Timeshares can get a bad reputation, but is there a benefit to investing in one?
Anybody who has traveled long enough will inevitably hear about timeshares—either they’ll be approached with a solicitation to attend a sales presentation, or they’ll hear from travelers who either love or loathe their experiences.
Timeshares are perhaps most famous for marketing techniques like offering significant incentives like free or significantly reduced stays, tours, amenities, and other goodies in exchange for the commitment to attend a high-pressure sales presentation.
Like them or not, timeshares are a growing part of the travel landscape. As such, it makes sense to understand what timeshares are, how they attract new buyers, and whether their products represent good value for travelers.
What Are Timeshares?
Also known as fractional ownership, vacation ownership, or vacation clubs, timeshares are ownership stakes in a vacation property. The original notion was simple—to lower the purchase cost of a vacation home by splitting it with other vacationers. The price could be most reduced if the purchase price were split into 52 shares so that each owner would be entitled to one week per year.
In addition to the purchase price, shareholders also split other associated expenses, like annual maintenance fees and association dues.
Recommended Fodor’s Video
In theory, purchasing a fraction of a piece of real estate is an asset with real value, so one of the selling points of timeshares is that their investments could increase in value over time, unlike a hotel stay, which is merely a short-term rental.
Many timeshares operate on a much grander scale than those original timeshares. Many timeshare companies now operate large networks of properties, so owners can often trade their week at their “home resort” for a week at another resort if they want to go somewhere different.
Are Timeshares a Scam?
On their face, no. Timeshares are generally legitimate vacation products that have their loyalists. However, timeshare sellers often deploy ethically gray tactics to make sales. Once purchased, timeshares can also be confusing or frustrating to book since availability can be limited, and there are often myriad restrictions.
Don’t sign if anything is unclear or if you have any questions that haven’t been answered in writing.
In the United States, timeshare sales and administration are often regulated at the state level. Timeshares outside the United States often have different rules, and consumer protections can vary in each country.
Many timeshare operators have the backing of major hospitality brands, explains Jason Gamel, President and CEO of the American Resort Development Association (ARDA), the trade group for fractional ownership properties and networks.
“Many people only think of the sales and marketing process when they think of the timeshare industry. They don’t think of the world-class, spacious accommodations, the professional management, including security, that provides for a consistent and reliable resort experience, and the top hospitality brands that are in the industry, such as Disney, Marriott, Hilton, Holiday Inn, just to name a few.”
How Are Timeshares Solicited?
Timeshares will often prospect for new buyers in a number of ways. Many major resorts in popular vacation destinations often sell hotel rooms on the same property as a timeshare and will entice hotel guests to sign up for timeshare presentations with free meals, tours, or activities.
At some airports in Mexico and the Caribbean, timeshare sellers will operate at the airport, offering free transfers, meals, booze cruises, or other incentives for travelers to join a timeshare presentation.
Many timeshare sellers also send solicitations by e-mail and postal mail, offering deeply discounted stays at resorts, typically with a prepayment that’s good for up to a year.
In all cases, the objective of the incentives is to get guests to attend the sales presentation.
What Happens at the Sales Presentation?
The sales presentations typically follow a pretty scripted format and are designed to last several hours to exhaust prospective buyers. You’ll provide your contact details (so they can send more solicitations), then you’ll tour the property (if you’re on-site) and/or view a presentation explaining why owning a share is such a good deal.
So-called “deeded” timeshares, where buyers are buying a specific unit or type of unit at a single vacation property, are now less popular. Nowadays, it’s more common for timeshare operators to sell bundles of points that can be used to book a week at one of the operator’s properties.
A number of sales tactics will be used to incentivize sales. Package prices will come down with negotiation, sellers will offer “one day only” promotions, or they’ll make offers of other amenities, meals, or tours for the current stay or another “free” stay in the future outside of the timeshare allotment.
What Questions Should Be Considered?
Before signing on the dotted line for a timeshare, carefully review the documents, including all the upfront costs and annual fees. Sales pitches will generally tout timeshares as a better value than retail hotels and hedge against inflation, but annual maintenance fees are typically not locked in long-term, and special assessments to cover large renovations or repairs are also a possibility. Don’t sign if anything is unclear or if you have any questions that haven’t been answered in writing.
It’s also worth considering whether prepaying to be locked into a single company’s network is a fit for your individual vacation style.
Similarly important is understanding if there is a no-fault cancellation period after purchasing and how the notification of cancellation must be received. Having a timeshare consultant, real estate agent, or attorney may be worthwhile to review the documents to ensure they represent good value.
It’s also necessary to review the dates and properties available for the points allotment or property type. Are the properties and available weeks desirable? Are the dates flexible? Many weekly timeshares run Saturday-to-Saturday or Sunday-to-Sunday, often making airfares expensive as timeshare owners migrate on the same days.
Ultimately the power remains with the purchaser until they’ve agreed to the obligations of owning their “stake” (or points)—so it makes sense to exhaustively review and consider what you’re purchasing before taking the plunge.