Owning a timeshare is a controversial topic. People love them or despise them.
Doctor of Credit continues to be a great supporter of The Timeshare Guru and I have posted another guest post concerning the benefits of timeshare ownership. This was a follow up to my guide on renting timeshares as seen here.
Please make sure you check out the post and the Doctor of Credit. Bank deals can be extremely lucrative and the Doctor of Credit is the spot to find the best deals.
The timeshare industry is big business and it is constantly changing. More resorts, more rules, more systems, etc. It is very difficult to keep up with as the systems and rules keep changing and becoming more and more complex.
While they attempt to make the systems easy to understand, the actual use of the systems are complicated and there are many tricks and tips to really maximize ownership.
Interestingly, Interval International, which is one of the largest exchange companies, is actually the owner of many of the timeshare systems. Interval International is a public company (ILG) with a market capitalization of $3.6 Billion. Even with there awful reputations, timeshares are big business.
Interval International has done some strategic acquisitions in the not so distant future and actually owns and manages the Hyatt Residence Club properties and the Vistana Signature Experiences (Starwood's timeshare properties).
The acquisition of both of these major timeshare companies did not produce much change from the consumer standpoint as these programs still operate completely independently of one another. Most owners did not see any difference in these systems or their ownership.
As with all public companies, there is always the pressure to continue to grow their business. Growing businesses take time but a quick way to show immediate growth is through acquisitions. There has been some rumbling of news from Interval International whose activist stockholder has urged the Interval International seek a merger with the Marriott Vacation Club.
Marriott Vacation Club is one of the largest timeshare companies and operates over 50 properties.
If Interval International actually purchased Marriott, this would be a very interesting development. Interval International would then own three of the major timeshare brands leaving Wyndham and Hilton as the other two major timeshare brands associated with hotel brands.
In my opinion, a merger with the Marriott Vacation Club would likely be a non-event to the end consumers. I highly doubt that Interval International would try to re-brand any Marriott properties and would likely leave it to operate as is as it has done with Hyatt and Starwood / Vistana.
However, Interval International would then be the major player in the timeshare game. As a consumer, I would love to see additional benefits for Hyatt, Vistana and Marriott owners. Interval Internationally would arguably be in a better position to offer some unique perks that the other timeshare companies simply could not offer.
Time will tell on whether anything will occur and if it does, what it will mean to the timeshare market and the end consumers.
If the merger happens, what would existing owners like to see? Leave your comments below!
Ethical Dilemma: Do you or should you discuss the economic aspects of timeshare ownership with other owners or potential owners?
I started this blog because I think that timeshares are misunderstood and if used properly and you can understand the systems, they can make worldwide travel affordable to most.
While this statement is my true motivating factor, the initial purchase price of timeshares can be exorbitant and if people purchase at these exorbitant prices, timeshare ownership almost never makes financial sense.
The key to maximizing timeshare ownership is to purchase a week at a reasonable cost. "Reasonable" definitely has different meanings for different programs.
I have not gone into much detail on purchasing from a developer or purchasing resale, but there will be more posts to come on this topic. While there may be some benefits to purchasing directly from the developer, the price for that privilege is generally extremely high as compared to resale.
I have argued in other posts that the initial timeshare purchase price should be considered a "sunk cost" since it will be difficult if not impossible to ever recoup the initial price.
The current timeshare model is based on developer sales since this is where most of the money for timeshares is made. Developers do not profit from the resale market so they tend to impose penalties to resale purchasers in order to keep developer sales high.
The difference in price between developer sales and resale sales can literally be tens of thousands of dollars. As I recently discussed in my other post concerning Westgate, Westgate was trying to sell me a timeshare for over $100,000 when the same timeshare was being offered on ebay for $1.00 - YES $1.00!!!
As I listened to their pitch and saw the economics of the offered "deals", I was truthfully embarrassed that I like timeshares as much as I do. The system is clearly broken but this experience brought up an interesting ethical question.
Should you tell timeshare owners or potential timeshare owners the true economic realities of a timeshare purchase?
When I was participating in a timeshare presentation, there were multiple parties that were very interested. The pitch seems to make a lot of sense and timeshare salespeople tend to tell you anything and everything you want to hear to make the sale. I witnessed a purchase at my meeting.
When I hear this and I saw people signing on the dotted line, I want to burst out and tell them the truth. The question is whether I should.
Other times, I meet various timeshare owners when vacationing and while some are not pleased with the overall system, many timeshare owners are very happy with the system. Many bought from the developer, use their timeshare each year and are very happy with the family vacations that they now go on.
Many people enthusiastically indicate that their initial purchase price of $50-$100,000 was a great "investment". Many people do not realize that the initial purchase price is almost never going to be recovered so these owners do not realize that the $50-$100,000 is gone - not like your typical real estate purchase.
The question is should I tell this fact or leave them be enjoying their purchase?
As I say, timeshares are great especially if you can purchase at a high quality resort for almost nothing. I purchased my first timeshare at Hyatt for a purchase price of about $6,000 on the resale market. While I paid $6,000, Hyatt was offering the same week for about $35,000 or more. I thought I got a great deal until I saw many, many weeks selling for a $1.00 on Ebay.
Do I regret my purchase?? Absolutely not. Even though I paid thousands more than I could of, it has given me numerous family vacations in well appointed condos for a fraction of the retail cost. If I paid for these vacations at standard hotels, I would have blown through $6,000 in one vacation.
Would I be happier if I paid $1.00?? Sure, but my view is that it is irrelevant. I paid $6,000 because I thought it was a good deal. Arguably, people pay $100,000 and they think it is a good deal.
To get back to my point of this post, in my opinion, everyone has a different idea on what a good deal is. While I definitely want to tell people and inform the world on the true realities of timeshare purchases, I have come to conclusion that telling people who already own a timeshare will be of little value.
If you purchase something and then found out you can get the same item for 90% less across the street, if you cannot return the item, the only thing that comes out of telling someone of the lower price is buyers remorse. If they never knew about the 90%, they will still hopefully be happy with the purchase. Arguably, they bought the item in the first place because they thought it was a good deal and wanted the item.
I definitely feel obligated to discuss and tell people about the economic realities of timeshare purchases but it is a difficult subject to discuss. You can definitely save people thousands of dollars, but you also run the risk of immediately making them regret the purchase and be upset with their purchase for many, many years.
If I am in a position to talk about timeshares with people, I usually encourage them to do their research before buying. Hopefully, they will find my blog or the countless other articles on timeshare ownership that discusses the economics of the situation so that they can fully review how the programs work and the true cost of ownership.
They can review the initial purchase price and determine whether the upfront fee that will almost never be recouped makes financial sense when considering the approximate cost of annual vacations going forward.
If the truth is disclosed, people can make informed decisions on whether timeshare ownership can work for them, their family and their vacation style.
I try not to discuss purchase prices with existing owners as there is little benefit that can come out of the conversation. However, this is truthfully an ethical dilemma for me as I really hate watching people purchase something for thousands of dollars that becomes almost financially worthless once they sign the documents.
What are your thoughts? Should you encourage people to not buy at a timeshare presentation? Do you tell people that their timeshare is probably worth a fraction of the initial cost?
I am interested to see comments to this. Please leave them below!
Doctor of Credit has been a very gracious supporter of The Timeshare Guru and has allowed me to post a number of articles on his site regarding timeshares.
I posted a complete guide to renting timeshares on his site which is a great resource for those looking to rent timeshares. I definitely encourage you to review the guide and to frequent the Doctor of Credit's website. His blog is the preeminent place to find bank account deals and has a lot of great travel deals as well as credit card deals.
Make sure to leave comments below if you have alternative sources or other tips and tricks to rent timeshares for cheap!
Hyatt's HPC Club Program (a/k/a Hyatt Pure Points) - Additional Details of Hyatt's Newest Program
DISCLAIMER: THIS INFORMATION HAS NOT BEEN CONFIRMED AND CAN BE CHANGED. THIS INFORMATION SHOULD STILL BE CONSIDERED RUMORS.
As had been rumored, the Hyatt Residence Club has apparently rolled out their new points program called HPC Club which has been previously referred to in the rumors as the Hyatt Pure Points program. While this in not the official name of the program, it is currently how it is being referred to outside of the official documentation. Reports have come in that some of the Hyatt sales centers have been discussing this program but a lot of specific details and important facts have not been disclosed at this time.
The Marriott Vacation Club entered into a similar program in 2010 where the various properties and weeks were deeded into a Land Trust. Instead of buying deeded weeks, Marriott Vacation Club now only sells points which are exchangeable into nightly or weekly stays.
Following on the footsteps of the Marriott Vacation Club, the Hyatt Residence Club is pursuing a similar strategy. Details of the new Hyatt Pure Points program are still being rolled out but here in the information that is currently available. I will update this as necessary as further details on information is disclosed.
Unfortunately, some of the material information that has not been divulged is the exchange charts, differences in tiers, exchange charts for Interval International (the likely exchange partner), further details on the effects to existing owners, pricing and what, if any benefits, are being offering for legacy owners to contribute their weeks to the new Pure Points Program.
Here are the rumored details as currently known. These can be clarified or altered as additional details are known.
The Hyatt Residence Club has created a HPC Club Declaration of Vacation Ownership Plan (the “HPC Club”). The HPC Club will govern the Pure Points program. The HPC Club and the Hyatt Residence Club (“the Legacy Program”) will operate independently and are considered distinct and different programs.
Structure of HPC Club
Hyatt has or will transfer various weeks to the Trust. All developer owned inventory at these properties will be considered property of the Trust. Owners who purchase the HPC Club Points will be given a deed conveying a Vacation Ownership Interest in the Trust Association. The Vacation Ownership Interest grants the owner the ability to use Trust property, subject to the terms and conditions of the HPC Club.
Similar to the Legacy System, the HPC Club will allow owners to reserve accommodations using points which are being called “HPC Club Points”. They are also allowed to sell fixed weeks where owners have the right to use a specific week at a specific property. Owners will also have access to the External Exchange Program (almost definitely, Interval International), the World of Hyatt program (Hyatt’s hotel loyalty program) and the HPC Club Benefits Program (no details on this program yet but apparently will be some type of travel benefits)
Request Lists and Wait Lists
As with the Legacy System, Owners will have the ability to put in requests for various accommodations.
Membership Tier Levels
The current Membership Tier Levels are Elite, Premier, Executive, Classic and Non-Authorized Resale.
The various Membership Tier Levels will provide different rights for the following:
(1) Reservation Window restrictions based upon the number of nights in the Vacation Period;
(4) Points Discounts;
(5) Owner Rental Discounts;
(6) World of Hyatt provisions, including conversion rates;
(7) Points Transfer Provisions;
(8) Wait Lists for HRC Resorts;
(9) Request Lists;
(10) Wait Lists for the HPC Club;
(11) Cancellation Provisions;
(12); Guest Certificate Rights;
(13) Rental Opportunities;
(14) Point Rental;
(15) Fixed Reservation Rights; and
(16) Room Attribute Guaranty rights.
I am very concerned about the Non-Authorized Resale category. That obviously does not sound good and can be very detrimental depending on the various penalties or restrictions being implemented for resale owners.
Assessments / Maintenance Fees
Through December 31, 2017, the assessment will be calculated as $0.9314 per Ownership Point.
Since we do not know the required amount of points to reserve weeks, this figure does not mean much at this time.
As with the Legacy Program, Hyatt has maintained its right of first refusal.
Interestingly, the following disclaimer is included in HPC Club documents:
The purchase of an interest in a multisite timeshare plan should be based on its value as a vacation experience or for spending leisure time, and not considered for purposes of acquiring an appreciating investment or with an expectation that the interest may be rented or resold.
In other words, this is not an economic investment!!
Overall, with the information disclosed at the present, it is difficult to make an informed decision on whether this will be a beneficial change and the overall effects on the Legacy System and the existing owners. I assume that there will be some benefits but the likely desire to move into this type of system is the ability to sell more inventory and make more money. I am slightly concerned at the moment but will wait to make my opinion until the further details are disclosed.
Does anyone else have any more details of this program? Have you been to a sale presentation recently that has discussed the roll-out?
Provide any more details below in the comments.
UPDATE: Apparently, there has been some issue with these certificates and Interval has removed them from member accounts. They have indicated that they will be redeposited at some point soon.
Interval International just released an additional accommodations certificate to Interval members. This may be targeted so it may or may not show up in your account.
In order to look in your account, you need to go to "Exchange" and go to "My Units". Hopefully, you will see the accommodations certificate listed.
As you can see in the above, I currently have 2 certificates in my account - one that expires in mid July and this new certificate.
This new certificate is valid for travel from June 6, 2017 to January 16, 2018. Take a look at this post for additional information about the Accommodations Certificates.
You can reserve up to a 3 bedroom unit which sleeps up to 8 people. Inventory changes daily as does the available destinations.
As discussed elsewhere, these certificates generally provide weeks in very low demand seasons or low demand resorts but there have been some stellar finds with these certificates. I have personally seen desireable Hyatt weeks, Marriott weeks and even the brand new Westin Nanea resort in Maui.
The fee to reserve a week with these accommodations certificates is $274 for the entire week with no timeshare presentation requirements or usage of your points and/or weeks.
Please post in the comments below if you received a new certificate as well as any great sightings!
Hyatt Residence Club owners have a variety of ways to exchange their week / points into various other properties. As mentioned in other posts, the Hyatt Residence Club is a hybrid system so you can either use your deeded week or convert your week into points.
When you have points, you can either exchange your points internally through the Hyatt Residence Club for other Hyatt Residence Club properties or exchange those points through its trading partner, Interval International, for other timeshares.
The one restriction to Hyatt owners is that you cannot use Interval International to exchange into other Hyatt properties. Interval International blocks that inventory so a Hyatt Residence Club owner wanted to use points to trade into other Hyatt properties, they must use the internal trading system.
While this isn't a huge deal, it is meaningful. This is because the point requirements to exchange through Interval can be much less than trading through Hyatt internal system.
For example, in Interval International, if you wanted to reserve a week in a studio during the highest demand travel season, this would require you to use 430 points. In the Hyatt Residence Club system, if you wanted to reserve a studio unit during the highest demand season, Diamond season, this would require 750 points.
This difference in points is almost double. Due to this difference, it can make sense to exchange through Interval instead of internally with Hyatt but the catch is that you cannot reserve Hyatt units through this method since Interval blocks this inventory.
As a result, I generally reserve Marriott units, Four Season Units or other high quality units through Interval using my Hyatt points instead of booking through the internal Hyatt system.
This provides me with a better use of my points but you cannot stay at Hyatt properties. I like Hyatt properties a lot and tend to gravitate to many of their hotel properties. I have stayed at plenty of the Hyatt Residence Club properties and they are all very luxurious and of high quality.
The blocking of Hyatt inventory for Hyatt owners is frustrating but understandable. However, a question came up on whether I could rent Hyatt weeks through Interval Getaways.
As I have discussed here, Interval Getaways allow you to book weeks using cash rather than points and do not have any requirements to sit through any timeshare presentations. The pricing for these weeks are generally fantastic and almost impossible to beat when comparing these prices to standard hotel rates.
Due to the favorable pricing, I wanted to see available inventory for Hyatt properties to rent instead of Hyatt. I tried to search using all of the resort codes for Hyatt (HRP, HNS, HWP, HYS, HSH, HYK, HYN, HBK, HMS, HSL, HYP, HYA, HCC, HYB, HYI, HRA) and nothing came up.
I wasn't sure whether this inventory was purposefully blocked or whether there was simply no availability. I called Interval to check and was told that there is no block on Interval Getaways for Hyatt owners since you are paying cash instead of exchanging your points.
However, upon further research, I found out that this was not in fact the case and Interval blocks ALL inventory, regardless of if it is exchange inventory or getaway inventory for Hyatt properties for Hyatt owners.
This is disappointing as Hyatt properties are some of the nicest but I guess the reason for blocking this inventory is that Hyatt provides the same functionality within their internal system albeit for higher points and cash requirements.
Overall, I think the Hyatt system is one of the best currently although the Hyatt Pure Points systems is on the verge of a complete roll out. Time will tell whether the new Hyatt Pure Points system will be as advantageous but I will be sure to provide a post concerning the new system once all the details are unveiled.
For those of you who want to book Hyatt properties through Interval, the only way to do so would be to be a non-Hyatt owner or have a second account for Interval that is not linked to your Hyatt account.
Can you see Hyatt inventory through Interval Getaways? If so, post the availability below so that everyone can see pricing and availability.
I have been to a fair share of timeshare presentations. As stated before, some are friendly and informative while others are very high pressure.
Since I started this blog, I have attempted to go to more of these more out of interest than to receive any perks or gifts. My travel preferences tend to gravitate towards some of more well known brands (Marriott, Hyatt, Hilton, Four Seasons, etc.) so I do not get the opportunity frequently to stay at some of the larger or well known strictly timeshare properties (Shell Vacation Clubs, Westgate, Diamond Resorts, etc.).
Over the holiday weekend, I had the opportunity to stay at the Westgate Park City. If you read this blog, you should know that I am a big fan of Park City, Utah. I tend to travel there at least a couple times per ski season.
I have never been during the warmer months so when the opportunity to stay in a 1 bedroom suite at the base of the Canyon mountain for a total price of $227 PER WEEK, it was hard to pass up. This price was offered through Interval Getaways and do not require any timeshare presentations to get these prices! You simply need to be an Interval member or know someone who is.
I have stayed at this Westgate property before and I think it is a great property. The location is hard to beat as it is ski-in / ski-out and their amenities are quite nice.
I inquired myself on how to get a tour on potentially purchasing a timeshare. They did not come after me but still offered me $150 cash for attending. In exchange, I promised them 90 minutes of my vacation time. They also offered free breakfast for attending.
We arrived at the timeshare presentation center and were told to help ourselves to some breakfast. The breakfast was truly atrocious. It was barely edible with biscuits and gravy as the main entree and frozen bagels and eggo waffles as other options. I didn't touch the breakfast as even the coffee wasn't good.
This was not a good impression but I was anxious to learn more about the Westgate system. We met with a very nice older gentlemen who indicated that he was not a salesman but was rather the notary and was filling in since they had overbooked the morning presentations.
He was very nice and began giving us the overview of timeshares and various benefits. Since I know a lot about how to maximize timeshares and exchange options, I did not want to hear that pitch so I kindly requested that he explain the Westgate system.
I did a post on the Westgate system here and as you can see, it is very straightforward. It is a week based system so you buy a week and can use the week or exchange that week into other weeks, subject to availability. I requested numerous times to see current availability and to see their online portal of how this works but my requests were simply ignored. They indicated that they do not have an owner account to log into to show me which is extremely hard to believe.
I wanted to see the system as an owner and see what type of availability would show in their internal system as opposed to what I can see through Interval International. Unfortunately, I did not get an opportunity to do that.
Once we got the general overview of the system out of the way, we were presented with a standard laminated packet that indicated that cost for particular size of units and whether this would be during ski season or summer seasons.
Here are the pictures:
These were the original offers. As you can see, they offer you a "generous" 10% discount for the first visit incentive. In case it does not come through while typing, I am being extremely sarcastic.
Also, as you can see, they offer a "no-credit check" financing option for 17.99% interest (.01% less than the maximum amount allowed by law!) and broke it down into "reasonable" monthly payments.
I am a big fan of timeshares or I would not have started this blog but these prices were simply ridiculous. I was absolutely floored that anyone would purchase units at these prices.
When I was pushed whether these interested me, I told them that this was not very appealing to me. Not deterred, the representative talked to his manager and came back with the following list of pricesl
Since I was fluent in timeshare talk and knew the Westgate property, they determined that I should be treated as an owner and brought out the above "Owner Pricing". These offers are only valid for owners but would make an exception for me. (again, sarcasm).
As you can see in the above, the prices were better than originally offered by about 50%. In as little as 2 minutes, I was already getting a 50% discount.
If anything, I wanted a ski week at this property so I requested information on that. They claimed to have "found" a ski week at the Owner Pricing and offering the following:
I was offered a ski week for $64,331 that comes with maintenance fees of almost $1700 a year. WOW!
When pushed on whether these prices were attractive, I politely declined and used the excuse that I did not like the week based model (this is actually true) and preferred a points based timeshare model. After a few more back and forths, they realized that a sale was not happening at our table and told to us to proceed to the gifting area for our $150 cash.
It appeared that some other people were about to purchase one of the units which I think escalated the desire to get us out of the room to avoid squashing their deal.
We were in and out in just about the 90 minute mark.
We proceeded to retrieve our $150 cash and we were on our way to go enjoy the mountains.
The presentation wasn't too painful and the representatives were nice. However, I was absolutely floored by these prices. Most timeshares do not have any resale value so the fact that they were offering units for about $100,000 meant that some people were actually buying these units. Even at the Owner Pricing, these prices simply do not make any economic sense. The maintenance fees alone were higher than most timeshares.
Out of curiosity, I did a search on ebay to see what these units were selling for on the resale market. Take a look!
The prices go from $0.01 and a $350 incentive payment to the Buyer to $9.00. This is significantly different than the selling price of $100,000.
As stated above, I rented a holiday week at this property for $227 for the week! No ongoing fees or financing options! I have seen plenty of weeks at this Westgate property for much less than the annual maintenance fees of $1700! Even ski weeks at this property become available for a few thousand dollars at most.
I really do think timeshares are great ways to travel and you can really travel for very reasonable costs. After attending this timeshare presentation, I was truly stunned at the system. While I know that the timeshare system is completely broke, I could not believe that these systems were preying on the uninformed to keep making tons of money.
Overall, I was taken aback by the offered prices. The economics of timeshare ownership at these prices do not make any sense.
The Westgate Park City is a very nice property and already have a few weeks booked for during next ski season. Instead of paying these prices, I was able to exchange my points into these weeks for a fraction of the offered prices.
Timeshare ownership is not for everyone and at these prices, they are for no-one. Timeshare ownership can make sense as I get a tremendous amount of value out of our weeks but you need to learn, understand and figure out the way to maximize ownership.
Do your own research and understand the systems, resale prices, resale penalties and exchange options before you commit. There are plenty of ways to enjoy timeshares without owning and will go into some of those options in other posts.
What have your experiences been? Please leave comments below.