Timeshare Basics: A introductory overview of timeshares

Thanks to the Doctor of Credit for allowing me to post a guest post on his blog found here.  As a result of his generosity, there are a few new readers to The Timeshare Guru.  As a result of this new readership, I thought I would take this opportunity to give a very basic overview of timeshares.  

Timeshares are complicated so I thought I can break down the basics so that readers can  have a better understanding of various options involved in actually owning or using a timeshare. 

Types of Timeshares:

There are actually a few different types of timeshares.  Most people are familiar with the most basic model which is where you purchase a one week interval at a resort.  This "weekly model" allows you to use that specific week each year or sometimes, every other year if you own a bi-annual week. 

Another type of timeshare ownership is a "points model".  Instead of owning a specific week, you purchase an annual allocation of points which can then be redeemed for stays are various resorts within that particular program.  You typically purchase enough points to use for a week stay at various resorts.

Yet another model is a "hybrid model'.  In a hybrid model, you typically purchase a week a at a particular resort and you have the option to use that particular week or alternatively, give up that week and get a certain amount of allocated points.  You then use those points to make reservations in other resorts.

Units:

Timeshares generally come in various size units.  Timeshares come in studios, one bedrooms, two bedrooms, three bedrooms and occasionally four bedrooms.  Studios are similar to hotels but generally can be slightly larger.  Most timeshares larger than a studio will come with a full kitchen and living room.
 
Seasons:

Unlike the standard four seasons, timeshares come in various different seasons.  Each program breaks down the 52 weeks of the year into many different seasons with as many as 6-8 seasons with various names depending on the program such as Platinum, Diamond, Bronze, Mountain, etc.  The general premise is that high demand weeks in high demand locations will be categorized in the highest seasons.  

Internal Exchanges:

While the older system of timeshares generally obligated you to buy a week and use that specific week year after year, the new version of timeshares attempts to give the purchaser a lot more flexibility.  Timeshares now offer the ability to exchange their week and/or points into other resorts within the same system.  For example, if you own a Hilton timeshare, you can exchange your week into another week at another Hilton timeshare.  This goes for almost all timeshares that are affiliated with larger brands (Marriott, Hyatt, Hilton, Wyndham, Four Seasons, Vistana, etc.)

External Exchanges:

​In addition to being able to exchange for other properties within the same brand, almost all timeshares offer the ability to use a third party exchange company to exchange your week and/or points into other timeshares.  Timeshare brands are generally associated with either RCI or Interval International.  For example, Marriott trades through Interval International and Hilton trades through RCI.  A Hilton owner can never trade into a Marriott and a Marriott owner can never trade into a Hilton.   

RCI:

RCI is one of the major exchange companies.  It was the original exchange company and is the largest based on the amount of resorts affiliated with RCI.  RCI was purchased by Wyndham International a few years back but still operates independently.  

Interval International:

Interval International is the other major exchange company.  Interval International has been a major player in the timeshare market and recently purchased many of the large brand timeshares including Hyatt, Vistana (Starwood brands)and Aqua-Aston.  

Purchasing a Timeshare:

The main option in purchasing a timeshare is buying from the developer or buying resale. Buying from the developer occurs when you attend a timeshare presentation or purchase directly with the timeshare brand.  Resale occurs when you buy directly from a current owner or on the secondary market with major outlets being Redweek, Ebay or other real estate brokerage firms that specialize in timeshares.  

Developer Purchases:

When you purchase from the developer, they tend to offer various perks including hotel points, extra or bonus vacation weeks, resort credits or some other perk for purchasing. Purchasing from a developer is vastly more expensive then purchasing on the resale market.

Resale Purchases:

Purchasing resale can provide some truly phenomenal cost savings as opposing to buying from the developer.  However, there are few items that you need to be aware of before you move forward with a resale purchase.  

The developer may provide some type of "penalties" for buying resale.  This can be prohibitions on internal trades or prohibition against converting your week into hotel points.  

Also, you need to make sure that there are no debts or other encumbrances on the resale week.  If you do not thoroughly research the timeshare week, you could end up assuming debt that you didn't realize existed.

Initial Purchase Price:

In order to purchase a timeshare, it will require an upfront fee for purchase.   The fees will vary widely depending on the size of unit, season, whether you purchase resale or from the developer and whether it is annual or bi-annual usage.  The fees can be as little as $0.00 (NOT A TYPO) or hundreds of thousands of dollars (AGAIN - NOT A TYPO).  
 
Maintenance Fees:

In addition to the initial purchase price, the owner will be required to pay maintenance fees on the unit.  Maintenance fees are essentially all the pass through costs of the resort broken down by unit and week.  Maintenance fees include property taxes, management fees, capital expenditures, reserve accounts, staffing, housekeeping, etc.  Maintenance fees can vary widely but tend to range from $500-$2500. These fees occur each and every year, regardless of whether you use the timeshare.  

As an aside, timeshares have developed this awful reputation due to this fact concerning maintenance fees and their recurrence and not being adequately disclosed during purchase. 

Exchange Fees:

In addition to the purchase price and maintenance fees, you will generally have to pay an exchange fee.  Exchange fees can be levied on internal reservations, external reservations, guest certificates, cancellation fees, etc.  There are no shortage of fees associated with timeshare usage.  

Converting Timeshares to Hotel Points:

Timeshares that are associated with major hotel brands generally offer timeshare owners the ability to convert their week into hotel points.  This "perk" is one of those that generally will be taken away if you purchase resale but can vary according to the timeshare brand.  Converting into hotel points generally does not convert at a favorable rate but it can be a useful option in some limited situations. 

Renting Timeshare Weeks:

RCI and Internal International both offer options to rent weeks for cash instead of exchanging your week and/or points.  These are called Interval Getaways or RCI Extra Vacations.  The rates for these weeks can be as low as $200 per week and can offer a tremendous amount of value.  One secret is that you do not even need to own a timeshare in order to rent these weeks.    

Reselling Timeshares:

​Timeshares are easy to purchase but can be very difficult to sell.  This is generally a surprise to most owners since they were likely induced to purchase thinking that the timeshare, a deeded property, would appreciate in value.  Timeshares almost never increase in value and can be difficult to sell since there is more inventory than demand.   The poor reputations of timeshares do not help the resale market either.  


if you are new to this website, I am sure that you have many preconceived notions on timeshares and have a lot of skepticism on timeshares.  While I am definitely a fan of timeshares, I am not here shilling purchases of timeshares as the intent of this blog is to educate timeshare owners and show you how you can maximize ownership, maximize the systems, grab cheap weeks without owning a timeshare and get a tremendous amount of value out of the systems if you own. 

I encourage you to look around the site at some various posts that go into some more detail on timeshares and some various deals that can be offered through these programs.  

As the site grows, I anticipate adding more details on some of the other major programs but I am hoping that readers can help direct me for content that they find useful.  

Please reach out with any questions and  I hope that I can help you see how timeshares can actually be a wonderful way to vacation with very little cost!

TTG 
The Timeshare Guru
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