The Resort Development Organisation (RDO) has recently updated its media pack so naturally we had to download a copy to see the all new version. After reading from top to bottom it was, as we could have predicted, not of any great interest. We feel that calling the document a “media pack” is a complete misnomer as no respectable journalist or media company would find it of any interest at all, TCA however found it of much interest.
The best way to describe the content is a veiled attempt to validate all that’s wrong with timeshare ownership, from justifying rises in maintenance fees to creating a member exit strategy which is both restrictive and expensive. Below we will look at some of the salient points.
Contents
There are twelve items listed prior to the introduction but for the purposes of this article we will not dwell on any single point in depth we will focus on what we believe are important statements and areas. In the introduction the following statement appears:
“RDO members represent the best in European vacation ownership and are committed to high service standards and integrity. They are bound by a code of conduct and an independent mediation and arbitration scheme, providing levels of protection beyond those required by law”.
Whilst this may be true, in developer terms the RDO only have thirteen actual developers who represent around 60 resorts out of a total of about 900 in Europe. Further down the page the following may be seen:
“Promoting best practice and fair-trading in all areas of the vacation ownership industry.”
Perhaps an explanation would be good as to whether 6 to 7 hour high pressure sales presentations and untruths relating to ownership benefits can be described as fair trading.
Much is made of the EU timeshare directive and the protection offered by the same, this may be all well and good but the directive falls woefully short of protecting existing owners. TCA whole heartedly agree that any legislation is welcome legislation and most certainly the directive installed greater protection at the point of sale but did absolutely nothing to assist existing owners.
Enforcement
“In 2013 RDO set up the Timeshare Task Force, an initiative that brings together Europe’s leading timeshare resorts, industry and consumer organisations.”
There is a whole section on how the RDO is proud of the fact that they created an enforcement organisation but stop short of mentioning the failed TATOC and at least one other organisation who were the original enforcement organisations.
Of interest is that TCA is a 25 year old consumer organisation, in fact we have been around longer than the RDO, but not once have we ever been consulted by the RDO, in fact completely the opposite, we are regularly attacked by them.
An exit strategy?
For longer than we care to mention we have been banging the drum for the industry to have a workable exit procedure for those timeshare owners who have simply had enough and want out. Praise to the RDO for at least going some way to place in their code of conduct such a strategy. The statement is that this is “mandatory” for all members but given that the RDO has no legal powers to enforce this one has to wonder how effective it is.
As the RDO says it is the trade association for European timeshare, with only 13 developers as members their exit procedure hardly makes a dent on the industry. Below is a copy of the member rules for exiting:
- In the event of the death of a joint owner, the surviving owner can surrender their timeshare if they wish and additionally, the beneficiaries of a will are not obliged to take on the timeshare if they do not wish to do so.
- A timeshare owner who has been declared bankrupt may hand back the timeshare without charge.
- If a sole owner or either of the joint owners is suffering from a long-term illness that prevents them from travelling to their resort for the foreseeable future, the timeshare interest may be surrendered.
- In all other cases, an owner may surrender their timeshare interest at any time, subject to the agreement of the RDO member. In such cases any surrender fee shall not exceed a sum equivalent to 3 years current maintenance fees.
As we said earlier, this is a step in the right direction as long as you are dead, dying, bankrupt or in all other cases exit is subject to “agreement of the RDO member” and even then, maintenance fees must be up to date and upon this and member agreement, you can “buy yourself out” by paying another 3 years maintenance fees. Obviously someone forgot to mention this to Seasons resort, Belton Wood who requires 5 years maintenance payments for all circumstances mentioned above.
We should also mention that if you purchased on finance and still have an outstanding balance then tough luck, you can get out of your timeshare but not the finance.
Maintenance fees
There is a very verbose section basically defending maintenance fees and why they are charged. There is even a section defending developers and resorts who still charged full fees with little or no benefit to owners during the pandemic. There is an entire section stating that maintenance fees do not swell the coffers of the developer, maybe someone at the RDO should look at the annual accounts of developers:
“There is a common misconception that annual maintenance fees are used by the developer to extract extra income from owners and are too high. Fees rise with inflation and major factors affecting fees in over the years have been the rise in employment costs in the countries where the resorts are based (Spain saw particularly steep rises in 2008/9) and the Euro/Sterling exchange rate, which has been poor from the Sterling perspective.”
What relevance is 2008/9 in 2022? The Sterling Euro rate has been pretty much stable for the last 10 years. In April 2012 it was 1.22 to the pound and in April 2022 it was 1.20, the lowest it has been in the last 10 years was 1.08 so that excuse doesn’t hold water.
Another fascinating statement concerns a comparison of maintenance fees to the cost of maintaining your own holiday home. In all honesty this is one of the most ridiculous statements in the whole document:
“It should however be emphasised that maintenance fees need to be looked at in the light of what it would cost the owner of a holiday home in terms of annual running costs and a comparison made on that basis”.
So let’s dismantle this completely. For example, you own one week at a resort, the average maintenance fee in a European resort is rapidly approaching £1,000pa. Allowing the resort to sell a single apartment for 50 weeks means the annual maintenance fees collected could be as much as £50,000. Multiply this by say a block of 20 apartments and we come to £1,000,000. We all know what maintenance fees cover but don’t try to fool us that it’s anywhere near the figure above
If you own your own holiday home and only use it for one week a year then you can rent it out for the rest of the year and make a tidy income. The all important fact is that by buying property you have an asset that could well rise in value, not so a timeshare. Timeshare loses virtually all value immediately after purchase. All this also forgets how much you have had to pay to buy in.
Reasons to buy a timeshare
Below are the spurious reasons offered by the RDO for buying a timeshare. We will make the appropriate comment after each section
Quality – timeshare offers superior accommodation at top-of-the-range resorts with excellent on-site facilities such as golf courses, leisure complexes, tennis courts & spas.
True, but you can get equal quality outside timeshare and in any case non owners can now book most timeshare resorts using online platforms.
More than just a hotel room – timeshare accommodation tends to be far more spacious than other accommodation types. Apartments range in size from studios sleeping two, to three-bedded apartments sleeping eight – with three bathrooms, kitchen and sizeable living/dining room. Some may even have a private sauna or pool.
Any apartment based holiday is more than just a hotel; just take a look at Airbnb.
The world’s your oyster – you’re not restricted to going to the same resort each year. Through the exchange system, a global network of accommodation will give you access to some of the most beautiful places in the world.
Ridiculous statement, holidays are now global whatever method you use it’s not just in the domain of timeshare.
Its family orientated – as well as kids’ clubs, nannies and play facilities, many resorts offer exceptional entertainment for both children and adults such as bands, magicians, dancers and local art and cultural events.
Most large hotels and holiday complexes offer entertainment as described above; many have crèche and child care services, so once again timeshare does not have exclusivity.
Flexibility – with the advent of points, timeshare is more flexible than ever and you can take a number of short breaks instead of a week or a two week holiday.
Many operators are now offering shorter-term timeshare contracts of, say 10 or 15 years, appealing to the new generation of buyers.
You certainly don’t need to be a timeshare owner to benefit from flexibility and you’re not tied in for 10 or 15 years.
Versatility – it’s not just cottages, villas, apartments and lodges that are available to stay at if you own timeshare. How about a catamaran, a houseboat or a cruise ship?
Another ridiculous statement, all the above are available to non timeshare owners.
Its hassle free – unlike owning a property outright, the maintenance of the resort is taken care of by the management company, so owners are free to relax & enjoy their holidays.
This comparison is incorrect when the rest of the statements are comparing holiday products not outright ownership. However even owners of overseas properties can employ the services of specialist management companies to take care of the property and assist with rentals when the owner is away.
Price – you’re paying for tomorrow’s holidays at today’s prices.
That would be true if you paid a single sum but what about the annual maintenance fee that goes up every year?
It’s personal – many owners like to go back to resorts they know well to meet up with friends they have made over the years.
Old fashioned fixed weeks certainly did provide this benefit but with the advent of floating weeks and points it has become a lottery as to not only getting into the same resort but also the date availability.
Finally
Naturally as the trade organisation for resort development in Europe the RDO must be seen to be supporting the industry but please don’t try to pretend to act, or have the interest of timeshare owners at heart. How can the RDO defend members who, for example, have overwhelmingly been proved to have sold timeshare in contravention of Spanish law?
What about the case of former RDO member, Azure in Malta arranging loans to purchase timeshare whilst unauthorised to do so by the Financial Conduct Authority, the corollary of which is a cost to the lender, in this case Barclays Partner Finance, £181m to correct the misselling.
Following on from this, because of the initial cost of timeshare, very few can afford to pay cash. How also can the RDO support lending policies of unsecured loans with an APR approaching 20%pa?
The fact these loans are unsecured is testimony that the finance industry places no value on the product the loan is taken for, unlike a secured loan against your domestic property which of course brings sensible interest rates on the borrowing.
Trying to hood wink readers into believing that maintenance fees don’t swell the corporate coffers of the developer is laughable. If this were not the case, why is there such intransigence when owners wish to exit?
A good try RDO but we suggest that if this document should find its way to the local library it should be filed in the fiction section. In case you wish to read the aforementioned document, it may be downloaded here.
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