If you have any interest in exchanging your timeshare through RCI or Interval International, the concept of trading power becomes of utmost importance.
Generally, trading power is the concept of the value assigned to your deposited week or points that will allow you to see certain inventory within the exchange company. Basically, the exchange company wants to take in high demand weeks and resorts and in exchange will give you the ability to trade into other high demand weeks or points. The exchange companies generally want to limit the ability to deposit a low demand week and have that timeshare owner receive a high demand week. RCI defines trading power as: "The value assigned by RCI to Vacation Time upon a Deposit and used by RCI to fulfill an Exchange Request." Interval International uses the concept of Comparable Exchange for its trading power. Comparable exchange attempts to match the quality of the week deposited with the quality of the inventory shown to that user. While the terminology for the concept of trading power differs between exchange companies, both of the major companies utilize various factors to determine the appropriate trading power of the week you own and then filter the inventory you see when you are searching for an exchange. While not inclusive, the various factors are generally taken into consideration: 1. Supply and Demand; 2. Quality of the facilities; 3. Unit type and sleeping capacity; and 4. Amount of time between the date of the deposit and the date of the week. Trading Power is a elusive concept since none of the major exchange companies will disclose the actual trading power of the deposited weeks or explain what inventory you can see and what inventory you cannot see. There are many theories on how these are calculated but nothing concrete has been disclosed that has actually shown the specific calculations. Overall, in the event that you want to own a timeshare, good trading power is essential in order to be able to see prime inventory. I would recommend the following: 1. Review the resorts that have the highest ratings within both systems. Interval's highest tier rating is now called Elite and RCI used the gold crown award standard. Those resorts with those ratings will generally be given the highest trading power even if the week is not a prime week. 2. If you know that you will not be using your home resort, deposit the week or those points as early as possible. The earlier you deposit the better the potential trading power. 3. Some types of units are considered lock-off units. Generally, it is a 2 bedroom unit that consists of a one bedroom unit and studio unit with connecting doors. The exchange companies can value these types of units higher than other types since they can rent the 2 bedroom or it can be split into a 1 bedroom and a studio. Generally, the exchange companies will give more "trading power" to these types of units due to the flexibility. 4. Own a desired week. This can be during a holiday, festival, certain events or any desired summer week. The more desirable the week, the more the exchange company will value the unit and the better trading power you will receive. Trading power is an important concept if you want to exchange your unit. Exchanging your timeshare is an important method to use if you want to maximize your ownership. Make sure to subscribe below and follow me on Twitter and Facebook
Not all timeshares are created equally and if and when you own one, you should understand various timeshare strategies. Understanding these strategies can assist you in determining what timeshare you should own and how to maximize its “value”.
“Value” is this situation can be defined as how best to use the timeshare for your personal use or “value” can be how best to use the timeshare to maximize your vacations for significantly less than booking directly with hotels or other accommodations. STRATEGY 1: USE THE TIMESHARE This may be basic but for those timeshares that continue to be based on a specific deeded week or allows the owner to use a specific week, the strategy is simply to own a timeshare at the specific resort for the specific week that you want to use. In this type of strategy, if you are the type of vacationer that simply likes to return to the same location and same resort year after year, then you need to own the specific week that you want along with the specific size of unit and resort. As discussed elsewhere, exchanging is difficult and it would be rare to get the same week at the same resort year after year with exchanging. While possible, this strategy would be the only workable timeshare solution to ensure that you get the week you want at the resort you want. While you may rent year after year, the typical nightly rates will generally greatly surpass the annual maintenance fees. Again, you need to do the math especially when you factor in the purchase price but nightly rents at these timeshare properties are generally very high since the amount of space is very large as compared to a hotel room. I personally like to visit a different resort and location each year so this strategy does not necessarily work well for my personal vacation preferences. However, I do understand the appeal of vacationing at the same location and resort. When you go to different locations or properties, it generally takes a couple days to figure out the property, restaurants, grocery stores, activities, etc. so you can avoid that learning curve by simple going back to same resort and avoiding have to learn the tips and tricks of that particular resort. STRATEGY 2: EXCHANGE THE TIMESHARE Again, this type of strategy applies to those programs that are deeded weeks or are tied to a specific week. In this strategy, the resort, location and size of the unit should not necessary matter to you. The only thing that should matter is how the specific timeshare trades within the exchange companies. Exchange companies value the timeshare based on what is known as trading power. In other posts, we will go over this concept but the general idea is that highly sought after resorts and weeks are given more “trading power” so that the exchange companies will entice you to deposit your week and in exchange will give you the ability to see other prime weeks, resorts and locations. In this strategy, the key is to obtain a timeshare that gives you the most trading power even if you never want to use the specific deeded week. This seems counter-intuitive to own a specific timeshare but never anticipate using it but this is a viable strategy where you can leverage the specific timeshare to get you into resorts and locations. For example, in using this strategy, I may want to purchase a timeshare week in Sedona, Arizona during the spring season which is a very high demand season. I pick Sedona because the weather is very nice year-round and maintenance fees are generally lower than other locations because the properties do not need to contend with snow, ice, salt water, heavy rains, hurricanes, earthquakes, flooding and other natural issues that tend to require more upkeep and thus more expenses which inevitably gets passed on to the owner. If I purchased a high demand week in Sedona for a low maintenance fee even though I would have no interest in ever using it, I can exchange that particular timeshare through RCI, Interval or SFX for other high demand weeks since the exchange companies would give the timeshare ample “trading power” that you allow you to see other prime weeks. I could use my Sedona timeshare to exchange into a prime ski week or a Caribbean resort where the maintenance fees could be double than what I would pay for my Sedona week. Even when you take into account the exchange fees and potential membership fees of the exchange companies, this strategy can be very worthwhile and actually save you a tremendous amount of money rather than purchasing at the resort or destination where you would prefer to vacation. The key to this strategy is determining the resorts that have the most trading power with the lowest maintenance fees. STRATEGY 3: THE HYBRID APPROACH I personally use Strategy 2 for some of my timeshare ownerships but also use Strategy 3. I believe that can you can use high demand weeks to get other high demand weeks in locations and resorts and save a tremendous amount on maintenance fees by owning at a low expense, high demand location. We can go over additional specifics in other posts but strategy 3 basically uses strategy 2 and takes into account the internal trading system of the timeshare that you own. Exchanging through RCI, Interval and SFX can result in some fantastic exchanges but you should not discount the ability to exchange in the internal programs. For example, Hyatt owners are able to convert their deeded weeks into points and use the points to trade within the Hyatt system for other Hyatt properties. If you own with Hyatt, you can exchange through Interval but Interval blocks Hyatt inventory from Hyatt owners. If you want a Hyatt property, you need to book directly through Hyatt and not Interval. Therefore, using Strategy 2 and owning a Hyatt week would prevent you for using Interval to exchange to Hyatt properties. While there are some benefits relating to the internal exchange system, the key downside is that if you own a low demand Hyatt week, the week will not be allocated a lot of points within the Hyatt system so there will be many properties that will simply be out of reach in order to exchange into for the same type of unit. You will simply never have enough points to exchange within Hyatt for a high demand property. However, that low demand Hyatt week may allow you to exchange into a high demand week within Interval. Hyatt does allow you to book 2, 3, and 4 nights stays in addition to 7 night stays that can be had for a favorable amount of points so you could use Strategy 3 to own a high demand, low maintenance week with Hyatt and exchange through Interval at times but also review the internal Hyatt chart to be able to stay at Hyatt’s properties. I am a big fan of Hyatt as all of their properties are generally very highly rated and there are some sweet spots with the Hyatt program that can make this a viable strategy. In addition, strategy 3 can be very worthwhile for Marriott owners or Vistana owners (formerly starwood). Most Marriott and Vistana timeshares can trade through Interval but there are some sweet spots within both of their internal exchange programs which we will detail in later posts. In addition, Interval provides Marriott and Vistana timeshares with a preference period. The preference period, which will discuss in more detail in other posts, basically allows Marriott and Vistana owners the ability to see other Marriott and Vistana exchanges before the general Interval population. In my example above, if you own with Hyatt, there will be times when very favorable exchanges become available with Marriott or Vistana but even with deposited high demand week, as a Hyatt owner, I will not be able to see those types of deposits. Interval specifically blocks all other Internal members from seeing those units and only shows the availability to its Marriott members or Vistana members. Therefore, it may be worthwhile to own with Marriott or Vistana if there are certain properties that you would like to visit within their programs. STRATEGY 4: EXCHANGE THROUGH THE INTERNAL PROGRAM Another viable strategy would be to purchase a timeshare in one of the major programs that allow for internal exchanges. All the major programs that still offer deeded weeks allow you to convert your deeded week into points and use those points to exchange with the internal program. You can own a specific unit within the program and use those points to trade within the program without ever having to exchange through the exchange companies. For example, you could own a week with Hilton or Hyatt and the location, size and season could be of no relevance to you. You would simply want to know the amount of points being allocated to the specific week so that you can convert the week into points and exchange within the program for other Hilton or Hyatt programs. This is a very worthwhile strategy and we will discuss the various sweet spots in the programs. In other posts, I will explain an additional strategy on how to leverage various programs in order to get even more value out exchanging your timeshare. This will definitely be more advanced but stay tuned for that post! As I have said multiple times before, timeshare ownership can be complex as there are so many variables that go into play with using them across the various programs. The various strategies outlined above are essential to have a general understanding about so that you can determine what timeshare to own or how to get the most value out of your existing ownership. There are too many disgruntled owners of timeshares since they do not understand the programs and do not understand the way to leverage ownership in order to get high quality reasonable priced vacations. One of the goals of this blog is to fix this perception and provide existing timeshare owners with the knowledge to get the vacations that they want! Make sure to follow me on Twitter and Facebook. 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Bulk deposits are when resorts deposit multiple weeks at once to an exchange company. This can occur in RCI or Interval International. Many times, a single resort may deposit multiple weeks at one time which provides vast amount of availability for exchanging into that resort. Other times, a developer, such as Marriott, Hilton, Westgate, Hyatt and so on will do a bulk deposit for many of their resorts within their system. In a split second, highly rated and recommended resorts become available.
There are some theories that bulk deposit do not always trigger a request first, deposit first or ongoing search matches. Sometimes, the bulk deposits occur and it will only be at a later time when a match is confirmed using these methods. The importance of these bulk deposits is that you can grab an highly sought after resort or week and potentially even bypass those other timeshare owners who have a ongoing search. Neither RCI or Interval International provides an advance warning on when such bulk deposits occur. If and when they do occur, the weeks are usually grabbed very quickly. In regards to Interval International, it is very advantageous to get E-Plus with your exchanged week as discussed here since a bulk deposit could become available at a nicer resort or at a hard to come by destination. E-Plus will allow you to make that exchange without an added exchange fee. As stated, these bulk deposits will show up and will likely be gone quickly so subscribe below to be alerted to these exchange opportunities.
While there are many ways to actually purchase a timeshare, a question normally arises on whether you should finance the purchase. While a home purchase will almost always involve a mortgage, a timeshare is different. While the various programs tout that the timeshare is a deeded real property interest, as explained here, a timeshare is a different type of real property and is completely different than a home purchase or other real property where you own the ability to use it 365 days a year.
All the major developers of timeshares do offer some type of financing option. Upon review of a few major developers, most will offer financing to qualified purchasers for a ten year fixed rate term for about an 11-15% interest rate. As a comparison, mortgage loans are currently around 3.5% for a 30 year term. I believe that a timeshare is a luxury item that should only be purchased by those that can afford the initial fee and the ongoing maintenance fees. While financing options are available, the interest rates are very high and any monthly fee that you will be required to pay the loan will be in addition to the maintenance fees. This can make the timeshare purchase not affordable or even more expensive that renting hotel units or other condo properties. Generally, you should not finance a timeshare purchase. There are many ways to purchase a timeshare and whatever way you choose, you should be able to afford the initial price. As argued in my other posts, the initial purchase should be treated as a sunk cost or looked at as a initiation fee or membership fee. You should be able to afford that price without financing. If you cannot and you go forward with a financing option, the monthly payment for the initial loan and ongoing maintenance fees will likely be a financial hardship and it will be difficult to maximize the ownership of the timeshare with a large financial overhead. A timeshare is a luxury item but it is also vastly different that true real property. I believe that timeshares are worthwhile to own but financing the purchase is generally a bad decision. Make sure to subscribe below!
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For those you who do not know, Tripadvisor is an online review source that lets users provide reviews of hotels, vacation rentals, activities, timeshares and other activities. Tripadvisor is fairly mainstream so I doubt that I am providing any real insight into this tool. However, this is an absolute must for vacation planning. Tripadvisor provides unbiased reviews so you can see what travelers like you and I actually think about a particular resort. Many timeshare properties are located on Tripadvisor so you can see what people have to say about the resort before booking it. Interval and RCI both provide designations for the quality of the resort using designations such as gold crowns or Elite resort which are somewhat useful to understand the quality of the resort. However, Tripadvisor provides real reviews so that you can see what others are saying and provide you with excellent tips and tricks for the resort. Travelers can inform others on room recommendations, nearest restaurants or grocery stores, the availability of tours and activities and so on.
One trick that I recommend doing is to go to the reviews and filter them so that you can see all the "Terrible" reviews. I recommend doing this because a lot of the terrible reviews can actually provide useful information concerning the resort. Some terrible reviews are just people ranting for something uncontrollable or people wanting to receive some type of compensation from the resort for minor inconveniences that occurred while on vacation. However, sometimes, you can review the "terrible" reviews and the same theme will be discussed on each review. Sometimes, they complain that the beds are bad or the location is inconvenient. I personally think that the terrible reviews provide more information that the glowing reviews since you can see the particular problems that the traveler incurred at the resort and potentially see how the resort reacted to the situation. Many times it is the hotel reaction that provides the most insight on the quality of management or empathy of the staff. You can then make up your own mind on whether the traveler was being high maintenance or whether the issue that they brought up is a potential concern. However, I caution everyone that the reviews are just that, reviews and opinions. Opinions can differ greatly so somebody's great experience could easily be somebody's awful experience. Additionally, it is very important to get a feeling of who is writing the particular review. If you have a traveler that stays mostly at Four Season's resorts, their review of a Holiday Inn would likely be poor even if the Holiday Inn was stellar. In contrast, someone who normally stays at a Holiday Inn and goes to a Four Season resort would likely provide a glowing review even if there were inconveniences that a regular Four Season's traveler would find troublesome. Tripadvisor has also branched out recently and you can now book hotel and vacation rentals directly with Tripadvisor. This is beneficial so that you can see what the "retail costs" are for these types of rentals and see whether booking direct or booking through the exchange company makes economic sense. Before exchanging, you should always do the math as sometimes booking directly instead of using the exchange could be economically beneficial and saving the timeshare exchange for better savings. I always recommend reading the Tripadvisor reviews before booking. Hotel and timeshare photographs can be extremely deceiving so Tripadvisor provides a good way to get true feedback on the property. Make sure to subscribe below!!
Hyatt Gold Passport is the loyalty program for Hyatt and allows members to redeem points for free hotel nights around the world. Hyatt Residence Club properties have always been treated differently in the program since they are timeshare properties and do not have to follow the same general rules as other Hyatt hotels. Hyatt has just recently made a change to the program that includes the Hyatt Residence Club properties to Hyatt Gold Passport so that Hyatt members can redeem points for stays at the Hyatt Residence Club properties. This is fantastic news as this gives us the ability to add on to timeshare weeks or stays using Hyatt Gold Passport points. In other posts, we can discuss how to obtain these points but this is a positive development. Here are the point requirements for the Hyatt Residence Club properties.
Hyatt Pinion Point, a Hyatt Residence Club (Sedona, AZ) 15,000 points per night Hyatt Hacienda del Mar, a Hyatt Residence Club (Dorada, Puerto Rico) 15,000 points per night Hyatt Sunset Harbor, a Hyatt Residence Club (Key West, FL) 20,000 points per night Hyatt Coconut Plantation, a Hyatt Residence Club (Bonita Springs, FL) 20,000 points per night Hyatt Wild Oak Ranch, a Hyatt Residence Club (San Antonio, TX) 20,000 points per night Hyatt Mountain Lodge, a Hyatt Residence Club (Avon, CO) 25,000 points per night Hyatt Main Street Station, a Hyatt Residence Club (Breckenridge, CO) 25,000 points per night Hyatt Beach House, a Hyatt Residence Club (Key West, FL) 25,000 points per night Northstar Lodge, a Hyatt Residence Club (Truckee, CA) 25,000 points per night Hyatt Windward Pointe, a Hyatt Residence Club (Key West, FL) 25,000 points per night Grand Hyatt Aspen, a Hyatt Residence Club (Aspen, CO) 30,000 points per night The Residences at Park Hyatt Beaver Creek, a Hyatt Residence Club (Avon, CO) 30,000 points per night Hyatt Siesta Key Beach, a Hyatt Residence Club (Sarasota, FL) 30,000 points per night Hyatt Carmel Highlands, a Hyatt Residence Club (Carmel, CA) 30,000 points per night Maui Ka’anapali Beach (Lahaina, HI) 30,000 points per night Hyatt High Sierra Lodge, a Hyatt Residence Club (Incline Village, NV) 30,000 points per night There are additional points requirements for 1, 2 and 3 bedroom units as the points above are for studio's. Overall, this is a positive development but still remain subject capacity controls which may limit availability.
One of the perks of being a timeshare owner is the ability to make discounted reservations using cash at the the various resorts. Almost all timeshare companies provide this perk including Hyatt, Hilton, Marriott and others. Today, I wanted to take a closer look at Hyatt's owner discount program. According to Hyatt:
As a Hyatt Residence Club member, you can enjoy priority reservations and discounts up to 40% on rental stays using cash instead of points. Reservations can be made at any time, and are subject to availability. According to Hyatt, you can save up to 40% of rental stays. I have personally make reservations using this program and there can be some discounts to be had. In addition, as discussed in various other posts, it is rare that airfares and timeshare weeks line up exactly right. Sometimes, airfare costs differ by so much that it is worth it to arrive a day or two before the timeshare week starts or stay a few days later. Unfortunately, even though a lot of programs provide flexibility for these one, two or three night stays, the cost using points can equal or even surpass a week long stay. In most situations, it makes sense to book using cash. While there are usually various hotels within the same areas as the timeshare, moving rooms or resorts is disruptive and generally a pain. While reserving a room at the same timeshare does not guarantee that you will not have to move rooms, most timeshares have the ability to keep you in the unit provided that the unit is not rented for the following week. However, it all depends on the resort. OWNER DISCOUNT RESERVATION: In order to make an owner discount reservation, you need be an owner with Hyatt. You can login to their portal at www.hyattresidenceclub.com. You can navigate to "reservations" and then you have the ability to choose whether you are looking at a single property or multiple resorts. In order to see what types of discount are really being offering, here are few results for random weeks during the week. FIRST TEST: Residence at Park Hyatt Beaver Creek: In doing a search for a two night stay, I find various open dates in September and October. Most are for three bedrooms but there are a couple of 2 bedroom units. For example, I see a two night stay in a 2 bedroom unit for September 11 - 13th. Hyatt requires a deposit in the amount of $708.12 which is also the cost of the room for two nights. The price per night for the reservation would be $354.06 including all taxes and other fees. In comparison, booking directly with Hyatt showing a room cost of $539.00 per night plus occupancy taxes of $118.47 and resort fees of $44.40 for a total cost of $1240.87. In this example, booking through the Owner Discount Reservation portal would save $532.75 providing a total discount of 42.93%. This discount actually exceeds the stated discount amount. While the room cost is still over $350 a night, this does provide you a reasonable discount off the public retail rates. SECOND TEST: Hyatt Wild Oak in San Antonio Hyatt Wild Oak is a very nice property located in San Antonio, Texas that is close by Seaworld. There are water slides, trails, and tons of kids activities. My family frequents this property a lot as it is a close drive for us and provides a nice little getaway from the everyday routine. Using the same dates as above, (September 11- 13th), I found plenty of availability. September is one of the nicest months in Texas as it is still hot but the crowds have died down. I found availability using the Owner Discount Reservation portal for a studio unit and a 1 bedroom unit: Owner's Discount: STUDIO UNIT: Total for two nights $254.52 or $127.26 per night (including all taxes) 1 BEDROOM UNIT: Total for two night $324.56 or $162.28 per night (including all taxes). In comparison, here are the results for booking directly with Hyatt: Hyatt Rates: STUDIO UNIT: Total for two nights $322.45 including city tax, occupancy tax, and resort fees or $161.22 per night 1 BEDROOM UNIT: Total for two nights $462.55 including city tax, occupancy tax, and resort fees or $231.27 per night As you can see, there is definitely a discount for booking through the Owner Discount Reservation Portal. The savings for the studio unit for this two night stay is $67.93 or a 21% discount. The savings for the 1 bedroom unit for this two night stay is 137.99 or a 29.8% discount. Overall, while these reservations do provide discounts off the regular retail rates, they still can be expensive especially when comparing the nightly rates to the effective nightly rates when using timeshare points or exchanging through an exchange company. However, that is not always feasible so if and when you need a couple of extra nights at the resort, the owner discount reservation can at least provide you with a reasonable discount off the retail rates. Availability differs so even if you see availability at the Hyatt website, you will not always see availability using the Owner's Reservation Discount portal. Make sure to subscribe below to receive up-to-date information! |
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