We’d like to start our discussion about the hybrid timeshare point-system here, because it is the root cause of so much misunderstanding between the timeshare industry and the consumers they are supposed to serve, with easy access to quality and economical vacation options.
How many times have you viewed literature from a timeshare membership club, where they discuss the sale of a timeshare as though you were buying a house, land or other piece of real estate? In fact, a quick scan online shows many timeshare sales offices using the “sold” sign, or images of a sales representative handing over keys to new owners.
We personally challenge you to find any licensed financial expert, that will refer to a timeshare as a property acquisition or asset. It’s not. But if the timeshare sales team sold it to you in a more accurate statement, it would sound like this:
“You are going to buy a long-term lease, with an allocated number of points that may, or may not qualify you to use them for a vacation, depending on your desired holiday period. Those points may or may not be enough to get the size of accommodation you need for your family, and you may have to wait (depending on demand) a year or more, before you can successfully schedule use of the timeshare you are paying for”.
And this statement would also be accurate: “we will be more than happy to sell you the additional points at an additional cost (plus fees and taxes) to provide you with access to the vacation time you thought you were buying, with your initial contract”.
A consumer never owns their timeshare. By purchasing points, consumers have the expectation that they will be able to seamlessly use them, each calendar year. The most unscrupulous players in the timeshare industry know that you are going to have a problem booking your vacation, and they know that your frustration may lead to purchasing additional points. And that works well for them, from a revenue perspective (but not well at all, for families).
You are never truly guaranteed a vacation every year at your resort, when you are a timeshare owner. The ability to successfully book that time, may mean tactics like booking at 1:00 in the morning on January 1st, hoping you beat the other 2,000 timeshare owners at your resort, for highly coveted red weeks.
The Dilemma of Points vs. Home Resort Structure Creates Confusion for Timeshare ‘Owners’
Another way that the timeshare industry artificially assures new owners that they will be able to easily book vacation time, is by perpetuating the identification of a ‘home resort’. While all point systems and most timeshare companies allow for vacation exchanges with other reciprocating resorts in their network worldwide, timeshares must base another source of their revenue on one resort. They need to identify your ‘home base’ to process maintenance and assessment fees.
We understand why a home resort designation is required. Owners are only responsible for incremental increases to maintenance fees, that are tied to the resort where they purchased their points. But again, timeshare owners are led to believe that designating a home resort means that their vacation requests have priority over other guests (from other networks) who are in direct competition with owners to book time during favorable vacation periods.
Unless you have purchased a fixed-week, which guarantees your use of the accommodations and resort that is prescheduled annually during the same date, timeshare owners are in constant competition with both members from other vacation clubs, and sometimes with the public, when the timeshare agrees to rent suites to non-members.
No Price Consistency for Point Value and Trade Allocation in the Vacation Club Network
Recently, we spoke to a client who had purchased a timeshare in Florida and missed the legal rescindment date (where you can cancel without impediments and receive a full refund). This client was upset because she felt she had received a great deal, only to find out that the points she received did not qualify her for the vacation time and accommodations she was promised.
The client purchased 37,000 Flex Options for a resort in Orlando, Florida. During the sale of her timeshare, she indicated to the representatives that she wanted enough points to assure that her family of four could enjoy a 7-10-day vacation annually, to enjoy Disney Land™ and other local attractions. The purchase price for her points, was $15,000 amortized over a six-year period with the resort, after which her family would only be responsible for maintenance and membership fees. When she did the math with her husband, and considered that her children were very young, this seemed like a great deal and opportunity to enjoy more than a decade of visits to Orlando, made more affordable, at an exciting luxury resort.
Unfortunately, it was after the rescindment period that she learned her points only qualified her for 7-days at the resort, in a junior one-bedroom room at the resort, annually. With two children (and another one on the way) the small accommodation would not work for her family. She felt duped by the timeshare sales representative that sold them, because she had spent a great deal of time articulating that they needed at least two bedrooms to accommodate their family needs.
The client also learned that other members of the resort, had acquired a higher level of points on the resale market, for far less. One example she shared, was an individual who had purchased the timeshare lease for $500.00 and received over 80,000 points (which would be enough for the two-bedroom suite she had wanted annually).
When our client contacted the timeshare sales office, in the hope that it had been a mistake that could be easily corrected, her family was informed that their only option was to spend more, to acquire an extra 45,000 points that they would need. This is case where the consumer asked very specific questions and was very clear about what they wanted to pay for (and were assured that they would be entitled to what they had requested). The family was also shocked to learn from other timeshare owners at the resort, that the MF (maintenance fee) of $1,500.00 annually was introductory, and that the resort had a history of increasing the MF by an average of 8-10% per year, according to other members.
The consumer had reasonable expectations and trusted in the advice that was provided to them by the timeshare sales team. Our client felt they had been defrauded, after learning that even new purchases directly from the resort (for the same buy-in amount) had netted other owners far more points than those they received in their package.
There was no consistency between buy-in costs and the amount of points received by multiple buyers, leaving the impression that the timeshare sales team had one goal in mind; upsell the highest possible purchase price, with the lowest possible points, to encourage consumers to spend more to level up their points to where they could enjoy the vacation time they thought they had already purchased.
Here is another real-world comparison that demonstrates why this exact scenario is a growing problem in the timeshare industry. Imagine that you bought a car for $20,000.00 that had a three-year factory warrantee, only to find someone who bought the exact same new car (for the same purchase price) that came with a five-year unlimited warrantee. Would you think that was fair? Shouldn’t there be some consistency in the purchase price for customers?
Regardless of claims of best-practice in the timeshare industry, when it comes to buying and selling points, one thing is very clear; they will oversell you on the purchase price, and provide the minimum points to new buyers, to ensure aftermarket sales of additional points. It’s deliberate, and it works well for the profit driven industry, by exploiting consumers.
One final point about points allocated by the timeshare industry, is the inflation of the numerical size of the points. In the 1960’s, a good quality vacation at an exotic destination, must cost a member 2,000 points, but today, members are buying points that start at 15,000.
The increase in the number of points subconsciously leads consumers to believe that they are ‘getting a lot’ for their money, and better vacations. Unfortunately, the value of the points in terms of real vacation time and quality accommodations, has deflated in tandem. You feel like you are getting more options, with more points; but weeks now require more points, to qualify.
Deflation of Point Values During Red Weeks and Peak Season
To further complicate the hybrid point system, of home resorts and vacation exchanges, did you know that timeshare points are worth less, if you try to use them during the peak season? Naturally vacation resorts elevate their rental prices to the public during long-weekends, or seasonal holidays when demand is highest, but what vacation clubs do to their members, adds additional levels of frustration and difficulty, when they are trying to book the time that they pay monthly fees to secure.
Imagine the frustration that timeshare owners face, when they realize the limitations attached to the use of the points they are entitled to. You may own the right to 37,000 points at a luxury resort, but the cost of a two-bedroom suite may be 30% to 50% higher, during peak holiday periods, meaning your buying power is diminished. Unless of course, you want to use those weeks during the off-season, when weather conditions are not ideal.
And that’s exactly how some of the most unscrupulous vacation clubs get away with selling you those points, by keeping 2-4 weeks in the calendar year accessible at that point level (as promised in your contract), right in the middle of hurricane season. Families that cannot afford to purchase additional points will try to use these discounted weeks, and they book up quickly, meaning that you may not even can use your timeshare every year (despite your contract and fees paid monthly).
From a legal perspective, the timeshare can say “we offer many weeks at that point level” and “it’s not our fault that people are booking up those weeks and you don’t have the ability to schedule them… try again next year”. We have had clients who paid for two and even three years, before they were able to accumulate sufficient points for one-week of vacation time. And exchanges at other resorts, can pre-book more than 1-2 years in advance as well, restricting vacation options.
Timeshare points are really like playing with Monopoly money. They are only worth what the resort tells the owner that they are worth, WHEN the resort determines that the timeshare owner can use them. And unless you are a member within the same resort network (or a reciprocal resort), those points have in most cases, zero monetary or cash-in value.
Nonetheless, the point system is marketed by the industry as a consumer friendly and flexible option, that provides more travel and exchange opportunities, while timeshare owners are left to struggle with the red-tape and administrative problem of trying to use them.
If You Must Buy a Timeshare Explore the Resale Market First
Our opinion and experience serving timeshare owners, is that the value proposition does not line up well, for most buyers. However, if you are convinced that owning a timeshare is a good opportunity to enjoy discounted travel, our team has some important advice.
There are thousands if not tens of thousands of timeshare owners, eager to transfer their contract to a new owner. We never suggest purchasing a timeshare online, and always recommend that every consumer conduct a thorough research of a resort, before considering the purchase of a resale unit.
Here are some red flags and precautions to follow:
Request a financial statement from the timeshare, that includes data on maintenance and assessment fees. Don’t buy into a resort that has a history of escalating fees annually, beyond 2-3% (which is the industry average worldwide).
Conduct a site visit of the resort in person. Don’t rely on images that can be decades old, to determine the luxury accommodations, outdoor amenities, dining and club activities. Rent at the resort first, to experience the facility and the surrounding area, and talk to current timeshare owners, to ask about their enjoyment and any administrative issues they have encountered.
Do a thorough investigation of the point structure of the resort. How many points do you really need to get the vacation time you want, during the seasons that you want to use your timeshare. Don’t be duped by promises. Get it in writing.
Depending on the terms and conditions of your contract with the vacation club or timeshare, you may have legal grounds to request a release from your timeshare obligations. Start by calling our timeshare release specialists for a free consultation, at 1-800-587-EXIT, and get real advice about next steps.