Holidaymakers in 2023 tend to regard timeshare as outmoded, dated, expensive and inefficient, but 20 million households worldwide holiday through some version of holiday ownership schemes. So how has the past changed the present and what’s in store for the future?
Background
Timeshare entered the holiday scene in the 1960s, but flourished with the expansion of foreign holiday travel in the decades to follow. Package tour companies in the 1980s and 1990s presented glossy brochures of hotels that turned out to be disappointing in real life. Dissatisfied holidaymakers were targeted en masse and hundreds of millions of pounds were made by an aggressive timeshare industry dangling the carrots of high standard accommodation and exclusivity.
Timeshare might have a dubious reputation, but it also has its advocates too. Are these people who are ‘sticking to their guns’ doing so because they are trapped in inescapable timeshare contracts? Or are there genuinely great reasons to choose timeshare schemes over regular holidays? TCA examines yesterday, today and will have a stab at tomorrow.
The past
There is no doubt about it. Timeshare owners loved what they saw or they wouldn’t have spent tens of thousands of pounds to join a costly holiday scheme. In the past there were certainly good reasons that managed to entice over 20 million people globally to sign up to timeshare memberships, so what were they?
Exclusivity
Timeshare resorts were sold as private, ‘members only’ clubs. If you were not a member, you couldn’t holiday in these luxury complexes. As a line from the 2004 film “Layer Cake” says: “Everyone likes to walk through a door marked Private” People holidaying in timeshare resorts knew that everyone else there had made a significant financial commitment to become members. People who make these kinds of commitments tend to respect both the resort itself, and one another.
Superior standards
This was the big one. Package tour holidaymakers were arriving in droves to tired, shoddy, cramped apartments that had looked so much bigger and more modern thanks to clever photography in the brochures. Brits in particular put a brave face on it. “It’s just a roof over our head while we sleep. We’ll be out most of the time anyway…” But this was rationalisation. When these same people were shown the higher standards and superior amenities of timeshare clubs, they wanted in. And they were prepared to pay.
Standard guarantee everywhere/exchange systems
It wasn’t just your home resort that was superior. Networks of thousands of timeshare resorts were linked via exchange systems. This meant that you could stay in any of over 4000 other resorts, in around 100 countries and be guaranteed similar high standards. A whole world of luxury holiday resorts? What’s not to love?
Better value/lower long term cost
Wait… better standard and lower cost? How is that possible? Timeshare was sold as owning rather than renting. The upfront costs of buying the membership were high. Thousands, or even tens of thousands of pounds. But it was billed as ‘paying for all your future holidays up front’ at today’s prices.’ Most forms of ownership (cars, houses etc) have a lower long term cost than renting, and once the big upfront fee is paid, there are just minimal annual charges to cover maintenance of the resort.
Pride of ownership
Instead of booking from a brochure and renting an apartment they don’t know much about, timeshare owners are holidaying in their ‘home resort’. With the original fixed week ownership system guaranteeing the same apartment in the same week every year, all was clear. The comparison can be made to owning your own car vs. renting. It makes little difference in the practical day to day use of the vehicle. But you know that it’s yours.
Investment potential
This does not apply to every type of membership. But the 1980s and 1990s many resorts sold heavily on the idea that the timeshare members were basically dividing ownership of an apartment into 52 ‘shares’, or ‘weeks’. That way they had the benefits of ownership, but not the expense of owning the whole property. They were in effect only paying for what they would use. However the association with property often promised a better potential for value retention (and maybe profit) than renting regular holidays. Particular in recent variations of membership called ‘Fractionals‘.
Makes you take holidays
Many a workaholic has cited this as the principal reason they paid to join a timeshare scheme. The fact that they have paid in advance for their holiday will force them to make the time to travel and spend time with their family or partner. With regular holiday bookings many of this type of work centric person put booking the holiday off continually until they missed it entirely year after year.
With a pre-booked holiday skipping that all important break is less likely to happen. Time spent together in a stress free environment with loved ones is seldom wasted. In a way, for these customers, the cost of the timeshare is an investment in their relationship, their health and their wellbeing. One USA developer, Westgate even compares their sales staff to doctors, firemen or police officers because they too are saving lives, a bit farfetched but it does make a point.
The present
The sharp eyed reader will notice that the list we produce below is largely the inverse of the Past. That is to say that the people who argue against timeshare do so mainly on the premise that the purported selling points and benefits of the past don’t stand up under examination today. So, let’s examine the counter-contentions one by one.
Exclusivity
Yes, timeshare resorts were originally exclusive. Then the massive decline in new member sales meant that many units were left empty, costing money but generating no income. One by one the timeshare operators opened their doors to regular holidaymakers. Nowadays non-members can book into just about every timeshare resort on the planet through sites like booking.com. And they pay around what a member pays in annual fees, despite not having had to pay to join the club. This has left many timeshare owners angry and questioning why they had to pay expensive, upfront joining fees.
Superior standards
It’s beyond question that standards were superior at timeshare resorts in the 1980s and 1990s. Observers point out that this no longer seems to be the case. When timeshare sales operations were flourishing, business was usually conducted onsite, meaning the resort was also the ‘product display.’ Since the end of high volume new member sales, cynics claim that there is no longer an incentive for the business to maintain such high standards of maintenance and upkeep.
Standard guarantee everywhere/exchange systems
With the advent of Tripadvisor and similar public review sites, there is plenty of reliable and accurate feedback on hotels and holiday accommodation freely available online. This negates the need to join an expensive holiday scheme to guarantee a high standard, especially as people can actually book into the timeshare units themselves if desired. Reviewers on such sites are only too keen to point out the good, bad and downright ugly.
With the lack of need for an exchange network to guarantee standards elsewhere, the systems have now become a limitation rather than a sales feature. Timeshare owners say they are able to book their preferred choice less than 1% of the time. The corollary of this seems to indicate that non-owners can now get accommodation whenever and wherever they want, with a clear idea of the standard before they book.
Better value/lower long term cost
I doesn’t take a degree holder in advanced mathematics to prove the numbers don’t add up to support this claim. With the originally marketed timeshares in the 1960s, maintenance fees were low enough (compared to equivalent accommodation booking fees) proving that over time it was potentially possible to recoup the initial outlay. However, since those early days maintenance fees have spiralled out of control and are generally around the same cost as non members pay to stay in the same apartments. When the joining fee is added on, the overall cost is considerably higher than holidaying through regular booking sites.
Timeshare maintenance fees are uncapped. Members have to pay whatever the resort requests, and they have to pay every year whether they holiday or not. There is no way for a member to take advantage of holiday deals, or new great value destinations. This lack of flexibility in itself could be argued to make timeshare holidays worse value than the general market.
Pride of ownership/investment potential
It is becoming clearer and clearer that timeshare owners don’t own anything related to property. Their membership is a commitment to pay to use a certain property (or properties) for an amount of years. The correct term is ‘right to rotational occupancy’. Because there is no property ownership, the timeshare purchase becomes financially worthless the moment it is bought. In fact, not only does the value fall to almost zero, it’s difficult, or almost impossible to sell even for a derisory sum. Because of this, most people who want to cancel their membership; when realising it holds no intrinsic value, have to pay for expert help to do so.
Fractional ownerships offered a solution whereby owners were purportedly buying a deeded share of a property. The implication was that because the membership was based on actual bricks-and-mortar ownership, that it would be a genuine investment. For various reasons Fractionals failed to deliver. TCA has yet to hear of a single case where an owner made money, or even got money back anywhere near representative of their initial cost from a fractional ownership, as described in our recent article.
Makes you take holidays
Timeshare ownership only makes people pay for holidays, not take them. Many owners confide to TCA that they committed to a timeshare purchase that they couldn’t really afford by getting caught up in the slick sales presentation. Years later, many people report that the high costs of finance and annual fees mean they can’t afford to actually afford to use the timeshare. Remember, all that timeshare ownership offers is accommodation. Flights and other travel costs, food and entertainment etc are not included; this has a big impact on affordability.
Today’s deeper problems
High pressure sales
Many owners report having been rushed into a decision. People claim that they were not left alone to discuss the commitment in private, nor were they given time to read documentation or consider the implications of such a large purchase.
This type of urgency indicates an emotionally charged sale, and a corresponding likelihood of regretting the purchase later. TCA has never heard of a timeshare owner who saw an advert on TV or other media, then approached the company themselves with a view to buy. If a product requires this level of intensity and aggression with its marketing and sales, can it really present value?
Not possible to leave?
Whether owners do or don’t enjoy their membership, there is no easy way to leave. There is no pretence of a win-win partnership. The resort will use all legal means at its disposal to make members pay, whether they are happy or not, whether they can afford it or not. The resort can raise the fees by whatever amount they see fit, and if someone disagrees and tries not to pay, they will be forced to do so in no uncertain terms.
Inflexibility
The world of holidays is opening up more every year. New destinations and types of holiday are available, as are new ways to book and travel. Timeshare owners are buying into a system that forces them to predict their holiday patterns years from now. They can no longer be spontaneous, and decide to go next week/not at all/ to a new destination/to split their time between a few days in different locations. Timeshare has made attempts to evolve, but it can never match the pure, click-and-book freedom enjoyed by today’s holiday consumer.
The future
At TCA we don’t have a crystal ball so it would be foolhardy to try to accurately predict the future of both the product and its development, but what we can say is things will have to change. Timeshare is a multibillion dollar industry with some massive organisations such as Wyndham, Hilton; Marriott et al. Timeshare resorts, it could be argued, are just another branch of the holiday accommodation industry, their physical layout differs them from the traditional hotel, however when boiling down to basics, they are only somewhere to lay your head, maybe have a swim or eat at an onsite restaurant.
Most of the big players in the industry are also hotel operators so the possible evolution is timeshare resorts could become more hotel than owner driven resorts, given the freedom to book as a non owner online already indicates a move in this direction. Choice Hotels, one of the largest hotel groups in the USA were reported in the Wall Street Journal as looking to acquire Wyndham Hotels and Resorts, Wyndham being the largest timeshare company on the planet, headline below:
Choice already have a toe in the timeshare water with their association with Bluegreen Vacations.
For many large long time served developers, financially countless resorts sold via the timeshare method have paid their development costs many times over. Moving to a more hotel based room rental would maintain commercial income and over time remove the stigma their corporate brand has suffered from because of the reputation of timeshare.
As we said earlier, we don’t possess a crystal ball, however given that the holiday industry is evolving exponentially and timeshare seems to be locked in the past, something will have to give. Will we see all our future holidays going over to the timeshare method or will we see the whole industry working on a pay as you use basis? If we took a show of hands, we honestly don’t think we would see many shows for the timeshare method, we could be wrong, but doubt it.
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