When you think of a timeshare, a luxury ocean side beach resort in an exotic location, may come to mind. That is the classic offering for many timeshare resorts, but increasingly, as consumer vacation needs vary, the timeshare industry is becoming more innovative at providing holiday experiences that consumers want to buy into. That is the case with The Manhattan Club Timeshare, located in Manhattan, New York.
Visiting New York for work or recreation, is always a pleasure, and the city offers an unlimited number of historical, entertainment and arts attractions (and great shopping). But safe accommodations for business or family travelers can be difficult to book, and very expensive. The concept of a metropolitan timeshare was unique to the United States, but borrowed from other successful examples of luxury urban timeshares, in many other high-demand cities around the world.
If you have family or friends that live in New York, the idea of owning a timeshare that made regular visits more affordable, makes sense. And as a business investment, it’s not hard to imagine how many entrepreneurs predicted that they could successfully rent their Manhattan Club timeshare, to offset costs. But in August of 2017, the timeshare was slapped with a heavy $6.5 million-dollar consumer fraud settlement.
The Draw of The Manhattan Club Timeshare
Located in the heart of midtown Manhattan, New York, the former Park Central Hotel is just a short walking distance to most of the major attractions, including the theater district, museums, landmarks and world-renowned restaurants. The location is also serviced by all three methods of public transportation, making it an ideal spot for both vacationers, and business travelers.
The renovated boutique hotel, offers some of the most spectacular views of New York City, from four grades of rooms, including the City Lights Suite (hotel room) through to a luxury one-bedroom executive suite. Comparable hotel rates for similar accommodations in the area, start at over $400 per night, given the amenities which include a business center, complimentary Wi-Fi service, a fitness center, concierge and neo-classic interior design.
How Timeshare Buyers Were Fraudulently Mislead
The Manhattan Club sold more than 14,000 timeshares to consumers, although the hotel itself, only had 286 suites available for occupancy. The difficulties and complaints began with consumers who were unable to successfully book the time they were entitled to by contract, at the luxury hotel.
The timeshare itself isn’t new, with many owners buying a share in the facility, over twenty years ago. The average cost of each timeshare buy-in at The Manhattan Club, ranged from $21,000.00 U.S. to over $32,000.00 or more, depending on the size of the suite secured. Selling the accommodations, given the five-star rating of the hotel and the location, was not difficult for the timeshare, nor was misleading consumers on a variety of different terms of contract.
First, The Manhattan Club promised timeshare owners that they would not rent out the hotel rooms to the general public, and that the hotel would remain a privately held boutique resort, for the exclusive use of timeshare owners. That was not the case, and in addition to grossly overselling the capacity of the resort, The Manhattan Club also rented out rooms to the public, increasing occupancy further, while making it more difficult for timeshare owners to book vacations.
Increasing Maintenance and Transaction Fees for Members
To address complaints by timeshare owners, the MC (Manhattan Club) hosted a mandatory meeting for all members. At that time, members were offered increased access to the timeshare, on an annual basis, but only if they agreed to pay an additional $5,000.00 fee for more ‘points’.
The new terms and conditions for members who purchased additional points, came with a heavy and unexpected transactional fee increase. Member complaints online (and from some of the clients we have served) indicated that new and expensive punitive fees were charged for:
Canceling a timeshare reservation, more than 24 hours after booking
Splitting the weeks up, into shorter stays, i.e., weekend or one-night only
Fees for booking, and trading points for other split properties
What got the attention of lawmakers was the heightened public outcry, when fees started to increase exponentially, in 2015. Some owners reported average annual fees of approximately $800, which suddenly increased to over $2,000.00 annually, even though timeshare owners remained frequently unable to book time at the boutique hotel. Some online complaints have reported that timeshare owners at The Manhattan Club, tried booking 11 months or longer in advance, without success. The average maintenance fee increases from 2012 onward, topped a 200% spike in expense for timeshare owners.
Adding to further owner frustration, in some cases, The Manhattan Club offered to buy back timeshare contracts, only after agreeing to charge the owner a fee, which averaged around $3,500.00. This was reportedly the case even for owners who had a zero balance on their initial purchase, having paid off the initial loan for the timeshare in full. The complaints were finally investigated by the office of the New York Attorney General, and the management team and executives were brought to court, to answer charges of fraudulent sales and trade practices.
Unfortunately, during the lengthy investigation of The Manhattan Club, frustrated timeshare owners were not permitted to place their units for sale. Many had been assured that the demand for the units would guarantee an easy sale, and the potential to earn a profit on the original purchase price of individual timeshares. However, sale and transfer of the units was frozen during the investigation, leaving consumers cash-strapped and powerless to end their financial obligation.
The Manhattan Club Timeshare Executives Are Now Barred Permanently from the Industry
While some new proposed laws in states like Florida, are attempting to limit the legal recourse that timeshare owners have, by removing established caps on maintenance fee increases, nationally, there is increased awareness of the fraudulent members of the industry.
The Manhattan Club was found guilty of a classic “bait and switch” scheme, and of fraudulent sales and contract activities. They were ordered to pay a restitution of $6.5 million dollars to the timeshare owners. The Manhattan Club had been legally restrained from selling any more timeshare contracts, effective 2014, while they were under investigation.
The owners of The Manhattan Club have been legally ordered to sell their stake and shares in the hotel to a third-party, and relinquish all management control of the property, finances, sales and governorship of the business enterprise. They have also received a life time ban from being a board member, an investor, owner or operator of any timeshare in the future.
The court order was announced in August of 2017, and timeshare owners from The Manhattan Club, who are seeking assistance and advice regarding cancellation of their timeshare contract, can call 1-800-587-EXIT to explore options with our expert and attorney led timeshare cancellation team.