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Timeshares: What's all the fuss about?
Let's face it, when anyone hears the word timeshare they immediately think scam and a sleazy salesperson who will say and do anything to get you to sign on the dotted line. As with most products, there are always good and bad sides to everything.
Some of the uneasiness with timeshare presentations comes from having a lack of background information on the concept and having to make a decision on the spot. The big hotel chains selling these timeshares know every marketing and sales trick in the book and have likely encountered every type of personality out there. This lack of knowledge going in, combined with their expertise on knowing how to get someone to buy a timeshare will always work to their advantage, unless of course, one can go in knowing at least the basics of what it is they could be purchasing. Also, knowing some keywords to mention can throw off the salesperson and let them know they are dealing with someone who knows a little about the timeshare business and how they work.
I've attended a few timeshare presentations from the major hotel brands including Hyatt, Marriott and Starwood, and have come away with a new found desire to learn the ins and out of these programs and if they are even worthwhile to consider purchasing. Experience from attending these timeshare presentations and reading information on the Timeshare Users Group, one of the best places to go for everything timeshare related, has allowed me to make an informed decision on whether purchasing a timeshare would be a good thing for me and my family.
Based on my experience attending these types of sales presentations, I believe a lot depends on the quality of the "product" they are trying to sell, as well the sales person you get for your presentation. If your heart is set on vacationing in a great place you love year after year, Maui for instance, then a timeshare may be worth considering. I plan on going into detail about the Hyatt Residence Club Timeshare Program in a future post so until then here are my tips on timeshares.
Advantages of Timeshares:
Purchasing a timeshare locks in a vacationing lifestyle. If you like predictability, you can have a guaranteed vacation destination every year leading to year long vacation wanderlust.
Vacation planning is taken care of for the most part. Most reputable timeshare programs allow for exchanges if you'd like to travel to new destinations instead of your home resort every year.
It's a different type of vacation, especially with kids, as units would have a kitchen and washer/dryer, making a vacation your home away from home in the most beautiful places to vacation in around the world. Families can also save money by cooking their own meals and not having to dine out every day for breakfast, lunch and dinner. I'm sure most people would also prefer the larger space and luxury afforded by a resort timeshare condo versus a smaller hotel room at a resort.
Drawbacks of Timeshares:
Yearly annual fees, including maintenance fees, taxes and special assessments, can increase at a fast pace and you really have no control over them.
Timeshares can be hard to sell and resales are typically sold at a steep discount to the initial purchase price. Buying on the resale market may be the way to go. Keep in mind that the Better Business Bureau has been warning consumers about timeshare reselling schemes that have defrauded victims out of thousands of dollars. These unscrupulous timeshare companies only add to the negative views most people have on timeshares.
It's a long term financial commitment and shouldn't be viewed as a financial investment. Most timeshares are for forever and don't have an expiration date. That means you're obligated to pay the annual maintenance fee indefinitely whether or not you use your timeshare.
Other Things to Consider:
A timeshare purchase should not be considered a
financial investment. It
is more of a lifestyle purchase so when you consider depreciation,
travel/airline costs and annual fees, the concept of "prepaying"
for vacations may not be in your best interest. Always run the
numbers and consider your own "break-even" point.
Compare the "Typical
Resort Hotel Room vs the Typical Resort Timeshare Unit" and what the
break-even point for your family vacationing lifestyle would be:
When you're traveling with kids or a large family, cramming into a single hotel room or trying to book adjoining rooms can sometimes be a challenge. Most people don't realize that timeshare units are so much different than the typical hotel room. At a typical hotel you likely get a room with a bed and bathroom, which can prove difficult for families with children, as the whole family shares the same space. But with a timeshare, you would get a studio or 1-2 bedroom unit with a central living area, dining area, kitchen, washer/dryer and separate bathrooms.
Never borrow money to purchase a timeshare. Most banks will not lend you money to buy them and the developer will be more than happy to offer financing for you at 10-15% or more. Annual costs, coupled with the initial purchase price, can become a burden on your personal finances if you are not prepared for it. I would suggest having money to pay for a timeshare set aside or, at minimum, have a plan on how to pay it off.
I have experienced the difference a timeshare vacation can make and believe for families with children it can be a superior way to vacation, as long as you've done the math and see if it fits in with your budget and lifestyle.
In summary, timeshares aren't for everyone and in lots of cases the arguments against them outweigh the benefits one could have from them. But if you've done your research and believe you can benefit from timeshare ownership, there can be a lot to love about them.