Finance

Timeshares Are Hard Sells

The receptionist checking us in to the Wyndham was pleasant and helpful. We mentioned that we were guests of friends who are Vacation Club members (i.e. timeshare owners). She ran through all the routine stuff and then informed us that we qualified for a “premium gift” (the bait). Before we could gain entry to our room, we had to meet with the concierge to get a parking pass which was really a setup for us to take the bait.

The Hard Sell

Vacation Clubs operate under a shared ownership model. The staff is compensated to sell timeshares. So in their eyes we were not just hotel guests but something more. We were big fish.

Our concierge was very nice and helpful. She was soon joined by another woman who told us that our premium gift was a free week at another Wyndham resort (i.e. the bait). All we had to do was attend a short presentation. She recommended that we book immediately because sessions were nearly full. (I can’t count how many times I’ve encountered those sales tactics.) Despite their insistent sales efforts, we did not sign up.

timesharesBut what if we had attended their presentation? Here’s how it likely would have played out.  We’d be seated with sales reps (one likely assigned to us), sales managers and other prospects. We’d listen to their spiel which includes all the great benefits of buying a timeshare. A tour of the property is likely at some point. (We saw sales reps eagerly showing prospects model rooms.)  If we said no, the sales manager would be called in (just like buying a car). She’d amp up the pressure and maybe offer a discount on the purchase price to get us to change our mind. If  we still said no, we likely would to come face-to-face with “the closer”. He or she would make a last ditch, high pressure effort to change our mind. This back and forth can drag on for hours.

A Hard Sell

Buying into a timeshare, or vacation club or fractional ownership is not for us.

  • They are not investments. We view them as the prepayment of vacations for many years out (at least 10).
  • Opportunity cost. The average price for a timeshare is $16,000. If you invest that amount and receive the average market rate of return of 8%, in 10 years it will be worth $34,542!
  • They do not appreciate in value.
  • There isn’t a robust resale market which renders them worthless.
  • We don’t want to commit to annual fees over which we have no control.
  • We want to retain the flexibility to stay where we want, when we want, or conversely not.

Of course, we’re not the only ones who feel this way. There are lots of respected financial and travel writers who share our opinion (check out what Dave Ramsey has to say). It’s for these reasons and the highly competitive market for timeshares, that resorts rely on high pressure sales tactics.

Why do people buy?

One reason is that people are vulnerable when on vacation. They’re living “the dream life” all-be-it only temporarily. So when presented with the opportunity to own a piece of their dream, many can’t resist. Some simply get worn down by the sales process and end up caving. In fact, the daily average percentage of people buying following the presentation is 15%!

Another reason is that for some people owning a timeshare fits their lifestyle. They value the certainty of being able to visit their timeshare, know what to expect, have the time to use it, and have the finances to support the responsibilities that come with ownership. They also like that point-based vacation clubs allow owners to travel to more than one location which gives them more options to create and share new experiences.

Buyer’s Remorse

According to research conducted by Dr. Amy Gregory of the University of Central Florida, 95% of all buyers contact their resort sales team to get more information about fees, resale and financing options; 85% of all buyers regret their purchase because of their personal financial situation, confusion and intimidation; and 15% choose to cancel their purchase contract within the legal cancellation window.

Here’s what the American Resort Developers Association has to say about Dr. Gregory’s research.

“Her information reaffirms our belief that timeshare sales presentations, while effective at securing a closing, do not provide all of the information that a consumer really needs to make a confident, educated purchasing decision. Her research, too, singles out many of the same factors that our clients have come to us complaining about, including daunting maintenance fees and the anemic nature of the secondary market.”

If You’re Interested

Here a few things to keep in mind.

  • The timeshare industry likes to point out that over a 20-year period, a family of four could save over $25,000 on accommodations by staying in a timeshare compared with what they would pay for hotel stays. You need to test and validate their numbers including their assumptions. And never agree to pay full price.
  • Educate yourself as to what you’re buying including fees, resale options and how their program works. It may help to talk it over with family and friends before you decide to buy because telling them afterwards is a common reason for buyer’s remorse (because they can’t believe you did that).
  • Know the state’s right of rescission (i.e. contract cancellation). Typically consumers can have up to a week to rescind a sales contract for a timeshare, for any reason. In Florida, for example, where nearly 25% of U.S. timeshares are located, it is 10 days, and money must be refunded back to the consumer within 20 days after receiving a cancellation notice.

I’ll leave you this final thought. The best way to manage all the risk and uncertainty associated with timeshares is avoidance. Skip the presentation. Relax and have fun doing your own thing.

P.S. Our timeshare friends told us that they still get pestered to attend a presentation every time they stay at a Wyndham. I suspect that’s an attempt to up-sell them. It never ends.

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