According to the AIF Economic Impact of the Timeshare Industry on the U.S. Economy (2016), resorts and local economies benefit tremendously through retail and service purchases by timeshare owners. In 2015, the impact of sales both for the timeshare resorts and local businesses was estimated by the AIF as $9.98 billion dollars in revenue. The report estimated that $3.4 billion was spent at on-site resorts, by members, for a total of $2,439 spend per party, or roughly a family of four.
It’s easy to think that timeshare companies generate their sole revenue through membership and maintenance fees. They’d like you to think that. After all, you might complain less about the rising cost of fees if you believed that was their only source of income for the resort. The truth is that resorts generate significant revenue through administrative fees (late charges, non-payment and maintenance fee spikes), as well as food and beverage service, concessions, retail sales, tours, equipment rental; the list goes on.
Why is this relevant information for every timeshare owner to know? Because when it comes time to part ways with a timeshare, they have much more ‘skin in the game’ than just your membership fees. They want you to retain your contract, because the business model is based on keeping members paying into the revenue cycle. They can’t make that $3.4 billion per year as an industry, if people stop using their resort, or if owners move to cancel their contract.
Many of our clients share that their resort had the ‘nicest’ administrative support team, until the exact moment that they inquired about canceling their timeshare contract. It is important to know that timeshare service administrators are trained using retention models, or in layman’s terms, they are highly skilled and rewarded for retaining timeshare owners in their existing contracts. If you thought the sales pitch was high-pressure, you can only imagine the tactics and strategies used against consumers who want to cancel their timeshare.
Based on over a decade of client counseling and experience, these are the eight lies that timeshare companies tell consumers, to keep them locked into a financially burdensome contract.
1. The Contract Is Binding and Cannot Be Canceled
It is important to understand that a contract is as legally binding as a mortgage. But to imply that the consumer has no recourse, particularly if the timeshare was sold under fraudulent terms within the United States, is inaccurate. This is a scare tactic used to prevent timeshare owners from seeking out options, and help with timeshare cancellation. It is legally binding, but you still have many legal routes that can help you cancel for good.
2. Canceling Your Contract Will Obliterate Your Credit
Non-payment of fees, or allowing fees to accrue over a period, can impact your personal credit. However, if you have been paying your fees on schedule and you are not in arrears, the act of canceling your timeshare with legal assistance will usually not damage your credit. We recommend consumers learn more about avoiding foreclosure, which registers much the way that a mortgage foreclosure might (credit damage). Keep paying your fees, and we can help you work on canceling your timeshare contract.
3. You Can Rent Your Timeshare to Offset Costs
Renting your weeks is usually an unsuccessful route to recouping a portion of the money you spend on fees annually. There are risks involved with renting a timeshare, and timeshare owners are responsible for any damages that occur to the residential unit, or to the grounds and recreational facilities by renters. It’s a big risk to take, unless you plan on renting it to friends and family that you trust.
The second dishonest aspect of the offer from the resort, is that they may be looking to earn additional fees from you, the member. Most resorts offer a rental service, for fees paid up front, and a promise to help you get monetary value from any unused weeks. If they are unable to rent your timeshare, you don’t usually get a refund, even though they got paid.
4. They Can Sell it for You
In high demand and exclusive resorts, the timeshare company may be willing to help you sell your weeks, or even buy them back from you, if they are confident they can resell it for a higher value. Sometimes this happens when timeshare owners buy in the first phase of leasing; once the resort is done, it can grow in popularity and demand, making it easy for the timeshare administration to earn more profit, by charging another large, front-end payment, and financing.
Frequently however, timeshares will agree to take the money with no guarantee of a successful sale, and no refund. The timeshare owner is out of pocket for the sales service and administrative fee.
5. Everyone Else Is Happy with Their Timeshare
If maintenance fees are going up at an astronomical rate, or if your resort has started to go downhill in terms of upkeep, security and amenities, chances are you are not the only dissatisfied owner. However, it is in the best interest of the resort to make you feel as though you SHOULD be happy, because everyone else is. That is a psychological sales tactic, to suppress your complaints, and make you rethink the option of cancellation.
6. The Maintenance Fees Are Average for The Industry
There are no ‘average’ fees for resort maintenance in the industry, simply because every resort is a little different. If you are staying at a five-star new resort, operational costs may be greater. If you own a contract on an older resort, mandatory maintenance and upgrades may be required. The best judge of ‘normal’ is of course the timeshare owners, that must cope with a sliding scale of expense that only goes in one direction; straight up.
7. You Can Get Loyalty Bonuses for Staying
If your resort is having a problem with retention and empty inventory, one of the fastest ways to tell is the offer of additional weeks at the resort, for no charge. While it may sound like a good deal, remember that the incentive costs the resort very little, but continues to cost the timeshare owner monthly. Watch out for an offer to buy more points as well; you could end up owning two or more timeshare contracts, without even knowing it.
8. You’re A Bad Person for Wanting to Cancel
If your timeshare has become a financial burden, you are not “the bad guy” for trying to cut expenditures and balance your budget. In our opinion? The timeshare is “the bad guy” for making you feel like a practical, financial decision is a compromise of your integrity. Their lack of ability to understand that needs and circumstances change for their customers, however is telling.
When you first approached your resort for more information about cancellation options, what tactics or conversational strategies did they use with you, to convince you to remain under contract? Share your experience with us on Facebook, or leave a comment on this article. We want to hear your story.