Are timeshares a scam or a steal?

Written for MyCentralJersey.com and DailyRecord.com 

Timeshare experiences fall into one of two categories.

People either think of those two nightmarish hours they sat through a boring meeting with only a continental breakfast to get them through, or about 8 percent of Americans — according to the American Resort Development Association (ARDA) — think of their beautiful timeshare that they fly off to every few months, trying out different lodgings whenever they please.

The reason that perceptions of timeshares vary so vastly is simply because they either perfectly fit a traveler’s vacation style or they don’t. By weighing what you’re looking for out of your vacation versus its price, you can determine if a timeshare is the right buy for you.

If you can’t find the time to plan an annual trip, you’re not alone. According to a Skift survey, 41 percent of Americans didn’t take a vacation last year, leaving 169 million vacation days at their office desk.

Steve Alessandrini, senior director of public relations for Wyndham Worldwide/ Resort Condominiums International (RCI), said that purchasing a timeshare is one way to commit yourself to traveling regularly.

“When you buy a timeshare, you know that you already paid for that week so you want to use it,” he said. “You are locked in your vacation and you are ensuring yourself that you are going on vacation that year.”

The Gran Velas Riviera Nayarit resort in Puerto Vallarta, Mexico. (Photo: Courtesy of Wyndham/RCI)

The Gran Velas Riviera Nayarit resort in Puerto Vallarta, Mexico.
(Photo: Courtesy of Wyndham/RCI)

Just because you’re heading to your timeshare, however, doesn’t mean you’re going to the same place every year. Nowadays, timeshares often operate on a points system, so travelers can earn points with their resort and visit any of those properties, sometimes with options for cruising and camping, although there are sometimes fees involved with these exchanges.

Unlike a vacation home, timeshare owners only pay for what they use, making a very expensive property more affordable without worries about year-round maintenance. Also, timeshares, which at their median are priced at $19,725 but vary widely, usually have more amenities than a hotel room.

“You’re getting a lot more space in a timeshare than a hotel room, so if you’re traveling with children, they have some room and you don’t have to tiptoe around at night,” said Alessandrini. “Timeshares also have a home-away-from-home feeling, since you have a washer and dryer and kitchen.”

However, five-star amenities and guaranteed vacations don’t exactly come with a cheap price tag, especially for those not anticipating the financial obligations of a timeshare, including an average annual $600 maintenance fee, the inability to claim it as a capital loss with the Internal Revenue Service if you sell it at a loss, annual network dues and exchange fees.

Robert D’Alia, senior Financial advisor at Merrill Lynch Florham Park, said that in his opinion, it isn’t advisable to purchase a timeshare to build up equity.

“It’s one of those things like joining a country club or putting a pool in your backyard,” he said. “If you’re really going to use it and enjoy it, you look at it as something that you’re investing in for your family.”

The Wyndham Bonnet Creek resort in Orlando, Florida. (Photo: Courtesy of Wyndham/RCI)

The Wyndham Bonnet Creek resort in Orlando, Florida. (Photo: Courtesy of Wyndham/RCI)

However, D’Alia also said that compared with the alternative of buying a vacation home, purchasing a timeshare doesn’t tie up a lot of income while also getting use of the facility.

“Timeshares are not for everybody, and consider if you’re going to purchase one. Do your homework and talk to people who have previously owned one because there are hidden costs and people need to be educated,” he said. “Remember, there’s always a secondary market.”

Since there is usually an excess of timeshare units on the secondary market, they tend to be sold at a discount.

However, according to a 2014 American Resort Development Association (ARDA) survey, 83 percent of timeshare owners, whether they bought it from a developer or in the secondary market, are satisfied with their buy and 17 percent even went on to buy a second timeshare to earn more points and exchanges more quickly.

As many potential timeshare buyers have learned, however, timeshares are also known for being sold with aggressive sales tactics, where salesmen offer on-the-spot commitment incentives while travelers are in “spending mode,” as D’Alia refers to it.

D’Alia, who has sat through a timeshare presentation while vacationing in Orlando, said that as a marketing professional, he felt that the salesmen tried to appeal to travelers’ emotions too much.

The presidential suite at the Hard Rock Hotel and Casino. (Photo: Courtesy of Wyndham/RCI)

The presidential suite at the Hard Rock Hotel and Casino. (Photo: Courtesy of Wyndham/RCI)

“They let you enjoy the property first and then they get you to relax and sometimes you forget about reality,” he said. “When I come home, I sometimes find that I bought things that I normally wouldn’t. The timeshare did appeal to me and I really felt like I had to pull myself away since it’s very easy in vacation mode to sign off on it.”

Instead, D’Alia recommends that prospective purchasers do not make the decision hastily while they’re on a trip and think it through before signing anything to really weigh the pros and cons.

Alessandrini recommends that travelers make sure they are working with a reputable company and do research on the resort to see if they work with an exchange company such as RCI that allows travelers to visit other destinations. Also, he said that the company should be a member of ARDA or other trade organizations.

Other good signs are if a grace period is offered, allowing purchasers to change their mind before committing or if the unit belongs to an owner’s association, giving the owners a collective voice.

Traveling preferences vary widely, from those who want the guarantee of being able to stay at a five-star resort with their family each year to those that want more flexibility with their wallets and their lodging of choice. It’s these decisions that travelers need to consider when sitting across from a salesman on their trip deciding on how they want to spend the next 20 years of their vacations.

If you’re considering buying a timeshare, check out EndlessVacationRentals.com to book a stay at a timeshare resort to try before you buy.

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