From the outset, you need to know that I am a skeptic of timeshares, and for good reason. More about that in a bit.
A few years ago, we took advantage of an AMEX offer to stay in an Orlando timeshare for pennies on the dollar, with the agreement that we would suffer through a two-hour presentation. Other than that, we enjoyed our time in Orlando and also thought the timeshare was very nice.
The timeshare presentation was a full-on high-pressure sales attack, with deceptive strategies employed from every angle. I felt bad for the folks who were following the crumbs laid out for the individual meetings at the end. We faced at least three different representatives in our private meetings. They all took turns after we said no to be more persuasive.
Before walking out, we bit on the opportunity to rent a timeshare in Hawaii. The cost came out to be around half of what we would have spent on a hotel room, and the room was twice the size. The timeshare itself was beautiful.
The catch? We had to sit through another timeshare presentation.
As I said from the outset, there is a good reason I am a skeptic of timeshares, and this is why. What follows is an explanation of the offer we received and our own experience.
The Sales Pitch Sob Story
Settle in for a sob story. I’m unsure if the story we heard was true, and I didn’t care. It’s designed to distract your mind from the numbers and pull at your heart.
One point that he pounded on that I agreed with was the value of quality family time on a vacation, but don’t let them convince you that the best way or only way to do it is with a timeshare.
The Cost
To purchase enough “points” for a week in Maui each year at a brand new, albeit beautiful resort, we would have to spend just shy of $200,000. This is the point in the pitch that he was using monthly numbers spread out over fifteen years to make it feel affordable, while simultaneously making me feel like this is something good men do for their families.
He stressed that our costs are fixed, but “hotel price inflation” is not, so it’s a good investment in future vacations. As someone who knows a thing or two about inflation, I knew he was only half right.
Of course, he had yet to reveal the annual maintenance or borrowing costs, which were not included in the monthly cost he showed us. Like I said before, he was only half right. Maintenance costs are not fixed.
The Points System
The points system is one of the most deceptive aspects of timeshares today. Its calculus is clearly designed to make it more difficult for consumers to assess the cost.
They'll claim that the points system's purpose is to create flexibility in both timing and location. That's nonsense. In fact, research shows that greater price complexity leads to consumers paying more.
Maintenance Fees
Maintenance fees are paid annually to keep the property in top condition. Our timeshare was through a well-recognized, reputable company, and the properties in Orlando and Maui were beautiful.
Here's the catch, and it's a really big one.
Maintenance fees aren't fixed. I'm going to say that again, maintenance fees aren't fixed.
You're purchasing a lifetime maintenance fee contract, and those costs will go up.
In our case, they were already expensive—$2,400 a year, to be exact. Granted, we were being pitched for a high-end property; the average annual maintenance fee is around $1,000.
The Borrowing Costs
I had to work to pin him down on these details. After some arm-twisting, he disclosed that the APR on the loan was 14%-16%. Keep in mind that we both have a near perfect credit score.
He told me those loans are designed as bridge loans until you get a loan from a traditional lender. I didn't take the time to investigate whether that was true.
For context, traditional mortgage rates were hovering around 5% at the time.
Reselling the Timeshare
I asked him if I could purchase an aftermarket timeshare. His snakelike response was, "Nobody wants to sell their timeshare once they own it."
He told me this twice when I pressed him a second time.
Of course, you can purchase aftermarket timeshares. In fact, I found a timeshare at the same location and for the same amount of time each year on Redweek for around $7,000.
Once again, they offered us the same timeshare at the same location for the same amount of time for just under $200,000.
Conclusion
Timeshares are in the property maintenance business, not the property business. They sell space at a premium and make lifelong profits on maintenance fees, which they increase each year.
Would I buy a timeshare? I doubt it. Maybe, just maybe, if it was from a highly reputable company, I would buy a timeshare for $1.
Did we enjoy our trip to Hawaii? Yes, we loved it! I wrote an extensive post about our Maui trip.
With all this said, I learned you can find wonderful weekly vacation timeshare rental opportunities on Redweek. The weekly cost typically covers their maintenance fees.
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