If you attend a timeshare presentation, you will be pitched on how great a value timeshare ownership is. You will be shown how you can lock-in the cost of your vacations, and how you can use your ownership to travel the world, and you can stay at exotic places. You will likely be offered nice gifts such as tickets, free vacations, cash, or other valuables just to listen to the opportunities that are available. You might even be told you are not being sold to, but that you are getting access to a unique opportunity that might save you countless dollars on your vacations!

Regardless of what is said to you, the question of whether a timeshare is a good value is relatively easy to answer. Before buying you should make sure you know the answer to this question

Attending a timeshare presentation can earn you cheaper vacations, money, tickets, and other items. In a separate article, I present tips that include questions to ask if you choose to attend a timeshare presentation. In this article, I’m going to focus on one area only – the value of a timeshare financially. Do the savings add up? With this focus, I hope to help you understand if the opportunity being offered truly is as good as what is being said.

Here are the important areas to consider regarding financials for a timeshare:

• Upfront cost
• Maintenance and other fees
• Special Assessments fees
• Timeshare Exchange Fees

It is important to understand each of these costs as ultimately if you buy a timeshare you could end up paying each of them.

Timeshare Upfront Costs

When you ‘buy a timeshare’ you are generally buying a specific week in a specific location at a specific resort. You might be offered to buy points, but roughly speaking, those points add up to what it takes to obtain a week at a specific time within a specific location at a specific resort. Whether you are pitched a week or points, both are generally sold with the flexibility to be used at different times within the resort, the resort chain, or even outside of the resort. In many cases, you are also told you can use what you are buying for other products such as car rentals, cruises, hotels stays, and more.

When you buy, you are often offered a specific unit size that can range from a studio to numerous bedrooms. In the most recent presentation that I attended at a Westgate resort, I was pitched a standard 2-bedroom unit during the most popular time at the resort, the peak time. While I was told the rates would be going up (“due to demand”), I could still get the current rate (standard sales pitch is that rates are going up, units are about sold out, and you don’t want to miss the deal). The rate was roughly $50,000 for a two-bedroom unit for a week at the resort.

That $50,000 let me own that week, “just like” I own the home I live in.

Of course, if you don’t jump on an initial offer, there is generally a better deal that is available. When I didn’t jump on the $50,000 price at Westgate, I was informed they just had an owner upgrade to a high-end unit, so there was a unit that had been partially paid for. I could have their equity and get a similar 2-bedroom unit to what they had just offered, but for just around $29,500! It was my lucky day!

Of course, this type of discount is standard. Just like buying a car from most automotive dealers, the first price is not the price you should accept or pay.

Financing will also be offered on this $29,500. I believe the payments would be roughly $165 a month, spread over about 15 years. For the sake of keeping numbers simple, that number doesn’t really take into account interest, so the payment would actually be higher depending on the financing.

Buying this unit would allow me to lock in the ability to take a week vacation each year. The pitch tells you that you are buying today, so you are locking in your ownership at today’s price. Let’s assume that you are 40 to 50, then this means you could be using the unit for over 30 years and thus over 30 vacations. By buying the unit, you’d lock your vacation cost at (roughly) $1,000 per year ($29,500/30). If you consider inflation and the changing value of the dollar, then, overall, this sounds like a good deal since it indicates you’ve locked in cost of your vacations!

Timeshare Maintenance Fees

In the presentation, they might tell you about other fees. The big one is the maintenance fees. In addition to the up-front cost, you’ll be charged an annual fee. These are often presented as a simple Homeowner’s (HOA) fee. This charge will be to maintain and cover your week’s use of things ranging from electricity, water, and cable, as well as cover the cost of house cleaning and more. It will also be your share of the cost to maintain the grounds and any amenities.

There will be other fees included in your annual assessment as well. When buying a timeshare, it is critical to ask what fees are charged and to get a clear understanding all the fees. For the unit above, I was told the current maintenance fees were roughly $800 a year. When I asked if this included property taxes, I was told that was “roughly $20 more”. That wasn’t included in the maintenance fees. As a note, $20 property taxes on a 2-bedroom timeshare seems unrealistically low to me. My timeshare property taxes are over $100 a year for a unit in Orlando.

There are a number of other line items that might be added to your maintenance bill beyond the base maintenance or HOA fee and property taxes. This can include management services to pay for the people who are booking your week and billing you for your annual fees. There can be resort fees that are charged by the owning organization (often a hotel chain).

There can also be reserve fees, which are fees that are charged to use for unexpected or planned updates. This can be for something such as a new roof, painting, or replacement of furniture and items in the resort unit. As a partial owner of the property, you are also responsible for such things as new paint, furniture, dishes, pool maintenance, and more. You don’t have to directly deal with these, but rather will pay fees to cover the costs. There can be numerous other fees. The following is an example of fees charged at a resort in Orlando. These don’t include the property taxes or standard reserve fees, which would be in addition to these:

• Housekeeping & Rooms
• Administrative & General
• Financial Services
• Technology Services
• Annual Audit
• Security & Activities
• Reserve for Bad Debt
• Repairs & Maintenance
• Utilities (Electricity, Gas, Water, Sewer & Telephone)
• Cable Television
• Internet Access
• Insurance
• Income Taxes
• Personal Property Taxes
• Fees to Division of Land Sales
• Management Fees
• Vacation Club Dues
• Maintenance Association

When fees are all added together, a 2-bedroom unit is likely to average between $700 and $1200 a year. If you purchase in high-demand areas, there are resorts that have fees as high as $3,000 a year. Note that these fees are required to be paid each year you own, or you could lose your unit.

The following are examples of annual maintenance fees (based on listings from Redweek.com):

• Grand Pacific Palisades Resort (Carlsbad, CA) – 2 bed / 2 bath – $1278
• Hilton Grand Vacation Club at Paradise (Las Vegas, NV) – 2 bed / 2 bath – $969
• Discovery Beach Resort (Cocoa Beach, FL) – 2 bed / 2 bath – $$1849
• Grand Timber Lodge (Breckenridge, CO) – 2 bed / 2 bath – $1148
• Marriott’s Newport Coast Villas (Newport Coast, CA) – 2 bed / 2 bath – $1300
• The Westin Kaanpali Ocean Resort Villas North (Lahaina, Hawaii) – 2 bed / 2 bath – $2693
• Lake Condominiums at Big Sky (Big Sky, Montana) – 2 bed / 2 bath – $744
• Marriott’s Ocean Watch Villas at Grande Dunes (Myrtle Beach, SC) – 2 bed / 2 bath – $1400
• Harbor Ridge (Southwest Harbor, Maine) – 2 bed / 2.5 bath – $570
• Sheraton Vista Villages (Orlando, FL) – 2 bed / 2 bath – $1516

Timeshare Special Assessment Fees

A fee that most people are surprised by is the special assessment fee. Most timeshare contracts will include the ability to charge owners for special assessments. Just like with a home, there are big updates that need to happen at times. This can be a simple modernization of what you own to big-ticket items like a new roof. Timeshare salespeople are unlikely to mention that after 10 or 15 years, that new unit you bought isn’t going to be as new. To do an upgrade could require more money than was collected via the reserve fees that were withheld each year. When this happens, a special assessment can be charged. This is a fee you are required to pay within a given period of time, or risk losing your time share.

As an example, I have a two-bedroom unit that after 15 years was being modernized with new televisions, updated granite countertops, and other improvements. A special assessment fee of roughly $3,000 was done with the expectation of it being paid over 2 years ($1,500 a year).

If this were to happen every 15 years, that would add $6,000 to the cost of owning the unit for 30 years. This equates to another $200 a year.

Timeshare Exchange Fees

If you plan to go to the resort where you purchased your timeshare every year, then you can ignore this section. Most timeshare presentations; however, rave about how you can trade your week and go to exotic places all over the world! If you do plan to exchange, then there are additional costs involved.

Exchanging can happen at multiple levels. You can exchange within the network for the resort you own, or you can exchange with one of the world-wide exchange companies. There are basically two world-wide exchange companies that most people use, Resort Condominiums International (RCI) and Interval International (II).

If your timeshare resort has their own network, then those fees are likely to be included in your annual maintenance fees. Many smaller resorts will use RCI and II for exchanging. Additionally, if you want more options, then you’ll also tend to use RCI or II.

While you could belong to both RCI and II, they each have an annual subscription price. To exchange you must be a subscriber. For RCI, the current price starts at $99 a year for weekly ownership ($124 a year for points owners). The average annual price can go down if you subscribe to multiple years at once. If you want added benefits including better trading, you can subscribe to gold or platinum membership levels. Gold increases the price by $49 a year and platinum increases it by $89 a year. For Interval International, the prices are similar to RCI including the gold and platinum levels.

In short, to have the option to exchange, you need to add roughly $99 a year to your timeshare ownership costs. 

Once you’ve become a member of RCI or II, you then can exchange. Assuming you find a unit to trade for, you will be assessed an additional exchange fee. Note that finding a unit you want is not as easy as implied by those selling timeshares.

Exchange fees can vary based on a couple of factors, and over time they increase in the same way maintenance, property tax, and other fees increase. Overall, the average is close to $200 to make an exchange. If you use Interval International, then some exchanges are cheaper if you own at a Sheraton or Marriott resort. Sheraton owns Interval International, and Sheraton and Marriott recently combined some business.

There are additional fees that are optional when exchanging. These can include trip insurance in case something goes wrong. You can also buy the ability to change your exchange. Generally, 24 hours after you exchange, you are stuck with the trade. The exchange companies will sell you the ability to re-trade. This can add roughly $50 to $60 dollars to your costs.

If you have a unit that breaks can be broken into pieces either by the bedrooms (called a lock-off) or by using only a few of your days at a time, then you pay the exchange fee for each individual exchange. The subscription fee is one time per year regardless of the number of weeks you own.

Pulling it all together: Is a Timeshare Worth the Cost?

If you pull all the numbers that have been mentioned in this article together, then you you’ll see the following annual costs for a 2-bedroom unit if you consider a 30-year value:

• Upfront cost: $1000
• Maintenance fees: $1000 (maintenance/HOA/property tax)
• Special Assessment Average: $200

Total cost to own: $2,200 a year. This equates to over $310 a night.

If you also subscribe to an exchange company and use the exchange, then you need to add the following:

• Base subscription: $100
• Exchange fee:  $200

Adding this to the other costs puts you at $2,500 a year, or over $350 a night.

At $2500 a week or $350 a night, you can rent at most resorts. If you know a person that has a timeshare and belongs to RCI or II, they can rent resort units for a lot less than that for you. There are often times when the rental prices through the exchange companies are lower than the total annual maintenance fees for the units. Even checking on travel sites can turn up units and specials that are substantially cheaper to rent than own.

Final Thoughts

While timeshare presentations will pitch the idea of locking in the cost of your future vacations at today’s dollars, it is important to realize that this is not completely true. The maintenance, property tax, exchange, and other fees will continue to increase. The average increases many of these fees can easily exceed inflation. Thus, you are only locking in your commitment to pay for your vacation, not the cost of the vacation.

You can also get a good idea of the value of timeshare ownership by reviewing the number of units available for resale and their price. Many units are for sale online and through timeshare resell businesses. These can often be purchased at a fraction of the cost of buying directly from the resorts, with reports of units available for a penny not being uncommon. The price paid at resorts for a timeshare are generally the highest prices, even after discounts.

In short, don’t be fooled by the numbers the timeshare people bombard you with. Ask your resort if they will buy back your unit or what the resell value is. That also will help you understand the value. In the meantime, enjoy the presentations if you think the tickets, cash, or other offers are worth your time. Just remember that if you don’t say “no”, you should make sure you know the real total cost.

# # #

Note: Numbers are based on the time this article was written and are subject to change. There is variability in how timeshares are presented and sold; however, in general the information provided here applies. In some cases, timeshares are sold for a set number of years (such as 20) instead of for life. The math and numbers, however, would still be similar.

By Bradley L. Jones

It is no secret to my friends and family that I own a timeshare. What might not be known is that for my first job out of college, I worked for a timeshare exchange company, Resorts Condominiums International (RCI). I worked for the DeHaans, who are credited with launching the timeshare exchange industry.

I have many conversations with people about timeshares and timeshare ownership. Most of those who I discuss this with have been approached to attend a timeshare presentation. Many people I know have wondered if the reality matches the hype. A few have bought, and one has bought multiple units. Simply put, it rarely does. Let me provide a few of my observations and some tips about timeshare presentations and the idea of timeshare ownership.

Timeshare Presentations

If you have attended a timeshare presentation, then you’ve experienced the high-pressure sales tactics that can be used. Timeshare salespeople make the reputation of used car salesmen look like kids play. You can say “no” over and over, but they will keep asking, plus they will pull other people into the sales pitch to also ask you to buy. The pressure to buy is intense.

Getting the Gifts

The pressure of timeshare presentations starts with gifts. If you stay at a resort or hotel associated with timeshares, you will likely be offered free gifts such as “hard to get” tickets, gift cards, “free” vacations, dinners, or cash. You also see these offers of gifts at mall kiosks, “half price ticket” booths in tourist towns, and other places. You might even get these offers over the phone should if you applied to a raffle to win a free car or vacation at your local mall, fair, or other location. The last resort I stayed at offered a $125 Visa gift card to attend a presentation. Regardless of how you come across it, most timeshare sales pitches begin with the offer of gifts.

Tip 1: Just say no, at least at first…

If you are staying at a resort or hotel that offers you a gift for a few minutes of your time, it is often best to say no the first offer. I’ve stayed at several resorts where the offer at check in was as much as half what the offer was a day or two later. A $75 Visa gift card can quickly become $125 by simply waiting a few days, or by asking if that is their best offer.

Note 1: It will be a high-pressure sales pitch

If you are offered gifts for a few minutes of your time, then you are undoubtably going to a sales pitch, and it will be high-pressure. You might be told that you are simply being asked for feedback on the resort, being given an update on resort changes, or being given an owner’s update. Regardless of the wording, if gifts are being offered, then you are being taken to a sales presentation.

Tip 2: Get the time commitment in writing

Sales presentations rarely last less than 90 minutes and almost always take longer than any amount of time you are quoted. One of the biggest complaints I’ve seen is that people feel held hostage at presentations. The reality is, if you don’t plan, you could be held hostage. As such, you need to mitigate any chance the resort can do that to you. To understand the extent that you can be held hostage, read reviews on a resort prior to attending any timeshare presentation.

I recently stayed at Westgate Smokey Mountains. There are a very large number of public reviews that indicate the promised 90-minute presentation went well over four hours and in some cases over five hours. Because many people are shuttled from other hotels for the presentation, they had no easy way to leave. Additionally, in the case of Westgate, like most resorts, they don’t give you your gifts until after they release you at the end. If you walk out before they release you, then you risk losing the gifts you were promised.

Get in writing how long you are expected to be there. More importantly, get in writing that the time starts at the time you are scheduled (and are there). It is not uncommon to keep you waiting when you arrive, and to also keep you waiting at other times. For example, if they are serving food, they will often consider the time you are eating as not a part of the presentation time – even though they will likely talk to you while you are eating.

Using Westgate Smokey Mountains as an example again, if you are staying on their property, they pick you up at your unit in a golf cart 15 minutes before your scheduled time to take you there. The driving tour to your scheduled time is packed with selling on their part. This is considered time spent getting to the pitch even though you are being sold the entire trip. The drive from your unit can include multiple stops to show you various aspects of the resort and the area.

If there are gifts, ask for them at the beginning of the presentation. At the resort where I own, they provide the gifts when you sign up for the presentation. You have them in advance and sign a waiver that says you’ll be charged for them if you don’t show up to the presentation. They also have in writing that you are committing to 90 minutes. They state that at 90 minutes, you can ask to leave, and they will honor it. This is not the norm for most resorts where I’ve stayed.

Tip 3: Read reviews for the resort

I mentioned in Tip 2 that many of the reviews for Westgate Smokey Mountains indicated that the presentation lasted more than 4 hours. If you are going to attend a timeshare presentation, read online reviews to see what others have experienced. This help you understand not only what people received, but also what issues they saw – such as being held captive for hours beyond what they expected. If your offer includes free nights at a vacation destination, you can learn about hidden fees or the quality of the vacation.

If you decide to purchase a unit (see my article on the value of a timeshare), then you can often find what people were offered and the pricing. You can see the approach taken to the sales presentation and more. Reading reviews can save you time and money.

Tip 4: Don’t believe what they say

Timeshare salespeople will tell you they don’t lie. At the last presentation I attended (at Westgate Smokey Mountains), I told the salesperson that he had blatantly lied to me, and that I didn’t appreciate it. I was asked to come do a quick 20-minute survey on how well he had served us during the week. He was our concierge person, so this was to help him. I had said I’d be willing to do that, but that I did not want a sales presentation, and did not want to be sold to. I said I didn’t want the sales presentation several times to the point that earlier in the week my wife indicated I was on the edge of being obnoxious about it.

It was quickly realized the survey was a full-court press for selling Westgate with all the normal tricks of the trade. I indicated to the salesperson that he had blatantly lied. He was selling, the person he had pulled over to present numbers for buying a timeshare unit was selling, and that this is exactly what I said I didn’t want. It was what he said he wouldn’t do. His response was, “I don’t consider this selling. I consider it the offer of an opportunity.” My response was that I value my words and my integrity, and that he no integrity and was a blatant liar. This didn’t faze him. Rather he and the additional salesperson that had been brought to present numbers, both focused on making sure others in the room were not hearing our conversation.

Tip 5: Ask their buy-back price

If something is worth a lot and is going to grow in value, the people tend to hold onto it. If a timeshare is going to be worth a lot, and is going to grow in value, then the company should have no problem buying it back from you at the price you paid. Right?

If you paid $25,000 for a unit today, then in 10 years, they should be willing to buy it back at $25,000 because it is going to be worth so much more. Ask about their buy-back program. You’ll likely be greeted with a blank stare. They won’t buy it back. In fact, if you search the internet, you’ll find that people are trying to simply dump their timeshares to get out of the annual maintenance fees. This should be a huge red flag as to the value of a timeshare.

In a recent presentation at the resort I own, the salesperson tried to get me to make a change to my ownership. I stated that I wouldn’t make the change. He indicated that my “old school” type of ownership was something they were moving away from. I own what is considered a specific week at the resort that can be used at any time and not a certain number of “points”. When I indicated I had no interest in changing, he stated that Marriott is willing to wait. More specifically, he said that Marriott will eventually get my unit back because I’ll either die and not leave it to someone, go bankrupt, or simply want to give it back to get out of the annual fees. If a resort believes they can get units back through these actions, then there is no need for them to buy them back.

Going forward, I plan to record future “owner update” meetings at my home resort as a result of this statement.

Tip 6: Don’t be fooled by the math

One week for $26,000 is the same price as 1 week every two years for $13,000. This might sound obvious, but when you are sitting in a high-pressured sales presentation, this is a way the salesperson will cut the cost to try to get you to buy. In the high-pressure sale, this might sound like a better deal. In fact, the offer of the week every other year for $14,500 might sounds like a better deal than the $25,000 offer, but clearly it is not.

Tip 7: The first offer is never the best.

Just as with the gifts that are offered for attending a sales presentation, the initial cost of a unit or for points is never the best. In most sales presentations, when you say no, better deals will be offered. In many cases, after the salesperson releases you, a new person (such as a “manager”) will meet with you to say they can actually get you a better deal. I’ve been told given a price that was the lowest that anyone could offer, only to have a different person provide a lower number right after. The longer you say no, the lower the price can be.

Tip 8: Exchanging isn’t as easy as they indicate – Buying to solely exchange is a mistake

One of the biggest selling points used to get you to buy a timeshare is the promise of being able to exchange to exotic places. You want to go to the Caribbean or Hawaii? By their unit and exchange! They tell you it is easy, and you can go all over the world.

The reality is not as simple as that. You can only go to places where people have also given up their units to exchange. If you want to go to Branson, Missouri in the winter or to some of the second-tier resorts in Orlando, Florida, then exchanging can work. If you want to go to a popular destination during Spring Break, then you will need a lot of pre-planning and a lot of luck to get a good unit at a good location. In fact, you should check to see when you can get your unit at your own resort. If you buy a flexible week, you might be restricted as to when you can use it even at your own resort.

Tip 9: Understand the true cost of a timeshare

When attending a sales pitch for a timeshare, one of the key selling points is locking in the cost of your future vacations. There are a lot of costs associated to a timeshare that include the upfront cost, the maintenance fees, property taxes, and other annual fees. If you are interested in exchanging, then there can also be exchange subscription fees and exchange fees as well as insurance and other optional fees. I outline the overall cost factors in the article, “The Value of a Timeshare”. While buying a timeshare can lock in part of your vacation costs, the cost of owning that timeshare and using it will increase.

Tip 10: Ask to see a maintenance fee invoice for the current year

In addition to the purchase price, you will be required to pay annual fees. These are fees that increase each year. You should ask to see an invoice for the current year for the unit size you are considering. This invoice should show both the maintenance fees as well as property taxes and any other costs. For a standard two-bedroom unit, these fees are likely to be between $700 and $1200 annually.

Tip 11: Ask for the specific rate increases for the last 5 years on maintenance fees

The maintenance fees mentioned in the previous tip tend to increase each year. While a timeshare salesman will talk about locking in the price of a vacation, the reality is, the price you pay will increase each year because the maintenance, property tax, and other fees will increase. Ask for the specific rate increases for the last five years for the unit being offered. This will give you an idea of what to expect going forward with the rates.

Tip 12: Ask about special assessments

A special assessment is an extra fee charged for large or unexpected costs associated to a timeshare. This can include damage not covered by insurance, replacement of features such as roofs and siding, or modernization costs. These fees can be hundreds to thousands of dollars in addition to your normal fees. These are not common but can happen every ten or fifteen years.

Tip 13: Make sure you know when the week / points you buy will work (red time)

For most resorts, demand changes throughout the year. For example, demand for a unit in the mountains of Colorado is going to be highest during the summer and ski seasons. During the spring and fall when skiing is over, but it isn’t warm enough to enjoy the outdoors, the resort is less desirable. If you buy during this less desirable time, then you might not be able to use the resort at other times of the year when it is more desirable. You need to know when you can use your unit and if there are fees for using it at a different time.

Tip 14: Ask about availability during peak times

If you have kids – or will have kids – then your travel is often restricted to Spring Break, Summer, and key holidays. As mentioned in the previous tip, you’ll want to make sure you have flexibility to use the unit at any time. More importantly, you’ll want to know how likely you are to get the unit during high-demand times. As an example, I’ve been unable to use my home resort during spring break due to lack of units.

Tip 15: Don’t buy a unit from a timeshare salesman

If you attend a timeshare presentation, the best tip is, don’t buy from the resort. If you don’t vacation for a week every year, then you don’t want to pay for a unit every year. If you add up the numbers, you will find that you might be better off to rent the room rather than own. While the cost will go up every year, the net average is likely to be lower if you plan.

If you know someone that belongs to a timeshare exchange company, then befriend them. They can often rent units that can be transferred via a guest certificate. These getaway rentals are often cheaper than the maintenance fees let alone cheaper than the upfront costs plus the maintenance fees.

Tip 16: If buying to go to all-inclusive areas, consider additional costs

Many resorts in Mexico, Hawaii, the Caribbean and other locations include all-inclusive fees. If you are looking to exchange into a resort with all-inclusive fees, then it is recommended that you see what the cost to rent the resort is without going through timeshare exchange. Often you can find packaged deals that are cheaper than the upcharge for the all-inclusive fees you’d pay through an exchange company.

Tip 17: Look at the cars in the employee parking lot

This might sound odd, but if attending a sales presentation for timeshares, review the cars in the parking lot next to the sales building. Specifically, look for the employee parking. The vehicles near the sales presentation area will likely be the cars of the salespeople. If these are high-valued cars, then this implies that the resort is making a lot of money selling the timeshares. The nicer the cars, the more pressure you should expect in the timeshare presentation. It’s not uncommon for me to see BMWs, Lexus, and other high-end car models in the lot for the salespeople.

Final Thoughts

Timeshare presentations are high-pressure events. It is easy to get caught up in the promises being presented, especially if you are on vacation. The value of a timeshare is easiest to understand when you look at the resale value. In most cases, there will either be no resale value, or it will be extremely low. Clearly, a timeshare is an expense and is never an investment.

# # #