Vacationing With Timeshare Freebies
While Not for Everyone, Vacation Timeshare Presentations can be Worthwhile
My family and I recently returned from a trip to Florida where we made the obligatory visit to Walt Disney World in Orlando. We had actually wanted to go to Hawaii but, by the time we had figured out a time that worked for my wife's and my jobs as well as those of our two teenage sons there were no timeshare units available at either the resort company we own with or that we could trade with. So, our next best last minute option was a beach front resort in Florida. About a week before we left my wife and teenage sons decided that we should visit Disney World. Knowing that tickets were around $100 per day per person, I was going to go on the Internet and search for a deal when my brother told me to wait until we got to Orlando and then find a timeshare presentation and get them that way. Being busy, I took his advice and waited until we got to Orlando.
I did find a Disney World ticket deal that I was happy with although, having done a quick search of Walt Disney World tickets on Google after we got home, I probably could have done as good or better by buying on line. However, that would have required more planning which, due to time constraints, I was unable to do.
Both the presentation and the whole timeshare travel experience (this was our first use of the timeshare that we purchased a year ago) taught me a lot. Anyone who is familiar with timeshares and the way they are sold will know what I am talking about. For those that are not familiar with this industry, here are some pointers on how the process works and how you can use it to your advantage.
Vacation Timeshare Basics
A vacation timeshare is basically partial ownership in a vacation resort. The appeal for consumers is the opportunity to lock in today's resort rates for future use. In addition to potential future savings on your stays at resorts, the other big savings with vacation timeshares is food costs. Timeshare units have kitchens, usually full kitchens with standard refrigerator, oven and sink along with dishes, tableware, pots and pans, etc. This means that, while vacationing, you have the option of doing your food shopping at grocery stores, rather than restaurants, thereby keeping you food costs about the same as at home. The basic appeal for the developers is the opportunity to have users of the resort pay for their future use now thereby providing the capital needed to develop the project with minimal use of outside financing.
While vacation timeshare ownership can be a wise economic choice, they are not for everyone. First of all the purchase prices from developers usually range from four (under $10,000) to five ($10,000 and over) figures with double digit interest rates if you finance through the developer. Second, there are the annual maintenance fees that tend to average $300 and up depending upon the resort and type of unit. While the timeshare ownership allows one to lock in a unit at today's prices, the maintenance feel will increase with inflation. Also, check the fee structure carefully as some have clauses that can add special assessments (for major repairs like roof replacement which will be needed every 20 years or so) on top of the regular fees when necessary.
As an owner, you can rent the unit (either through the resort management company, an outside broker or places like eBay) and this may offset the maintenance fee in years when you don't use your time. If planning to rent, remember the 3 R's of real estate (location, location, location) and don't be surprised if you don't receive any takers for the one week you own during the summer at a ski resort. Even if you purchase a peak season week at a 5 star resort you still may not be able to get an ideal week - either to rent out or use - as there appear to be a growing number of people who study the market carefully and grab the best rental weeks as soon as they become available. In addition to their market knowledge these people also often own 4 - 5 weeks or more worth of time, which at many resorts, gives them an elite status with extra perks like having the opportunity to choose their times for the next year (most timeshare companies limit how far in advance you can make a reservation - 12 months is the usual maximum) a few weeks to a month or more before the commoners, who only own the equivalent of one or two weeks. The point of this is that the primary motivation behind the purchase of a timeshare should be for personal vacation use and not for rental income or appreciation in value as the resale market for timeshares appears to be more like that of cars (whose value generally drops noticeably the minute they leave the sales lot) rather than traditional real estate.
Another point to consider is your ability to plan your travel. As I learned this year, just because you own a timeshare doesn't necessarily mean that a unit will be available the week you want it (this is especially true with timeshares that use the point system or season but may not be true if you ownership is for a specific calendar week). Because I had to schedule around the schedules of four people (2 being teenagers with one or more part-time jobs) I wasn't able to get everyone to agree on a date until a month and a half before we left. As a result my choices were limited to 3 resorts in Florida and a couple of foreign destinations which we could not get to due to lack of visas. My experience this year suggests that timeshare usage works best if you can make travel plans six months to a year in advance. If you have a crazy work schedule or teenagers with jobs who you want to take with you, timeshare ownership may not make sense at this time.
Free Gifts and a Free Education
However, while timeshare ownership may not make sense at this time in your life, it can still be very worth while to take advantage of offers to attend 90 minute sales presentations as you will be rewarded with some very valuable gifts for your time. Since vacation timeshares are relatively new and not understood by most people, they don't lend themselves easily to ads in newspapers and magazines or to TV or radio spots. To effectively sell them a one-on-one sales approach is needed. As an incentive to sit through a 90 minute sales presentation timeshare companies offer generous gifts such as cash (I have received as much as $300 to attend a presentation), double and triple digit gift cards, free airplane tickets, free vouchers for restaurants, free or nearly free stays at expensive resorts, etc. In an earlier article on another blog I described how these companies can afford to do this so, rather than go into that here, I will just describe the sales process and let you click on the other article if you wish.
Timeshare companies first hire one group of sales people to sell you on the idea of attending a presentation. Since their job is not to sell the timeshare but rather the presentation, they will stress that it is just an informational session with NO pressure to buy. This is not really a misrepresentation as I have yet to attend a presentation where I felt that I felt strong pressure to make a purchase. You must remember that the first sales rep's job is to simply get you to attend the presentation and once you show up that sales rep gets paid regardless of whether or not you buy. In the last year or so the companies have started having the first sales rep collect a fee (usually in the $20 to $40 range) as evidence of good faith when they talk you into signing up for the presentation. This is refunded if you show up and forfeited if you don't. The purpose is to both eliminate prospects who are definitely unlikely to buy as well as provide an incentive to those who pay to show up at the appointed time which may be later that day, that week or even that month. In most cases that fee is kept by the sales rep as his or her commission (since this is basically a numbers game it works out nicely for the timeshare company as the sales rep has an incentive to sign up as many people as possible while the company itself only has to pay commissions - in the form of a refund of the fee to the prospect - for those who actually show up while those who fail to show end up paying the sign up commission through their forfeited fee).
Links for More Information about Timeshares
- NY Times Article on Timeshare Ownership
May 16, 2008 NY Times article on Timeshare ownership - pros, cons and things to consider before buying.
- Timeshare Users Group Homepage
Organization for timeshare users. Small membership fee required for full access to the site but much valuable information is available to public for free on site. Good site for balanced info from actual timeshare owners.
- Time Share Basics - Get the Facts
Page on About.com with series of articles on various aspects of timeshare ownership.
Surviving the Presentation by Keeping the Dream in Perspective
While single people are welcome, couples (either married or in a relationship) are required to attend together on the assumption that the odds are greater that one of the two will buy the dream and talk the other into going along with the purchase. However, in our case, my wife trusts my judgment in these matters and has become very good at shrugging her shoulders, looking at me and saying he makes all these decisions when the sales representative sees that I am not responding to the pitch and turns to her in hopes that she will help persuade me to buy into the dream being sold. However, if I think this would be a good purchase, I do ask for time alone to discuss it with her and unless she agrees that we should go ahead, we don't proceed with the purchase. Similarily, if she ever felt we should go ahead when I am hesitating she would signal me or speak up and we request to be left alone discuss it and make a decision. The purchase decision for us us joint but this little trick allows us to prevent the sales rep from trying to play us against each other thereby helping us to level the playing field a little more in our favor.
I say dream because, while if you decide to buy, you will be purchasing an interest in a timeshare vacation property but the sales presentation has little to do with a timeshare purchase and almost everything to do with the dream of a lifetime of happy vacations for you and you family and, after you are gone, your heirs (this is tangible property that can be passed on as part of your estate) can continue to enjoy additional lifetimes of happy vacations.
Oh, you will be presented with statistics showing how, thanks to inflation, hotel and resort rates will climb steadily through the years while your investment will remain fixed (maintenance fees are glossed over and left for the fine print on the contract). A 15 minute movie showing happy families frolicking at plush resorts will be presented. Your sales rep will have you fill out a dream sheet in which you check off where you would like to visit, leisure activities you enjoy, etc. You will be asked to let you imagination run free and express your travel desires and any destination you mention will almost always be responded to by showing you a book with color pictures of either sister resorts in that area or, if the company has nothing in that area, other companies' resorts which you can visit by trading your time in the unit they want you to buy. The sales rep, all of whom own timeshare units in the resort you are visiting, will also tell stories and even show pictures of their own recent vacations with their families. You will also be given a tour of the facility and shown attractive model suites.
Make this a "Get Paid to Learn" Session
However, just because the sales rep wants to sell the dream that doesn't mean that you can't take some control and use the presentation to educate yourself about timeshares. While I am always motivated to attend by the gifts offered, I truly believe that vacation timeshare ownership can be a wise investment in terms of affordable and enjoyable vacations. While the dream being sold is not necessarily pure fiction, I need more than a fantasy image before I part with a few thousand dollars and a lifetime commitment to pay annual maintenance fees. The purchase of a vacation timeshare is a rather complex real estate transaction (which is why all or most states only allow licensed real estate brokers to sell them) in which you can be burned financially or sorely disappointed if you wait until after the purchase to learn what you actually purchased. I am not implying any impropriety on the part of the companies or the sales reps and I have yet to find a company or rep that I would consider dishonest or unethical. But anyone who makes a purchase based upon the nice pictures in a movie is bound to be disappointed and even angry when they unexpectedly get the bill for the first year's maintenance fee or discover that they did not buy the one bedroom unit with the great ocean view that they were shown but rather an undivided interest in the entire project and right to a week's stay in whatever one bedroom (which is like every other one bedroom unit in terms of layout and design but not location within the building) is available at the time of their stay.
I always go into presentations with a desire to learn and I do it in two ways. First by simply listening to the sales rep's presentation. Yes, it is mostly a sales pitch about the dream, but I have yet to meet a sales rep that is not both knowledgeable in a technical sense and has personal experience as a timeshare owner.
Like a CIA analyst skimming hundreds of periodicals a day seeking discrete bits of data which, over time, form into patterns of usable information, I pick up bits and pieces of data that, over time, have given me what I feel is useful and valuable information. I also leverage this knowledge by using it as a basis for asking probing questions that yield bigger chunks of information. And, hey, you are not only NOT paying for this information but are also being paid by the company, in the form of gifts of cash and other items of value, to sit there and learn.
The sales rep, who works on straight commission, and the company both want you to buy. But, as one sales rep confided to my brother (who owns timeshare interests in 5 different resorts) a while ago, they understand that it is a numbers game that relies heavily on educating the public. So, while the sales rep really wants you to buy, he or she knows that, unless you are totally ignoring then and counting the minutes until you can pick up your gift and leave, that they are planting a seed in your mind that will eventually lead you to buy either from them on that day or another company another day. If you don't buy from them that day they can at least console themselves with the fact that, while they were spending 90 minutes preparing you to purchase from another company in the near future, other reps at other companies are doing the same thing with other prospects some of whom the rep, who failed to get you to buy today, will end up selling to in the future. It's a numbers game.
While there is not a hard sell like many people have come to expect from a used car sales person, they will pull out all the stops to get you to buy. The dream, as presented, is powerful and they are not above laying on a little guilt which you may already have, having entered with the notion of going only to pick up the expensive (to you, not to them as I explained in my previous article cited above) gift they promised. They also try to wear down the decision maker who is balking by stressing the fact that person is not only depriving him or herself of the rewards of nice vacations but their families as well.
As the session nears its conclusion most will be worn down somewhat by the dream of owning and/or the feelings of guilt or doubt about what they will be depriving themselves and family of. By this time the sales rep usually has a good idea of your circumstances and desires and will offer you a package that is equal to or a little above what they estimate they can reasonably sell you. When that option is turned down, they propose other, less costly, alternatives until they reach the end of their standard packages. To increase your motivation they stress that the price, package contents and other little frills are a one time offer that you must take NOW. If you say no, and then change your mind and come back later you will only be able to purchase the weeks or points, at the, higher, standard price, without the extras. Further, they will tell you that state law and/or company policy prohibits them from letting you come back for the same presentation for at least a year (at which time the prices will have increased). If you still decline, the sales rep will usually excuse her or himself and return with the sales manager who makes one last pitch at your emotions. If that fails, the sales manager will sometimes pretend to check his or her records and come up with a special deal. These deals, when offered, are usually in the form of a trial ownership, with a one week's use of the resort, that is generally good for a period of one to three years and does not include the frills. It might also be a piece of inventory that was taken back for some reason. If the trial option is offered it usually includes the opportunity to upgrade to one of the packages offered with all the extras included and at today's prices (the goal here is to get you to try to buy and not simply to make a few bucks on a week's rental). In effect, they are selling you (and you do have to pay for this - usually a few hundred dollars) the option to both think about the deal for the next year or more AND get a week's vacation at the resort. If you still say no, they have someone escort you to the gift counter, where they give you your gift.
If you say yes and buy any one of the offers presented, they will ring a bell or blow a horn, present you to the whole room (the presentations are usually held in a large room with the prospects and reps sitting around individual tables) as the newest member of the family and often serve a small glass of champagne in a plastic cup to you and your partner. You will then be introduced to their closer who will escort you to his or her office and proceed to explain to you and have you sign the maze of documents associated with real estate transactions. Included with the legal paper work will be a large package, in an expensive looking carrying case, that will contain, in paper and DVD format, information about both the resort you brought into (referred to as your home resort) as well as the other resorts in the company and trading organization (Interval International or RCI) which lets you trade outside of the company's system.
Among the legal documents will be a Notice of Right of Recision, which is required by Federal law and gives you and the co-buyer the right to withdraw from the contract and cancel the deal within three business days of the day you accepted. If you do nothing with this it expires and you are locked into a legally enforceable contract with the company and committed to make the required payments. If you execute and return this document within the required time period the deal is canceled and you membership terminated without cost.
As I said above, timeshares can be a smart buy, but they are not for everyone. If you enjoy traveling but, like most of us, don't have an unlimited travel budget you might want to consider how you could use vacation timeshare presentations and, if the concept works for you, ownership as an additional means of increasing your vacation and travel options without increasing your budget.