The Illusion of a Timeshares – What Are They REALLY?
December 13th, 2008 by Bobby K.P. Hernandez, under Travel and Leisure. No Comments
The job of the timeshare sales person is to make timeshare ownership appear to be the most commonsense and hassle-free way to vacation. But when you actually view a timeshare for what it is – without all the talk of “investing in your family’s future vacations” and exotic travel destinations – what you’re left with is quite a different understanding of what a timeshare really is. When you sign your name to a timeshare contract you are making a lifetime financial commitment that can quickly spiral into becoming a financial liability.
One of the strongest selling points used by the timeshare sales person is to say that a timeshare enables a family to enjoy the kind of vacation that under normal circumstances they would most likely be unable to afford. The timeshare industry wants timeshares to be seen as the most practical way to vacation. The amount paid upfront and the annual maintenance fees are both sold as nothing more than an “investment” that will inevitably save you money down the line.
There is a downside for this access. You must prepay for your time at the resort without first using the resort. Can you imagine buying a car that way? The average amount needed to be paid upfront was $19,000 in 2007 according to ARDA, the American Resort Development Association. To make a timeshare cost effective, you’ll need to use it a number of times. Use it ten times and the per vacation cost drops to $1,900. In order to reduce the cost to $1,000 per week, you and your family or friends needs to visit 19 times over 19 years.
Turn it around now. What if you only use it once or twice ever? Those one or two vacations would thereby cost a total of $19,000. Imagine the type of service and amentities that you should receive if you paid $19,000 for accommodations for only 1-2 weeks. Your vacation would be far and away more lavish than what your timeshare could ever provide.
Now, imagine that all the upfront cost disappeared. What if the only cost of a timeshare was the annual maintenance fee? In 2007, the average timeshare maintenance fee was approximately $600 for a 1-bedroom suite. Six-hundred dollars (US) for one week at a luxury resort for 4-6 people. That’s a deal, isn’t it?
The problem lies in the fact that timeshare owners do not use their timeshares every year. If you miss a year or two, the cost jumps to $1,200 and $1,800 for the same vacation week. Suddenly, the wonderful travel savings disappear like a bad magic trick. Plus, increases in maintenance fees occur regularly, so that an initial $600 a year turns into $700 or more rather quickly.
When you add this to whatever the upfront price of your timeshare, the costs start to stack up. Then, there is a third mandatory fee. The current downturn in the economy has resulted in timeshare companies turning to timeshare owners to make up for some of the financial losses the industry in the form of special assessment fees. Although these fees have been smaller in the past, the special assessments can occur at any time whenever it is deemed necessary by the timeshare.
An alternative would be to rent timeshares when you want to vacation. Developers are renting their unused timeshare inventory, often for less than what owners pay in maintenance fees. The timeshare rental industry is booming because of the lack of use by owners. By renting units, the developers earn an additional income stream on top of the maintenance fees and special assessments paid by owners who never used their timeshares that year.
Timeshare ownership will only make fiscal sense if you plan to use your unit every year without exception. If a substantial amount is paid upfront, then the plan on using it consistently over many, many years for you to break even.
