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Vacation Timeshares Become Politically Correct

By David Skinner,
President, Holiday Group

When was the last time you received a "You Are A Winner" offering in the mail? Recently, I bet. And if you read this offering a bit further it'll mention the following: Please endure a 90 minute presentation of So And So's Vacation Property and win anything from an All Expense Paid Trip to a cheap Mexican blanket. "Why me", you ask. Because, if you're like the majority of Americans, you vacation yearly and spend your share of the millions of dollars allocated to the travel/ vacation industry. And because you fit the demographics for vacation ownership, you qualify for the guaranteed winning prize!

Surprised? Hardly! Over 380,000 of you did purchase during one of those 90-minute presentations last year, making timeshare sales BIG BUSINESS. If you thought it was just the other guy, think again. What's the profile of a typical vacation owner? A couple; well educated; middle aged and upper-middle-income. Of this likely group:

69.5 percent have incomes over $50,000
67.5 percent are 45 years of age or older and
55.7 percent have at least a bachelor's degree

So then, if it's not you, then perhaps it's your accountant, your grocer, your neighbor or even Uncle Ernie. All are likely owners of a vacation program.

And if you thought it was still the carnival tent barkers or high-pressure fly-by-night hucksters doing the selling, you'd better think again. Companies like Marriott, Disney and Hilton have joined the fray. They are in the vacation ownership business and in it big time. Timeshares have become... politically correct.

Saving vacation dollars is one of the primary selling points made by the timeshare industry. But, ironically, this is not one of the primary reasons for purchasing, based on a 1995 nationwide survey of owners. And it's a good reason! It is very hard to make a convincing argument for cost savings when airfares continue to be a big and uncontrollable part of the expense. Membership prices vary from six to ten thousand dollars all the way up to twenty-five thousand dollars. On top of this, all timeshares have some kind of annual maintenance fee, which is subject to change --usually upwards. Also, through careful shopping, the 'wannabe' vacationer can find package deals at very low prices in the off seasons.

Of the 2000 people surveyed, the most important reasons given for purchasing were the "high standards of the resorts a which they own and exchange, followed by the flexibility offered through exchange programs". In other words, the quality of the vacation experience was more important than any money they might save. This says a lot for Americans and how they value their playtime!

The second most prevalent reason sited was the flexibility offered through vacation exchange programs. This is a system where you may exchange your vacation plan for one of similar size and season in one of the over 4,145 participating resorts located in 81 countries. While there are several such exchange organizations, the most popular are Interval International (II) and Resort Condominiums International (RCI). The latter being the largest in number of participating resorts. Rules for exchanging are very similar between them and on the outset simple to accomplish.

Fundamental to each is the: Like For Like Rule. Example: You may exchange for a different area than the one you own--for one in a season of equal popularity. In this case, perhaps a Colorado Ski Lodge in January for your Cape Cod bungalow in August. Both represent prime vacation time at their locations. Likewise, if you own a one bedroom with kitchen you may request just such a facility at your visiting resort, ergo like for like.

You are normally free to request an exchange for something lesser than what you own, be it size or season, but rarely greater. Because the system is based upon availability, being flexible in your choices increases the likelihood of fulfilling your request. RCI cites a 97.4 percent confirmation rate on requests in 1995. The likelihood of a satisfactory exchange increases exponentially, as more vacationers own timeshares, they will increasingly use exchange systems.

Also important in the II and RCI exchange systems is the ability to deposit and save or carry over your week into the next year or years. If this is the summer your in-laws come to visit, you may save up your vacation time and double the fun next year.

In the same survey, 75.3% claimed satisfaction with the vacation purchase they made. While this number will not likely qualify the industry for a Malcolm Baldridge Award for Excellence, it probably comes as a surprise to most, who have, over the years, heard timeshare horror stories.

There are a number of considerations to keep in mind before making a purchase:

The membership is only as good as the Resort Developer or Owners' Association underlying it. While it is possible that either could go broke and you would be left with little but the cheap blanket, more and more States are coming to the rescue, thanks to the timeshare or real estate divisions of the Attorney General's Office. Most US resorts are required to give some kind of prospectus and cooling off period, as well as a full accounting of your rights and responsibilities. Remember, it pays to study up a little if you have any doubts.

What type of ownership are you being offered? The two primary types of ownership are fee simple as in the ownership of your home or right-to-use similar to a long-term lease. The difference? In the former you own it forever and the latter is usually 25 to 30 years in duration. Fee simple ownership may appear to have the advantage, but it is usually governed by an Owners Association rather than by a Developer, who maintains an active interest in the property (Because he will eventually get it back!). These differences are often reflected in the price with fee simple slightly higher over right-to-use in price.

What should you expect during your 90-minute presentation? First, don't expect to be there for ninety minutes. The prevailing attitude of the timeshare industry, from top to bottom and from inside to out, is that they have one chance to sell to you, so take no prisoners. While there are certainly exceptions to this rule, they are greatly in the minority. Here's the best advice: If you have absolutely no interest in the product, your two to four hour time investment is probably not worth the price of the free gift. Furthermore, the salesperson will sense your purpose and only get frustrated at best, highly pressuring and ugly at worst. Instead, why not spend a nice day with the family?

On the other hand, if you have interest, do your homework before attending:

• How often does your family vacation and how many weeks per year?
• What could you afford today and/ or how much could you budget?
• Would you prefer to vacation primarily at your resort or exchange for distant places?
• Ask friends their advice or better yet, seek out an owner at the resort you are visiting. If they enjoy it (and chances are they do), they'll be happy to share their experiences with you.
• Be prepared to negotiate. It's half the fun.

Financing? Interest rates offered by Developers are notoriously high. The risks and difficulties in collection keep the banks and many financial institutions away. You may well be able to negotiate a much better price if you can offer cash. In such a case, use your credit card to purchase by offering cash and pay them off after arriving home. Those with air mile or auto cards do especially well, saving on their purchase and earning air miles or credits.

What type of interval ownership? There are three types of interval plans popular today. Normally only one type will be available at a particular resort. The oldest and most familiar is the fixed week type. The weeks of the year are numbered 1-52 and you purchase one or more weeks to be used at the same time each year at your home resort. The advantage to this type of ownership is the assurance that your unit will be waiting for you faithfully each year. If you choose to exchange your fixed week you will receive a week at another resort in a similar season as yours, but most likely not the same week as you own.

The second type is floating time. You buy your vacation time by the season, not designated as to the actual date or week of the year. It is your responsibility to contact your resort each year and confirm your exact arrival date. Check-ins are usually Friday, Saturday or Sundays. Obviously this program offers some scheduling flexibility, however it is usually based upon a first come-first served basis, so highly desirable weeks go early during their season. Also, when exchanging, you must first reserve or affix your time at your home resort before the Exchange Companies will accept it for deposit.

The newest form of ownership to become popular is the points system. These can vary widely, but most often depend upon an accounting system to determine your vacation plan. You can purchase sufficient points for a desirable unit during your favorite vacation season each year or you can double up those points and go every other year and stay in a larger unit or use them in the off season for more time. The system is very flexible and for that reason is growing in popularity. If there are drawbacks, they are the sometimes confusing accounting systems and the same subject-to availability as floating time.

Another way to get involved with vacation ownership without going through the 'sales presentation' is to buy on the secondary or used market, a true misnomer. After all, the whole concept of timeshare is to use it over and over again. So purchasing a pre-owned membership has no effect other than saving you money - sometimes thousands. Do not confuse the secondary market with what a developer or resort salesperson may represent. It is not in their best interest as their profit margin in the resale market is nonexistent. Individual owners can often be found in the local newspapers or posted in company cafeterias. You are going to get the best deal by shopping around. There is also a growing number of broker/ dealers representing timeshare sellers as well as buying and selling for their own accounts, much like a real estate broker may do. Most are licensed under their respective State's real estate or timeshare laws. Be sure to ask.

While there is no actual multiple listing service, 'a one stop place to shop', one of the best and growing areas to look is on the Internet. By inserting the subject timeshares in any of the popular search engines you will receive a list of many topics which may include a single 'for sale by owner' to major brokers selling timeshares from all over the world. There will also be support organizations and user groups listed that offer further information.

Holiday was one of the first timeshare resale companies on the Internet. And as the first major Web site of its type, there were a lot of lessons for us to learn, both from our customers and from the technology itself. We have enjoyed an ever-increasing level of business from the Internet and our customers, whether as single individuals or whole families, seem to enjoy our site! And why not! You can shop for vacations from the comfort of your own living room! You'll find plenty of pictures and text of the resorts, as well as supporting information on exchanging, buying and selling. Whether your vacation dreams extend only as far as the region you live or to faraway exotic beaches, you can locate your next vacation quickly through an interactive global map and an index of listings. If you have further questions or wish to purchase a particular property, please may e-mail us directly or call us on the toll-free phone number. No sales are actually consummated over the Internet as of yet, but as an information tool, it is unsurpassed. While great savings and convenience is the plus side of shopping this way, there is one obvious draw back: No cheap Mexican blanket!