Saturday, August 19, 2006
Timeshares Are Shedding The Faint Odor Of Disrepute
You have probably seen the marketing pitches in the mail promising luxury hotel accommodations or new televisions just for listening to a time-share presentation.
The resort also has swan boats available for rent. Tempting, but no, I’d say, tossing the brochure in the trash. Trapped in a room with someone giving me the hard sell is not my idea of fun. Besides, time shares always seemed to be the used-car dealerships of vacations — slightly sleazy, with a real chance of being a scheme.
But increasingly, friends and family are mentioning that they are flying to Hawaii or South Africa or France to stay in their time shares. And they brag about how it costs them almost nothing and how they can trade their time share for a vacation site practically anywhere in the world.
Maybe it’s time for a second look.
Lisa Ann Schreier, who worked in timeshare sales and is founder of Timeshare Insights, says they can be a good vacation option if you go in knowing what to expect.
“Don’t believe everything good or bad that you hear,” Ms. Schreier, author of “Timeshare Vacations for Dummies,” (Wiley, 2005) said. “There’s no such thing as ‘free, perfect, always and never.’ Nothing is free, nothing is perfect and don’t believe assurances that you can always get the time share trade you want or maintenance fees never go up.”
The negative reputation timeshares have dates to the early days, about 30 years ago, when it was not unheard-of for customers to put down money based on wild promises of beautiful resorts soon to be built.
The complexes were never constructed, the developers disappeared and the money was never seen again.
That practice is much less common now, with a flurry of laws passed by most states in the mid-1980’s regulating the industry, but the whiff of disrepute also has to do with the free offers and often high-pressure sales tactics that are still used by some developers.
“If Circuit City offered two free tickets to ‘21’ for coming to look at a TV, you’d think something is wrong with the TV,” Ms. Schreier said. “But the time share industry refuses to change.”
Nonetheless, she said, it is a good idea to look beyond the sales pitches and see the reality.
The term time share encompasses many options, but generally, in this country, it is joint ownership or lease of a vacation property that you can use for part of the year, usually one or two weeks annually.
In some cases — primarily overseas — the time share is available on a lease for a predetermined number of years.
Timeshares now include hotel rooms, yachts and castles, but the resort condominiums with pools and tennis courts still dominate; Florida has almost 28 percent of the entire United States inventory.
Another term, “fractional ownership,” pops up when discussing timeshares. These are generally more upscale properties that people buy for longer periods of time, three weeks or a month. For example, Marriott International, which owns the Ritz-Carlton, offers fractional ownership programs at the Ritz-Carlton.
Ms. Schreier’s rule of thumb is if you vacation more than five nights a year, spend $70 or more a night and enjoy knowing pretty much what kind of quality you’re going to get, time shares might be a good option.
In the universe of all timeshares, a midrange two-bedroom timeshare in a good location in a good season can cost $12,000 to $20,000.
Prices can climb up to $117,000 for a penthouse in Maui during prime time, like Christmas or New Year’s, said Ed Kinney, a spokesman for Marriott Vacation Club International.
The upfront price does not include annual maintenance fees, which can run several hundred dollars a year and up.
Then there’s the issue of exchanging your place for another. There are almost 6,000 timeshare resorts worldwide, with the majority affiliated either with Resort Condominiums International or Interval International.
These companies make money by charging fees to exchange property — $100 to $200 a transaction, depending on the company and whether the trade is domestic or international.
The big players offer more choices, but some consumers prefer to go with smaller companies that they say offer better customer service, for example, Trading Places (tradingplaces.com) and Dial an Exchange (daelive.com).
The ability to exchange your place depends on what size it is, how upscale the resort, how desirable the location (think of Orlando, Fla., or Hawaii) and the supply of time shares in the area you’re looking to go.
“If you have a time share in Mississippi, you better like it, because you’ll have a hard time trading it,” Ms. Schreier said.
The system seems byzantine to an outsider, but apparently once you get the hang of it, it’s pretty simple to figure out how to get where you want to go when you want to go.
My friend Veronica bought a three-bedroom timeshare in Orlando three years ago, five years after attending a sales presentation.
“We didn’t purchase then, but it opened our eyes to what a timeshare was,” she said. They waited until they could afford $15,000 for the property, and so far have been more than happy.
They have already been to Puerto Rico and the Dominican Republic and this year they are off to California and Hawaii.
For Veronica, one of the best things about a timeshare is that it is already paid for (minus the travel expenses), which means her workaholic husband is much more likely to actually take vacations.
“That’s what they told us at the sales pitch,” she said. “You don’t want to waste your money, so this way you’ll go on vacation — and in our experience that’s true.”
Ray Jacobs, editor of TimeSharing Today, an independent magazine devoted to the industry, said surveys showed customer satisfaction with timeshares hovered around 85 percent.
The most common complaint is an inability to exchange at a convenient time.
“Many people are unrealistic about where and when they want to go, but a lot of people also don’t have much flexibility,” Mr. Jacobs said.
A class-action suit was filed in March against RCI, asserting the company rents out empty timeshares to the general public rather than making them available in the exchange pool. RCI said it would not comment on pending litigation.
Mr. Jacobs pointed out, however, that RCI, which dominates the market, made 2.6 million timeshare exchanges last year.
According to Kenneth May, chief executive and chairman of RCI, the time share industry has grown by 12 percent to 15 percent annually over the last 15 years. It’s now even expanding to China.
“The person most likely to buy a timeshare is someone who already owns one,” he said.
But don’t buy a time share with the idea that you’re investing in something that will appreciate over time.
“It’s an emotional investment,” Mr. May said. “The resale market is not one of the strengths of timeshares yet — it still has to be developed.”
Mr. Jacobs agreed that time shares were not the place to make a real estate killing, as properties depreciate immediately, but noted that the resales were becoming more popular; he estimated they were now 15 percent of the market. If an owner sells a timeshare bought new from a developer, he or she will probably get only half the purchase price, Mr. Jacobs said; people who buy from other individuals usually break even when they sell.
Some words of advice from those who’ve seen it all before:
Make sure the timeshare is “salable, rentable and willable,” Ms. Schreier said.
Find out if you have to use the time share on a fixed week every year, or if it floats, which allows owners to pick a week to vacation, usually within a particular season. Both fixed and floating have benefits — do you have to have a place every spring break, or are you more flexible?
Does the insurance cover the replacement cost if your timeshare is wrecked by, say, a hurricane?
Is there a cap on maintenance fees? Can they be raised arbitrarily?
So, with this newfound knowledge, would we buy a timeshare? I would no longer dismiss it out of hand, but for economic reasons alone, it’s not something that’s going to happen in the near future. For now, we’re going to rely on an even older method of vacation sharing — staying free with relatives.
The resort also has swan boats available for rent. Tempting, but no, I’d say, tossing the brochure in the trash. Trapped in a room with someone giving me the hard sell is not my idea of fun. Besides, time shares always seemed to be the used-car dealerships of vacations — slightly sleazy, with a real chance of being a scheme.
But increasingly, friends and family are mentioning that they are flying to Hawaii or South Africa or France to stay in their time shares. And they brag about how it costs them almost nothing and how they can trade their time share for a vacation site practically anywhere in the world.
Maybe it’s time for a second look.
Lisa Ann Schreier, who worked in timeshare sales and is founder of Timeshare Insights, says they can be a good vacation option if you go in knowing what to expect.
“Don’t believe everything good or bad that you hear,” Ms. Schreier, author of “Timeshare Vacations for Dummies,” (Wiley, 2005) said. “There’s no such thing as ‘free, perfect, always and never.’ Nothing is free, nothing is perfect and don’t believe assurances that you can always get the time share trade you want or maintenance fees never go up.”
The negative reputation timeshares have dates to the early days, about 30 years ago, when it was not unheard-of for customers to put down money based on wild promises of beautiful resorts soon to be built.
The complexes were never constructed, the developers disappeared and the money was never seen again.
That practice is much less common now, with a flurry of laws passed by most states in the mid-1980’s regulating the industry, but the whiff of disrepute also has to do with the free offers and often high-pressure sales tactics that are still used by some developers.
“If Circuit City offered two free tickets to ‘21’ for coming to look at a TV, you’d think something is wrong with the TV,” Ms. Schreier said. “But the time share industry refuses to change.”
Nonetheless, she said, it is a good idea to look beyond the sales pitches and see the reality.
The term time share encompasses many options, but generally, in this country, it is joint ownership or lease of a vacation property that you can use for part of the year, usually one or two weeks annually.
In some cases — primarily overseas — the time share is available on a lease for a predetermined number of years.
Timeshares now include hotel rooms, yachts and castles, but the resort condominiums with pools and tennis courts still dominate; Florida has almost 28 percent of the entire United States inventory.
Another term, “fractional ownership,” pops up when discussing timeshares. These are generally more upscale properties that people buy for longer periods of time, three weeks or a month. For example, Marriott International, which owns the Ritz-Carlton, offers fractional ownership programs at the Ritz-Carlton.
Ms. Schreier’s rule of thumb is if you vacation more than five nights a year, spend $70 or more a night and enjoy knowing pretty much what kind of quality you’re going to get, time shares might be a good option.
In the universe of all timeshares, a midrange two-bedroom timeshare in a good location in a good season can cost $12,000 to $20,000.
Prices can climb up to $117,000 for a penthouse in Maui during prime time, like Christmas or New Year’s, said Ed Kinney, a spokesman for Marriott Vacation Club International.
The upfront price does not include annual maintenance fees, which can run several hundred dollars a year and up.
Then there’s the issue of exchanging your place for another. There are almost 6,000 timeshare resorts worldwide, with the majority affiliated either with Resort Condominiums International or Interval International.
These companies make money by charging fees to exchange property — $100 to $200 a transaction, depending on the company and whether the trade is domestic or international.
The big players offer more choices, but some consumers prefer to go with smaller companies that they say offer better customer service, for example, Trading Places (tradingplaces.com) and Dial an Exchange (daelive.com).
The ability to exchange your place depends on what size it is, how upscale the resort, how desirable the location (think of Orlando, Fla., or Hawaii) and the supply of time shares in the area you’re looking to go.
“If you have a time share in Mississippi, you better like it, because you’ll have a hard time trading it,” Ms. Schreier said.
The system seems byzantine to an outsider, but apparently once you get the hang of it, it’s pretty simple to figure out how to get where you want to go when you want to go.
My friend Veronica bought a three-bedroom timeshare in Orlando three years ago, five years after attending a sales presentation.
“We didn’t purchase then, but it opened our eyes to what a timeshare was,” she said. They waited until they could afford $15,000 for the property, and so far have been more than happy.
They have already been to Puerto Rico and the Dominican Republic and this year they are off to California and Hawaii.
For Veronica, one of the best things about a timeshare is that it is already paid for (minus the travel expenses), which means her workaholic husband is much more likely to actually take vacations.
“That’s what they told us at the sales pitch,” she said. “You don’t want to waste your money, so this way you’ll go on vacation — and in our experience that’s true.”
Ray Jacobs, editor of TimeSharing Today, an independent magazine devoted to the industry, said surveys showed customer satisfaction with timeshares hovered around 85 percent.
The most common complaint is an inability to exchange at a convenient time.
“Many people are unrealistic about where and when they want to go, but a lot of people also don’t have much flexibility,” Mr. Jacobs said.
A class-action suit was filed in March against RCI, asserting the company rents out empty timeshares to the general public rather than making them available in the exchange pool. RCI said it would not comment on pending litigation.
Mr. Jacobs pointed out, however, that RCI, which dominates the market, made 2.6 million timeshare exchanges last year.
According to Kenneth May, chief executive and chairman of RCI, the time share industry has grown by 12 percent to 15 percent annually over the last 15 years. It’s now even expanding to China.
“The person most likely to buy a timeshare is someone who already owns one,” he said.
But don’t buy a time share with the idea that you’re investing in something that will appreciate over time.
“It’s an emotional investment,” Mr. May said. “The resale market is not one of the strengths of timeshares yet — it still has to be developed.”
Mr. Jacobs agreed that time shares were not the place to make a real estate killing, as properties depreciate immediately, but noted that the resales were becoming more popular; he estimated they were now 15 percent of the market. If an owner sells a timeshare bought new from a developer, he or she will probably get only half the purchase price, Mr. Jacobs said; people who buy from other individuals usually break even when they sell.
Some words of advice from those who’ve seen it all before:
Make sure the timeshare is “salable, rentable and willable,” Ms. Schreier said.
Find out if you have to use the time share on a fixed week every year, or if it floats, which allows owners to pick a week to vacation, usually within a particular season. Both fixed and floating have benefits — do you have to have a place every spring break, or are you more flexible?
Does the insurance cover the replacement cost if your timeshare is wrecked by, say, a hurricane?
Is there a cap on maintenance fees? Can they be raised arbitrarily?
So, with this newfound knowledge, would we buy a timeshare? I would no longer dismiss it out of hand, but for economic reasons alone, it’s not something that’s going to happen in the near future. For now, we’re going to rely on an even older method of vacation sharing — staying free with relatives.
# posted by John @ 6:55 AM 
