The Timeshare Comes of Age

• Is a Timeshare Vacation a Good Value?
• Consider a Secondhand Timeshare for Sale
• Timeshare Resale Scams

But the industry has become much more consumer-friendly and transparent, insiders insist, largely because major hospitality chains—such as Disney, Four Seasons, Hilton, Hyatt, Marriott, Ritz-Carlton, Starwood, and Wyndham—are among the big players. The entry of these global giants has “solidified the product and brought credibility to the sales process,” says Michael Brown, chief operating officer of Hilton Grand Vacations, which operates 71 club-affiliated resorts in the U.S., Canada, Europe, and Mexico.

Today you needn’t even sit through a company’s sales pitch in person. You can contact representatives by phone or live chat. And you can go online to check out images and videos of the properties, and get detailed information about the complete cost of ownership. And as befits any new “rebranding,” the industry has come up with more warm and fuzzy—and less incendiary—terminology to describe its expanding array of products, such as “vacation ownership” and “interval travel.”

There has also been a demographic shift among owners, which now number 9.1 million households. In 2014, consumers bought almost $8 billion worth of timeshare properties in the U.S., with an average sales price of $20,020 and average annual maintenance fees of $880. Though the median age of timeshare owners is 51, the concept resonates loudly with younger people. Among owners who have bought in recent years, the median age is 39. And half of them have children younger than 18 living at home.

“New owners are younger, more affluent, more diverse, and better educated,” says Howard Nusbaum, president and chief executive officer of the American Resort Development Association (ARDA), an industry trade group. “These are people looking for a way to enhance their family vacations—space for everyone to truly unwind—and lots of amenities and experiences for everyone.”

Fixed-week, fixed-resort timeshares are still around, but they’ve been upstaged by more flexible plans that allow owners to vacation at any property around the world that’s affiliated with the brand. In other words, you’re not married to one place. Many of the plans are tied to points-based vacation ownership. You buy a certain number of points and use them at one or more resorts within a brand. In a points-based vacation plan or club, the number of points you need varies according to the length of the stay, size of the unit, location of the resort, and when you want to use it.

You can bank points, borrow against future points, buy additional points, and even exchange them with other owners. Similar to hotel room rates, your points will go further—so you accrue more vacation days—by visiting offseason or on certain days. You’ll get less bang for your buck during peak periods, holidays, and even weekends. Aside from the cost to buy in and the ongoing maintenance fees, timeshares often have a distinct advantage over a conventional hotel stay. Your investment is relatively stable. For example, your bucket of points will buy as much in 20 years as it does today, insists Hilton’s Michael Brown. But to be safe, ask your developer if your points are inflation-proof. 

Timeshares are ideally geared toward those committed to vacationing every year, Nusbaum says. “We’re asking, ‘What do you think you’ll be spending on vacations the next 10 years?’ ” If you have limited time off from work or a job that forces you to change plans on a dime, a timeshare might not be for you. Also consider that the appeal of the resort options must stand the test of time.

A timeshare at Disney’s Magic Kingdom might be great for 15 years, but once the kids are grown, most of the magic might be gone. An unhappy timeshare owner is someone who bought in during the flush of joy on one vacation and later realized that the resort experience didn’t suit their long-range vacation tastes. Timeshare exchange companies can perhaps alleviate some buyer’s remorse. They allow owners to trade units within a resort system. Developers have a relationship with an exchange company, which administers the service for owners at the resort. Owners become members of the exchange system when they buy their timeshare. At most resorts, the developer pays for each new member’s first year in the exchange company, but members pay after that. When a member takes a week from the inventory, the exchange company charges a fee. One of the largest such exchanges is RCI, which offers members access to more than 4,500 affiliated resorts worldwide. 

You also need to disabuse yourself of the idea that you are owning investment property. You may rent, sell, exchange, or bequeath your particular timeshare unit. But unlike an actual piece of real estate, a vacation ownership’s value is tied exclusively to its use as a vacation destination. “You’d be foolish to buy a timeshare for investment purposes,” says Randy Conrads, co-founder of RedWeek, a website that lists timeshares for sale or rent. “It’s a lifestyle investment, not a financial one. You’re buying a vacation property that you thought you’d use.”

But like buying any property, don’t plunk down cash without careful consideration. Whether the sales pitch is hard or soft, it’s easy to get seduced by the romance of a getaway villa in Steamboat Springs while swooshing down a snowy mountain. That’s why salespeople are so persistent and want you to buy immediately, says Florida attorney Susan Budowski. “My advice to anyone attending a timeshare presentation is never buy on the first day. Always sleep on it. The ‘special deal’ will be there tomorrow in 99 percent of the cases, regardless of what the sales rep tells you.”

Be sure to evaluate the resort, including its location; the quality and condition of the living areas, grounds, and facilities; and pay attention to whether it’s swarming with people or empty. Talk to other owners to get a feel for the resort and its pros and cons. Local realtors can be a good source of information, too. As always, check for complaints about the developer and management firm with the state’s attorney general.

Also make sure the sales contract contains all of the promises made during the pitch. Study the paperwork and run it by a knowledgeable timeshare lawyer.

Even after you’ve signed a contract, be aware that every state has a “right of rescission” period, usually from three to 10 days, to back out of the contract. Know how much time you have to cancel, especially if you buy while on vacation and weren’t planning to look at the documents until you returned home.

If you decide to cancel, do so in writing. Send your letter by certified mail, and ask for a return receipt. Budowski suggests hiring a lawyer if you plan to exercise your right of rescission. Remember, too, that timeshares in foreign countries are not covered by U.S. law.

According to a study commissioned by ARDA, about eight in 10 timeshare owners said they would happily buy their timeshare again. But what about those who aren’t as satisfied?

Financial hardship is one reason people want out. Another industry study, by EY (Ernst & Young), revealed that 56 percent of reclaimed timeshares—properties that revert to the developer—stem from foreclosure. Maintenance fees—which pay for property taxes, landscaping, management, and insurance to protect against catastrophes like storm damage—can be a concern because you must keep paying them even after your purchase payment is satisfied. A Disney sales rep we spoke with said fees, or “dues” in Disney speak, rise 2 to 3 percent per year. Industry­wide, they’ve increased 5 percent per year on average since 2010.

As for resale value, a timeshare is more like a car than a house, in that it depreciates if you are looking to sell it. In fact, there’s no shortage of websites such as eBay, RedWeek, and Timeshare Resale Vacations that advertise timeshares for $1, put up for sale by owners who want to escape the burden of annual maintenance fees.

Resale might be difficult, but it’s not impossible. Developers said that they sometimes buy back their timeshares. You might also be able to negotiate with the developer to take the property off your hands if you are willing, say, to pay one or two years’ worth of maintenance fees while the company tries to find a buyer. Disney maintains the right to repurchase unwanted vacation points before anyone else. If an owner wants out, he or she is free to sell the property on the open market, but Disney has the option to buy the points back at the price the private buyer is willing to pay. However, don’t count on that happening everywhere.

But consumers who are disappointed that their timeshare has little or no value after lengthy ownership are missing the point. Think of it this way: You enjoyed that once-in-a-lifetime meal at a four-star restaurant. When it’s over, it’s over, and you don’t expect to get your money back.

But if you really want out, there are businesses that handle the negotiations and legal wrangling on your behalf. One is the Timeshare Exit Team. Its CEO, Brandon Reed, claims that it has a 99 percent success rate among the approximately 6,000 con- sumers who have sought relief over the past four years. But the firm, which is based in Washington state, charges $3,900, on aver- age, and the settlement might require you to pay maintenance fees for a year.

Here’s a short list of some of the more unusual vacation opportunities we unearthed. Some are for sale as timeshare purchases; others involve membership, not ownership; and still others can be booked as part of an exchange, where you trade in your week at your resort to vacation elsewhere.