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!