A simple question TCA get asked all the time, with a simple answer, you just can’t but why should this be? We will attempt to answer the question with a little more fact-based reasoning. Firstly we need to divide the timeshare product into two parts, the old-fashioned fixed or floating week contract and the current concept of points.
Before we delve deeper it’s fair to point out that timeshare is like any other product, sales are driven by market forces. Too many buyers and not enough product is an enviable position as prices rise in favour of the supplier. The other way around is too much product and not enough buyers is not good, this is where we find the timeshare market. There is another non market driven problem with current timeshare and we will look at this later.
The old fashioned way – A brief history
In the early days of timeshare, fixed weeks were the only way the product was sold. For a purchase price, a week or weeks were allocated at a specific resort and at a specific time, a simple easy to understand product. It was quite normal for timeshare developers to sell each accommodation for fifty weeks, keeping two weeks to carry out annual maintenance.
Historically this product attracted a value to both the developer and the resale market this is because the product had meaning, a buyer could map out their holidays with precision, same dates each year and same apartment for the entire term of the contract. Floating weeks were similar, although not as attractive as fixed weeks, you couldn’t plan exactly when you could holiday or what apartment you would end up in, nevertheless it sort of worked.
Enter the exchange companies. This added a whole new layer of flexibility to the fixed week owner; go where you want when you want in theory, OK it wasn’t quite that simple but on average it worked.
The problem as far as the developer was concerned is that there was a calculated maximum number of customers, so after all weeks were sold there would be no more high value stock to sell and the developer would be entirely reliant of payment of maintenance fees, and of course any resales, given the market back then was quite buoyant.
Unfortunately, the monies derived from maintenance fees didn’t quench the thirst of the developers in their quest for new sales and associated profit, something had to be done.
The new fashioned way
Enter the points system. Points are a form of digital timeshare currency so instead of being allocated a fixed or floating week, as before, you are allocated a number of points that normally equated to a week or weeks at what was described as your home resort but without the need to visit your home resort every year. The annual maintenance fee was now expressed as an amount payable for each point owned.
Resorts had different points values, to stay in a high end resort would take more points than in a lower level resort so effectively, the more points you purchased the greater the resort choice. On the surface this would seem to have propelled a tired concept into the modern world; however, problems were not far behind.
The problems with points
We said earlier that points are a type of digital currency but unlike real currencies that are normally backed by gold reserves, timeshare points have no intrinsic value. This in itself doesn’t create a problem, what creates the problem is the sale of points is infinite. As we explained earlier, in the old days one apartment could be sold to a maximum of fifty owners, with points there is no upper limit, the same apartment could be sold to 5,000 owners because points are not attached to any specific apartment.
The greatest complaint by far from points owners is the lack of availability, not surprising as instead of one owner having one week, there could be thousands vying for the same week. Imagine how many points owners with young families would like to holiday in Orlando to visit the theme parks. We would venture that trying to get a booking anytime in school holidays will be nearly impossible.
The value of points
This is where we answer the question “Why can’t I give back my timeshare?” put simply, because points have no intrinsic value and they may be created as needed by the developer at a whim, the developer neither wants them back or needs them. Points are created out of thin air as and when needed, so the reality is your points are worth nothing, that said you personally do have a value to the developer.
The reluctance for developers to take back either points or weeks is because this would mean letting you out of a long term contract, the corollary of this is they wave goodbye to all the future maintenance fees that you are contractually liable to pay, and that’s not good for business.
Can’t give them back so sell them
This is pretty much a non starter. If the developer places no value on the points they issue then how does the resale market value them? The answer is the value is virtually nil. To demonstrate a point we searched EBay in the USA and what we found are lots of timeshare points for sale with various developers. How about buying 1,000,000 Wyndham points for just $2,499 at the splendid Wyndham Emerald Grande at Destin in Florida:
To stay in this resort in high season will take about 400,000 points per week. To stay as a paying guest in July 2023 would cost about $6,000 so why no bids? Maintenance fees for Wyndham run at around $6 per thousand points so the maintenance fee for these points would be around $6,000 per annum. The killer is this fee, which of course will rise every year so the bargain sale price will be diluted by this cost and of course if you purchased, you too will have the problem of trying to get shot of it at some stage in the future.
TCA comment
We hope that this article has cast some light on why developers don’t want your timeshare back. There are a couple of exceptions, Marriott do have a buyback programme but only for a few selected resorts. Disney Vacation Club has a very good buyback policy because at present the demand for their timeshare outstrips supply.
In general giving back, selling or simply trying to exit a timeshare is fraught with problems. In the example, we looked at an American resort but the problem is not just limited to the USA, it’s a global problem. If you are a timeshare owner and had always thought you had made an “investment”, we are sorry to have poured water on your bonfire. At best, timeshare can only be classified as an investment in future holidays, if you can find availability, nothing more.
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