Economic Analysis: An Overview of Hyatt Ownership

 I hope I don't scare away too many people with this economic analysis but I hope that I can clarify some of the mystery around timeshare ownership and the economics of ownership.

First, my analysis will avoid discussing the initial purchase.  In economic terms, I view the initial purchase price as a sunk cost.   According to investopedia, a sunk cost is a cost that has already been incurred and thus cannot be recovered.  The purchase price of the timeshare should be considered a sunk cost.  In other posts, I will explain why this is the case but the majority of fees incurred by timeshares are not the initial purchase price but rather than ongoing maintenance fees.  In this post,  I discussed some of the basics of maintenance fees.  While ignoring the purchase price as a sunk cost in my analysis may be controversial, I argue that this is the proper way to assess timeshare ownership.

In this post, I want to examine the economics of a Hyatt timeshare.  While Hyatt has a small footprint, the quality of accommodations are generally excellent and most units are able to exchange into very high quality units through Interval International.  As discussed in my guide to Hyatt found here, Hyatt's are sold in week intervals and are based on the amount of points.  Generally, the strategy is to purchase the highest point week with the lowest maintenance fees.  The maintenance fees will be same for each same sized unit regardless of the season so you get the most bang for your buck but getting the highest point week.  However, as with most purchases, getting the top tier product is not always attainable.  In this post, I will explore the economics around a 1300 point week.  1300 points is provided for a 2 bedroom unit or 1 bedroom premier unit during bronze season.  This is fairly low season as the only other two seasons are Mountain and Copper.  I am picking this type of week because these weeks are generally priced well and 1300 points is able to be exchanged through Interval International for a 2 bedroom unit during high season.  Therefore, without much analysis, an owner of a low demand 1300 week can exchange through Interval International and receive a high demand week for the same 1300 points.  

THE FIRST SCENARIO:

While maintenance fees vary by different resorts, one of my Hyatt units is a 1300 week and has a maintenance fees of $1,207.46 for 2015.  In my earlier example, I am assuming that I simply pay my maintenance fees and instead of exchanging through Hyatt, I exchange through Interval International in order to take advantage of the high demand week.  In fact, I did do this in 2015 and we ending up staying at the Londoner at the Morritt's Club in Grand Cayman island in a newly constructed 2 bedroom unit.  In this example, I paid 1,207.46 for my maintenance fees and a fee of $179 to Interval International (online exchange fee instead of a phone fee) for a total of $1,386.46.  Based on this, I paid a price of $198.06 per night for a 2-bedroom unit.  Not exactly a bargain per night but the same accommodations through an online travel agency was $430.97 per night.  Therefore, simply using my timeshare instead of booking with an online agency resulted in a 54% savings. 

THE SECOND SCENARIO:

While I have two young kids at the moment, my wife and I purchased the timeshare before kids.  At the time, a studio unit was more than sufficient for a couple. Studio's units are basically hotel rooms but are slightly larger and usually have a microwave, fridge and sometimes a hot plate.  For a couple who are comparing timeshares to a hotel room, a studio is perfectly fine. 

Exchanging through Interval International requires 430 points for a studio unit it high season.  With 1300 points, I can reserve three high season weeks (430 x 3 = 1290) and still have 10 points leftover.  Again, with my maintenance fees of $1207.46 and 3 exchange fees for Interval International ($179 x 3 = $537), I can reserve a total of 21 nights in studio units during high season.  My total cost per night for a studio unit is $83.06.  At just over $83 per night, it is hard to find comparable hotel room properties.  Additionally,  since these are high season weeks, these weeks can be during prime season.  For example, here a few of my historical transactions where I was able to utilize this strategy.

Four Seasons Residence Club Aviara in November
Marriott's Kauai Beach Club for Christmas week
Marriott's Aruba Ocean Club for Thanksgiving week.

These are all very luxurious accommodations that I reserved during peak season at a cost of just over $83 per night. 

In reviewing the current rates for the same seasons for this year, I find that these stays would cost the following when reviewing the times and dates on Priceline.

Four Seasons Residence Club Aviara (November 5-12, 2016):  Total cost: $2,164.68
Marriott's Kauai Beach Club for Christmas week: Total cost : $2,033.64
Marriott's Aruba Ocean Club for Thanksgiving week: $2,499.90

These three weeks would have cost me approximately $6,698.22 instead of $1744.46 saving me approximately 74% off the regular cost. 

THE THIRD SCENARIO:

Exchanging through Interval International provides some significant advantages especially when trading with a 1300 point week.  Due to the favorable exchange rates, a 1300 low season week can result in many weeks through interval as discussed above.  The problem with the above strategy is that you will never be able to stay at Hyatt properties.  This may or may not be a problem but Hyatt's do have some very nice properties and I think that they are worth a visit.  In this next example, I assume that you can trade your 1300 points week within the Hyatt system instead of using it at your owned week.  For example, you can use 750 points to stay at a Hyatt during Diamond season (the top tier season).  Hyatt charges a fee of $39 for each reservation.  As I have done in the past, we have reserved one week at the Hyatt Mountain Lodge in Beaver Creek.  Diamond weeks are ski weeks and this was a very nice property.   In reviewing the upcoming ski season, a week in a studio for January 7 through 14 is $659 per night for a total price of $5,314.22.  

After using 750 points, I still have 550 points to use for additional nights.  Hyatt's system favors 4 night midweek stays which go from Tuesday to Saturday or Sunday through Thursday.  We have used these 4 night stays various times as the points values are usually great.  For example, a stay in a studio unit at the Hyatt Coconut Plantation in Bonita Springs, Florida only costs 140 points.  Week 21 is the start of Bronze season for Hyatt Coconut Plantation.  A reservation for May 23 through May 27th, (Tuesday to Saturday) would cost a total of $1849.36 for the 4 night stay.

After both of these trips, you would still have 410 points to use.  You can use 400 points in many ways but in my example, we have used points for a long weekend for a 3 night stay.  A three night stay in a studio during Platinum season can be used at Hyatt Wild Oak in San Antonio, Texas.  For example, a 3 night stay for March 31 - April 3 in a Studio would cost a total of $1,218.32.  

With the above examples, we would still have 10 points left over which actually can be used for a 2 night stay in Mountain season but we will assume that all points have been extinguished for these examples. Using these examples, we were able to book a total of 14 nights in a Studio unit during fairly high season.  The total cost for these reservations would have cost $8,381.90.

In comparison, using the Hyatt timeshare, I paid my maintenance fees of $1207.46 plus $39 for each reservation fee for a total of $1324.46 for a total of 14 nights or $94.60 each night.  

The various computations are almost endless but there are tremendous ways to maximize the value of the timeshare instead of purchasing hotel accommodations or purchasing directly.  The examples above are dependent on availability and availability tends to be the biggest issue.  However, with enough advance planning, flexibility, and diligence (not to mention following me on Twitter, Facebook and through e-mail), you can also score these types of weeks and exchanges.  Make sure to subscribe below for further updates, travel deals and exchange opportunities.