Timeshare 101

Timeshare 101

February 3rd, 2009

One of the reasons for this post is to assist those who have no clue what a timeshare is. I would have you know that prior to working in the industry I never knew what one was. Another reason for you to understand what constitutes a timeshare is because if you ever go on a timeshare tour, you must understand what the facts are. There are several sites that discuss this in depth. I encourage everyone to go to TUG’s posting on this topic for an in-depth explanation.

There are several terms that you must understand. I could write for hours about this. The first is Vacation Ownership. All sales reps want you to use this term. Psychologically they are attempting to change the bad impressions of timeshare to a positive one just by using a different name. Vacation ownership makes you feel like you will own your vacations for the rest of your life and your children’s life. Sound familiar to anyone? Another name is Fractional ownership. All that means is that the time that you have in a certain condo is divided fractionally between several owners, i.e. the term timeshare.

Timeshare programs give the owner the ability to use their week, or points to set a vacation in the location of your preference in the time period you choose. If there is no resort in a location you want, you can use an exchange service to find a location anywhere in the world. Obviously, there is a fee associated with an exchange. One way to do this is what is called a fixed week. This means that the owner owns a certain week in a resort every year. The location is fixed to a particular condo as well. If you owned a week at Myrtle Beach, you would go to the same resort, and the same condo every year at the same time. Fixed weeks then transformed into floating weeks which meant that you could choose the week, but you would still go to the same resort and condo every year. Now the industry has changed to a points system.

Points have become good and bad for the industry, and for the consumer as well. the problem is that for those that own a fixed or floating week have a harder time exchanging into a different resort. The other problem is that when they do exchange into a points resort, they become bait for the sale vultures. They will be told that fixed weeks are a thing of the past and in the near future they will not be able to use their timeshare. This is absolutely false, but the timeshare industry trains their sales reps to push this hard. For many fixed week owners they are made to feel as second class citizens and are often dealt with harshly.

Another problem with points is that it is not as easy to use as some would make you believe. Points do allow the owner to have more flexibility to go to other resorts without having to exchange. This eliminates the need to exchange and saves you money in the long run. The other benefit to points is that you can now have more flexibility on the time that you spend on vacation. AAA surveys state that the average family vacations 4.7 days per vacation. By owning points, you would not lose time because you could plan a 4 or 5 day vacation instead of being forced to take a week. Either way, whether you own points, fixed week, or a floating week, the purpose of owning a timeshare is to spend time with family and to relax.

Lastly, you must ensure that you understand the costs associated with owning a timeshare. First and foremost, the cost to purchase a timeshare needs to be researched. You can get one for as little as $500.00 and as much as $75,000.00. The differences between the two are numerous. The average timeshare owner has purchased several times and has upgraded when there was no need to. All you need is a tool to allow you to get away and enjoy yourself while you are away. I am not knocking those that purchase from the big companies, but you must know that the depreciation factor is huge for timeshares. You think it is bad when you drive a new vehicle off the showroom floor? Timeshares are hundreds of times worse. Dave Ramsey, a nationally syndicated financial guru addresses this very issue on his website.

Another cost that catches many new and experienced owners by surprise is maintenance fees. Do not let anyone fool you into thinking that maintenance fees never go up. As the cost of everything is going up, so too will maintenance fees. The other thing that is important to note is that you have no control over the amount that they go up. If you own where natural disasters occur, and your resort is damaged you will surely pay additional fees. This is what hurts the majority of owners. You need to know what these are going to be upfront and ensure that you see them in writing. These must be planned for just like you would for any other type of maintenance.

This is a quick guide to help you understand what you are getting into before you purchase. If you do own and you know of someone thinking about purchasing, ensure you have them read this and other information to ensure they are properly informed. Once the damage is done, it is extremely difficult to go back and undue it. The bottom line is that vacationing needs to be done, just check out all the options.

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