The COVID-19 pandemic has impacted many areas of our lives, including our travel and holiday plans. If you own a timeshare, you were probably unable to use it during 2020 and may face challenges scheduling a trip in 2021, depending on how long the pandemic continues to affect our lives. Ideally, timeshare companies should be doing everything possible to address the concerns of their owners during such a challenging climate. Unfortunately, this industry has never been known to place the needs and experiences of their owners above their profits.
By now owners will have no doubt received and paid their 2021 maintenance fees and from what we have established most have increased from 2020 levels. These fees will not be waived due to COVID-19, even if you’re unable to schedule a holiday during the pandemic. In addition, it’s possible that you may receive a larger maintenance fee hike than normal as timeshare companies try to limit the financial losses they’re experiencing from the pandemic.
By way of example Marriott, one of the largest timeshare groups in the world, released an abridged copy of their 2020 4th quarter trading figures. The full 4th quarter results are not being published until February 24th, the company did however state that it ended the fourth quarter with liquidity of about $1.3 billion. Liquidity is the money a company has after all expenses, taxes, debts etc are paid.
The Unstated Purpose of Timeshare Maintenance Fees
Often, timeshare companies use maintenance fees as a way to create revenue and improve their profitability. This is accomplished by charging a larger fee than is necessary to perform all required maintenance and upkeep.
Unfortunately, European resorts are less than transparent in sharing information, not so the USA. Whilst we are using an American example, we are in no doubt the maths will look the same across Europe.
Let’s look at the maths surrounding timeshare maintenance fees:
According to the American Resort Development Association (ARDA), the average cost of timeshare maintenance fees is $1,000 and the average timeshare resort contains 129 units.
If we allow for one week per year for maintenance of each unit, the example resort has 6,579 one-week vacations to sell in order to reach full capacity.
Let’s assume a conservative estimate that of these units, only 50% are sold.
In this scenario, the average timeshare resort is earning $3,289,000 in annual maintenance fees ($1,000 x 3,289 owners).
Does it really cost upwards of $3.3 million a year to staff and maintain these resorts, especially as due to the pandemic many are closed and running on a skeleton staff? If not, the remainder of this money reflects profit for the resort or management group. Here we only look at fixed weeks; the financial gain with points only resorts would be staggering.
Maintenance fees are hard enough to fit into your budget when you’re using your timeshare. If you’re unable to book a trip in 2021 due to COVID-19, this could represent an extremely large expense without receiving any benefit for your money.
The future of holidays
Moving forward COVID-19 will undoubtedly change the way many people take holidays. As a result, you may find that your timeshare no longer meets your needs. You may also decide that annual maintenance fees that consistently spiral out of control are no longer financially feasible for you and your family.
Given the fact that the majority of timeshare resorts allow non members to book direct, the issue that needs answering is why would anyone pay a significant up front sum then pay annual maintenance fees when the very same holiday is available in the public domain on a pay as you go basis, often at the same price or cheaper.
Holidays should be an enjoyable escape not a financial liability. Go where you want, when you want and only pay if you can afford it, not be forced into accepting somewhere you don’t really want to go to at a time that may be unacceptable but still having to pay top dollar for the privilege. We know which way we would prefer to holiday in the future, a no brainer really.
For more information regarding this article or assistance in any other timeshare related issues please contact the TCA on 01908 881058 or email: info@TimeshareConsumerAssociation.org.uk