasty high pressure sales tactic they can think of. They lie, cheat and steal and once they make the sales they are GONE. The sales people work only on commission and have no connection with the resort.

Timeshares are available USED. If you like a resort search on e-bay etc. for the resort and you can get the same unit for pennies on the dollar. Many, many buyers regret buying after a year or so and can’t get out of the cast iron contracts they’ve signed. That’s your opportunity to buy cheap.

Beware the maintenance fees. They make it sound totally minor but if you are paying $1500 a year for the unit whether you use it OR NOT. It becomes a major cost. If you decide to just stop paying them they will have debt collection agencies on you in a heartbeat. 

Believe me I tried it! 

If they let YOU off the hook the hundreds of equally dissatisfied owners will jump on it too and they’ll go bust overnight.

Beware financing a timeshare, they will gouge you with interest rates and if you buy and regret it you won’t be able to get out of it.

Use the power of exchange to visit other resorts. We’ve owned our home resort for 30 years and only been there once! We have been all over the US and even to Europe on exchanges. 
To us the value of timeshare has been in trading, not owning a particular resort. That means you can buy ANY timeshare and get the benefits. You don’t have to buy the high price flashy unit the sales guys are pitching. 

We bought a second unit at our home resort. A 2 bedroom, red week for $1000 and $300 a year maintenance just so we’d have another week to trade and/or share with family.

1 comment:

  1. Lots of people got caught in the time share scam back then, A woman in our office "won" a free holiday in a 4 star hotel in Gleneagles Scotland and came back with a log cabin for two weeks in Aviemore in February.!!!!!!!!!!

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