Maximize Timeshare Ownership
The ultimate resource to understand, maximize and leverage timeshare ownership to travel in luxury accommodations on a reasonable budget.
The ultimate resource to understand, maximize and leverage timeshare ownership to travel in luxury accommodations on a reasonable budget.
For those of you who do not know, travel hacking is the term given to obtaining hotel points, frequent flyer miles and credit cards points for little or no out of pocket expenses and being able to convert those travel currencies into luxurious vacations for free.
It seems difficult but it can be remarkably easy. The general idea is that you sign up for credit cards for their initial bonuses, use them in order to meet the minimum spend amounts and then cancel them. You basically do this over and over with various credit cards. If you are new to this, you can easily rack up 500,000 to 1,000,000 of these travel currencies with little effort and then use those miles to travel for "free" in many very luxurious destinations.
New Credit Card Rules
While travel hacking is still abundant and possible, the credit card issuers have gotten wiser about this and have made this hobby more and more difficult.
For example, American Express has many great welcome bonuses. You use to be able to get a card, get the bonus, cancel the card and reapply and get the bonus again. It wasn't too long for American Express to figure out that this was not profitable and that these were not the type of customers that they wanted.
American Express instituted a restriction where you can only get the bonus once in a lifetime for card. Therefore, if you received the welcome bonus on a specific variant of their card, you could no longer get the bonus again. (Based on my understanding, American Express considers a "lifetime" to be 7 years).
This dealt a blow to the travel hacking community as it severely limited the amount of bonus offers that you could receive through American Express.
American Express now just released a new rule where they can deny your bonus offer if they suspect that you are gaming the system.
Here is their new language:
Welcome offer not available to applicants who have or have had this Card. We may also consider the number of American Express Cards you have opened and closed as well as other factors in making a decision on your welcome offer eligibility.
Here is a good article from One Mile at a Time discussing this.
Chase is one of the biggest players in the travel credit card space. They offer some of the best cards with some of the best bonuses. A few years ago, they got wise to "travel hacking" and instituted an internal rule called 5/24. Basically, if you opened up 5 new accounts from any bank in the past 2 year period, they will deny your credit card application, NO MATTER WHAT!
I have been subject to this rule and despite having personal relationships with Chase, a stellar credit score, a good paying job and significant assets being held with Chase, I was denied their credit cards. The reason: too many inquiries in the past 2 years.
Despite pleading to the bank through multiple different avenues, they stuck with their position.
Here is a good overview of the Chase 5/24 rule.
As bonus offers have kept going up, the various banks have also increased the annual fees for these products . They provide additional perks and benefits in exchange for these higher annual fees, but you need to use them in order to get the value.
For example, the American Express Platinum card, can offer bonuses as high as 100,000 points. The annual fee use to be a whopping $450 per year which is almost never waived. American Express has been adding various perks in order to rationalize this annual fee but has recently now raised the annual fee to $550 per year.
I think that the annual fee can actually be worth it IF you take the time to understand the perks and USE the perks. In my case, I try very hard to maximize every perk in order to rationalize the annual fee but it takes time and diligence. I imagine that there are a significant number of American Express Platinum users who do not use a fraction of those perks.
The premium credit card market has been expanding quite a lot recently. Paying $550 for year for a credit card seemed ridiculous but these types of premium credit cards are being introduced over and over.
For example, you have the Chase Ritz Carlton Card which costs $450 per year, the Citi Prestige Card which costs $450 per year, United Mileage Plus Club card which is $450 per year, the Delta Reserve card which costs $450 per year and many others.
Here is a post from the Points Guy on these premium cards.
Using your Frequent Flyer Miles and Hotel Points
Once you accumulate the various travel currencies, you get to use those frequent flyer miles and hotel points to travel anywhere* in the world. However, "anywhere" in the world generally is subject to availability, price increases, poor routing choices and various other difficulties.
You use to be able to book 330 days in advance and generally get whatever route you wanted at the lowest mileage cost. It worked well for me over the years.
In the past 5 or so years, airlines and hotel chains have gone away from this approach and now use the historical data on capacity and demand and do not release availability or low reward available this far out if they are fairly certain that they can fill those planes and hotel rooms throughout the year.
The travel currency world is constantly being devalued. Every year, airlines and hotel chains release new charts, new programs and new ideas that all have the effect of devaluing your travel currencies. Many do so without warning. Delta has even go far as to not release award charts so you do not know what the awards should cost.
Hotel chains introduce new tier structures and constantly move hotels up and down, (mostly up) in their tier categories to require more and more points.
The general saying is to earn and burn your travel currencies as the next devaluation will shortly occur.
My Credit Card Portfolio
As I stated many times before, I am a HUGE fan of credit cards and credit card points. Between my wife and I, we probably have about 30 credit cards. I use specific cards for travel, specific cards for gas, specific cards for flights and generally make sure to get the most points per transaction possible.
However, I also pay A LOT in annual fees. I have the American Express Business Platinum Card ($450), the Citi Prestige Card ($450), the Chase Sapphire Preferred ($95), the Chase Ink Business Preferred ($95), the Chase Hyatt card ($75), the Delta Platinum card, ($195) etc. and many others.
Just based on the cards mentioned above, I spend OVER $1,360 on annual credit card fees.
This seems somewhat ridiculous but each card has certain perks and benefits and I think that I get enough value out of these cards to justify the cost. However, it is hard to do. It requires a lot of time and energy, research, reviewing points blogs, searching availability, figuring out the best use of miles and hotel points, comparing different programs, etc.
I have the mind set to do it and the desire to do it. However, as the credit card issuers are getting more strict about bonuses, as annual fees continue to rise and as redemptions for hotels and flights get more expensive, it is getting to be more difficult to justify the time and effort required in order to get your "free" trip.
Comparison to Timeshares
Just based on this general overview of travel hacking, you can see that it is complicated, the "free" trips that you take are really not free, and that the rules are changing and they are not in the customers favor.
The title of this post, "are timeshares the next frontier in travel hacking?" is meant as a legitimate question.
Timeshares are extremely similar to travel currencies. I would say that they fall under the same category as a travel currency.
Instead of applying for credit cards to get a travel currency, you pay an annual maintenance fee and you can get points to use for travel.
While there are many different types and qualities of timeshares, most programs are moving towards a point based programs so when you pay your annual fee, you will receive points which can then be used to exchange into quality accommodations.
As I stated many times before, I pay about $1,200 per year in maintenance fees for my Hyatt Residence Club timeshare. In exchange, I get 2,000 Hyatt Residence Club points. I then use those points to exchange into other timeshares where I can easily get 5 weeks of travel for my $1,200 per year plus exchange fees. I have broken down the economics of timeshare ownership here.
Compared to credit cards and travel hacking, I think that my timeshare is actually a much better deal. The exchange rates for timeshares do not change as frequently and some exchange rate changes are extremely rare.
One of the biggest difference between timeshares and credits cards is the repeatability. Each year, when I pay my maintenance fee, I receive my points which can be used for travel. While in the past, I used to be able to reapply for multiple cards and get bonuses, they systems have changed and it is become harder and hard to make travel hacking through credit card bonuses repeatable.
Credit card bonuses are a great way to accumulate a lot of points and travel for "free" for a year or two. However, with the once in a lifetime rule, Chase's 5/24 and the general adversity against people gaming these systems, it is becoming harder and harder to obtain travel currencies for "free" year after year. Therefore, travel hacking has become non-sustainable if you travel multiple times per year, year after year.
Some points programs such as Marriott, Hilton and Hyatt put out annual exchange charts for their properties. They cannot devalue existing owners weeks or points as this would create a huge backlash and many times, can be restricted in doing so since timeshare owners bought into a specific system and if they materially change the offerings, point structure or usability of their timeshare, they could be forced to rescind such purchases. Rescission would be extremely detrimental to the entire timeshare industry.
In contrast to other travel currencies, devaluation is rampant and if you do not like the revisions, you change systems and loyalties. There is no contract that you sign with the travel currency providers indicating that they cannot or will not change their systems.
While timeshare programs tend to rearrange some point requirements and modify rules, generally you do not see the tremendous changes in point requirements for timeshares as you do with hotel chains.
Additionally, the external exchanges (those through RCI and Interval International) generally stay the same. I have owned a Hyatt timeshare for over 10 years and the exchange rate from Hyatt to Interval International has stayed the same the entire time.
Furthermore, Interval International and RCI do not differentiate points based on quality. It costs the same amount of points for a Four Seasons exchange as it would be the equivalent of a Motel 6. Therefore, as the systems currently are, there are tremendous opportunities to get outsized value.
I consider myself to be very well versed in the "travel hacking" space and know the ins and outs of the programs. My family and I do extremely well navigating credit cards, points, and frequent flyer miles.
Also, you know that I do quite well with our timeshares as well. I talk to many people about timeshares and the reputation of timeshares is a material hurtle to overcome. The industry has such an awful reputation that it is hard to get people to look past the negative perception and dive into the actual programs to determine if there is value.
There are so many similarities between travel currencies and timeshares. Once you understand the inner workings of the programs, you will find that there are tons of "sweet spots" in these programs, strategies to maximize ownership and use and ways to get awesome vacations for less than even your "free" vacation.
My view is that timeshares will be the new frontier in the travel hacking space.
It is a bold statement to say but the credit card programs are changing, bonus points are becoming harder to get, hotel chains are constantly devaluing their points where it can require a ton of spending or stays to accrue a "free" week, frequent flyer points are being devalued so quickly that it hard to fathom, first class redemptions are prohibitively expensive after multiple rounds of devaluations, availability is sparse during peak times, airlines and hotel chains are increasingly playing more and more games with availability such as minimum stay nights, blocking availability for one night during a peak demand week, blocking award availability for key connections to hubs and various other games all to prevent you from getting the promised value of these travel currencies.
With all that being said, travel currencies are definitely needed and I get a tremendous value out of them. However, the constant changes, devaluations, and availability issues make it harder and harder to keep up with the systems and know the best way to maximize their use.
If you read my blog, I am not shy about discussing the negative attributes of timeshares. Some of the worst attributes are the prohibitively expensive upfront costs that the developer charges, the difficulty of selling or even giving away a timeshare and availability.
My view is that if you purchase a high quality, name brand timeshare on the resale market (Hyatt, Marriott, Hilton, Four Seasons, Vistana (Starwood) for a low upfront price, where the week or points for that timeshare carry a reasonable maintenance fee, you can get tremendous value out of timeshares. Not only get you get tremendous value, but you can easily sell the timeshare once you do not want to use it anymore. The key is to get in at a low price with a high quality timeshare.
While I still will accumulate and use travel currencies through credit cards and multiple other avenues, I think that timeshares are being overlooked as a viable strategy to travel well and potentially cheaper than using other travel currencies. I am sure that many people will disagree. I am interested to hear your thoughts!