Investing in a permanent vacation
Get a tan at your timeshare, without getting burned
By Colleen Bazdarich, CBS MarketWatch
Last Update: 1:52 PM ET Aug 5, 1999
Personal Finance News
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SAN FRANCISCO (CBS.MW) -- Melinda Boeh of Kansas City and
her family had been heading to the same resort in the Ozarks
for seven years. Each year, they plopped down cash for the
hotel room, the cost of on-vacation food and just about
everything else the American family looking for some leisure
time is willing to buy.
And, then during one stay, they were
offered some free time on a jet-ski if
they would attend a seminar on buying a
timeshare. They found out they could
permanently own a one week stay at the
same resort -- but in a bigger room, with
a kitchen, laundry facilities and all the
same perks of their favorite vacation
spot. Now, six years later, Boeh has been
spoiled by her family's little corner of
luxury.
"I used to think roughing it meant camping," she said. "Now it
means having to stay in a hotel room."
Rising popularity
More and more serious vacationers are buying timeshares as a
way to offset hotel costs and avoid the financial burden of a
second home that only gets used for one or two weeks a
year-- a total of 1,767,000 households own timeshares in the
U.S., and sales of intervals in timeshares are growing at a
compound rate of 9 percent a year, according to the American
Resort Developement Association.
The growing interest is attracting hotel companies like
Marriott (MAR: news, msgs), Disney (DIS: news, msgs), Hilton
(HLT: news, msgs), Embassy Suites and the Four Seasons (FS:
news, msgs), who are offering timeshares in resorts around
the world. Some timeshare communities are converted hotels,
but the latest trend is purpose-built facilities, like Marriott's
new resort with 650 ocean-view units on the beach in
Newport, Calif.
For each unit, the companies draft up 52
deeds-- one for each week in a year. A
vacationer will buy a deed and have the
right to stay in their timeshare for one
week per year. The timesharer can sell the
deed, or even pass it on in their will.
Along with the opportunity to stay at their
timeshare, where space is usually more
generous than a hotel room and comes with
a kitchen, a timeshare owner can "swap"
their week for a week in another
destination. An owner with a space in
Hawaii, for example, may exchange a week
for one in San Diego, France, or Mexico,
etc. Theoretically, a timeshare owner could
find themselves at a new spot every year,
but still own the deed to a timeshare in one
locale.
Under pressure
Timeshares are known less for their vacation possibilities and
more for the infamous high pressure sales pitches that
accompany them. Most buyers are lured into timeshare
ownership under the auspices of a "free" vacation. They end
up spending thousands when the too-good-to-be-true free trip
is actually a timeshare sales pitch, which ends with a promise
of a drastically lower-price if the consumer buys the
timeshare before the vacation end.
Afraid of losing "the deal of a lifetime," many buy a timeshare
with little knowledge of their available options, and find
themselves up to $30,000 in debt, with a vacation they don't
really want and a dire re-sale market.
Even Boeh, who says she feels no regret, felt a fair amount of
pressure to sign the deed without much information about the
timeshare business and her available options. "I wish I would
have known what I know now. A lot of people just don't
educate themselves," she said.
Education is the key to making a positive timeshare purchase,
says Bill Rogers of the Timeshare User's Group, TUG. Their site
provides information on buying and selling timeshares, and has
an active billboard that exchanges an overwhelming amount of
information about the minutest details of the industry.
Education for the leisure lover
For prospective timesharers, finding out the basics can save
thousands of dollars and help you avoid high pressure sales
gimmicks.
CBS.MW compiled a list of tips from
timeshare owners for first-time buyers:
Think re-sale. A majority of TUG
board users consulted for this story
said they wish they had known
about re-sale before they purchased
their first timeshare. Re-sales sell at
about 50 percent of original price,
an average of $5,000, according to
Mario Collura of Tri West Real
Estate, which will have a timeshare
auction in September.
Think about the big E. The buzz
word in the timeshare world is
exchangeability. If you buy a
timeshare at a premiere destination
like Orlando, you are high on the
exchange scale; people will be
willing to trade their popular spots
for your room. Every company will
tell you that they have high exchangeability, but they
can't all be telling you the truth-- so do your homework.
Give yourself some time. "You had no idea what this
presentation was about, and now you're being asked to
make a $25,000 committment in the next few hours.
Very rarely in your life will you ever have to do that,"
says Rogers. He reminds consumers that they can say no.
If a sales person tells you that you can only buy that day,
question why they are pushing a hard sell. If you really
want to buy the property, it will most likely be still
available after you have had a week to sleep on it,
usually for the same discounts promised.
Consumer common sense
These are the basics dos and don'ts of the timeshare world.
The most important piece of advice timeshare experts give is
that you never go into a sale uneducated. You wouldn't buy a
car without comparing price, safety, reliability, etc.
Consumer common sense is a must in this market.
"The secret to timesharing is educating yourself before you go
into one of these high pressure sales pitches so you know
what you are looking for and find out what else is available,"
says Rogers. |
