In the heady days of timeshare in the dim distant past life was simple, timeshare owners knew exactly where they stood and how their timeshare worked. Fixed weeks at the same resort, same time each year in the same accommodation, simple. In the early days of exchange programmes simplicity was the order, remember when RCI even produced a glossy brochure every year listing all the resorts then depending where and when you owned it was easy to arrange an exchange. Sadly, for the most part, those days have gone.
Enter the points system
It wasn’t until the 90s that points started to become popular, in this article we will take a look at what points are. We will also take a look at the benefits to the timeshare owner and more importantly the developer.
In the simplest of terms, points are a form of digital currency in other words they don’t really exist and are simply a mechanism for ascertaining the buying power of your ownership. By way of an example, you purchased enough points to enjoy a high season week at a resort in Spain. In the real word it’s unlikely that this number of points would get you a holiday in the Florida, even in low season, we’ll take a look at a real example below. Although the sale price of the points may be the same the “trading” value differs greatly.
Pros and cons for the owner
Although the purchase of points is attached to what is known as your home resort, this doesn’t mean or guarantee that you have to holiday at this resort every year. In theory points add a greater layer of flexibility to timeshare ownership and for those who are computer literate the booking process is fairly simple. Another possible advantage is that, as and when affordable, it’s possible to purchase more points to get better “trading” value, therefore better holidays.
The major disadvantage of points is that of availability. Popular resorts, destinations and seasons all impact on whether or not you get your holiday including where and when you wish to go. Unlike the fixed week described above, points offer no guaranteed holiday especially if you don’t have the flexibility of dates or locations.
Advantages to the developer
The weeks system was very easy to understand, a developer has one apartment, logic dictates that there are 52 weeks in a year so the maximum owners could number 52, not so points. It’s perfectly feasible to sell one apartment to hundreds of owners and it’s this very practice that causes the log jam and leads to lack of availability.
From this it may be concluded that points work really well for developers, not only from the volume that can be sold by reference to the number of apartments but also the points system makes it so much easier to “up sell” owners into buying more and more points.
Do points make prizes?
Certainly not, points work in favour of the developer at the expense of the owner. Another complication is that every developer has their own points and pricing system so in timeshare terms points appear to be a universal currency but they are far from universal, they behave the same as real currencies. As an example, £1 is worth 9 Croatian Kuna but equally, 9 Kuna equals $1.26, so as with currency, points values differ from developer to developer. Hilton points have a different value to Disney points that also have a different value to Wyndham points so swapping between them is complex and impossible without using exchange companies to create a trading value.
Looking at trading values a little closer, as we have said, location and time interval are all important. The trading value differs vastly when taking these factors into account. As an example using the RCI points system, we looked at a holiday for the 7th to 14th August 2022 in two locations. First we looked at the Palladium Hotel in Benalmadena Southern Spain for a holiday here the points requirement is 48,500.
We then looked at the Wyndham Star resort in Kissimmee Florida, here the required points for the same week is 88,500 making it plain to see that the trading value of a Spanish resort has a much lesser value than a Florida resort. Logical really but this disparity will never be mentioned at sales presentations. It’s true to say that points can get you all over the world but only if you have enough.
From this it may be seen that the whole points system is both complex and confusing. We mentioned Hilton above; well as if you think points are confusing spare a thought for Hilton Grand Vacations owners. After the takeover of Diamond Resorts the HGV points system had to be adjusted to fall in line with the Diamond system. Below is a chart simply looking at a couple of former Diamond resorts. The chart shows the original HGV points and the new points required to book the same resort.
This is not a price rise, it’s simply a revaluation financially of HGV points to dovetail them into Diamond.
From what we gather and by using a hypothetical example, if a single HGV point is worth $1 then 7,000 would be worth $7,000. Under the new regime the price per point would fall to 62.5 Cents, but when multiplying 62.5 Cents by 11,200 the figure reaches the same $7,000 result. Effectively, HGV have multiplied their original points by a factor of 1.6. After this, of course, HGV points need converting to RCI points to ascertain trading value.
Our comment
Whilst on the surface it could be argued that the move to points based timeshare ownership is both logical and provides benefits to timeshare owners but under the surface the reverse is probably true. We stated earlier that points are effectively a digital currency; however with the exception of a few developers such as Disney and Marriott, most points have a zero value. Developers won’t buy them back and the second hand market is awash with owners trying to offload points with little or no success.
The trading value disparity between developers causes much confusion leaving the exchange companies to attempt to create a level playing field for all to understand. It is plainly obvious that the primary beneficiary of the points system is the developer. Not only can a single unit be sold multiple times over but also the up selling of more points over the years yields substantial profit to the developer with little extra benefit to the owner.
Over the years timeshare has reinvented itself many times but at the end of the day this form of holidaying has really passed its sell by date. No matter what guise the product takes it’s still expensive to get in, expensive to maintain, difficult to find availability, offers little or no residual value and worst of all it’s extremely difficult to dispose of when the time comes.
If you’re a points owner we would be interested in hearing your opinion. Do points work for you? Do you get the holidays you want where you want? Have you had to upgrade to get more points to achieve your holiday goals? Let us know.
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