Is It Now Time To Acquire A Timeshare?

Generally, “hard” sales tactics, unexplained price reductions, and low-quality resorts are disappearing. This indicates that many vacationers now view timesharing as a practical and affordable option for future trips.

However, they require much more information to make an intelligent purchase.

With companies like Disney, Marriott, and Hilton entering the market, the timeshare industry is exploding. In the past two years, nearly half a million households have acquired over 700,000 week-long units at timeshare resorts. This indicates that there are over 2 million owners at over 2,000 resorts worldwide. Contrary to popular belief, a recent study by leisure survey specialists Ragatz Associates revealed that over eighty percent of these owners are satisfied with their purchase.

“It is evident that timesharing is growing in popularity, not only in the United States but also in Europe, Mexico, and South America,” says Tom Franks, president of the American Resort Development Association, the timeshare industry’s Washington, D.C.-based trade association.

THE BASICS

In timesharing, consumers typically purchase one or more weeks at a specific resort and can return to that resort annually or “trade” it with an exchange company for a week at another resort. Currently, prices average approximately $9,000, with annual maintenance fees averaging around $300.

Generally, vacation timesharing takes one of two forms: The purchaser of “fee” timesharing receives permanent property rights in the form of a deed. Approximately 85 percent of timeshare resorts are sold through fee-ownership contracts. The purchaser of a “right-to-use” timeshare is granted the right to use the property for a specified period of time, such as 30 years. The purchaser of this type of timesharing does not receive a deed.

Instead of returning annually to their home resort, many timeshare owners choose to exchange their week for a week at one of the thousands of other resorts worldwide. Companies like Resorts Condominiums International (317/876-1692) and Interval International (305/666-1866) perform these exchange services for member resorts and owners for a fee (usually less than $100).

Many owners cite this exchange privilege as a key factor in their decision to purchase, and the exchanges have proven to be quite successful. The keys to being a successful exchanger are purchasing at a popular resort (which increases exchange power), “depositing” the week with an exchange company as early as possible (which gives the exchange company more time to find a user for the week being exchanged), and being flexible on the desired destination, resort, and travel dates.

SOME SPECIFICS

The region surrounding Orlando, Florida is a prime example of what is available. It is a massive market for vacationers from all over the world seeking a piece of Orlando’s “magic.” If you know where to look, there are dozens of options and the area is a great place to own one or more weeks.

Island One (407/859-8900), Marriott (813/688-7700), Orange Lake (407/239-1082), and Vistana (407/239-3008) are well-established options. At these and other resorts, you will frequently find kitchens, decks, pools, restaurants, golf courses, tennis courts, and many other amenities. These timeshare resorts more closely resemble fully-equipped apartments or suites than traditional hotel rooms.

Disney Vacation Club (407/939-3313) is the first timeshare resort that Walt Disney World has opened. As expected, they have developed some distinctive characteristics for their timeshare concept.

Disney addressed two of the most pressing issues in the timeshare industry: flexibility and aggressive sales tactics. Along with numerous other timeshare properties, Disney has taken steps to improve these two areas, which have received positive early reviews.

Guests who purchase a real estate interest at Disney Vacation Club Resort automatically become members of Disney Vacation Club and are entitled to an array of exclusive benefits and privileges. Members also receive an annual allotment of vacation points, which can be redeemed for vacations at the resort or at more than 100 resorts worldwide through RCI’s “Member Getaways” program.

Mark Pacala, general manager of Disney Vacation Club, explains that the ability to select from a variety of vacation options distinguishes the program from others of its kind. “The vacation point system enables members to choose the type of vacation that best meets their needs, especially as those needs change from year to year.”

Disney has also attacked the aggressive sales tactics that plagued the industry in the past. They offer no incentives or prizes to prospects who attend the sales presentation, and the majority of their sales force is compensated with a fixed salary rather than high commissions for high volume.

Guests may purchase, for a one-time fee, a 50-year real estate interest in the resort. Currently, prices range from $11,730 to approximately $16,000.

The points system, which is becoming increasingly popular in the timeshare industry, is much simpler than it initially appears. Let’s say your Disney Vacation Club ownership interest provides you with 270 points to use annually. You could reserve a two-bedroom home for a week in June or a three-bedroom Grand Villa for a five-day family reunion in July. Alternate options include reserving a two-bedroom home for a nine-day stay in September or a studio unit for an incredible stay of several weeks.

Disney’s timeshare operation is representative of the industry’s promising future and savvy timeshare purchasers. There are timeshare options available throughout the United States, including large multi-site options such as Hilton Grand Vacations (813/482-7766), Fairfield Communities (800/251-8766), and the Lawrence Welk Resort Group (619/485-5556), as well as small, intimate single-resort operations. There are apartment-style accommodations in a resort-like environment.

WORLDWIDE CHOICES

Timesharing is in no way restricted to the United States. This global industry is extremely popular in Mexico, South America, Europe, and a number of other regions.

Last year, more than 100,000 weeks were sold at over 100 different resorts in Mexico. The prices are typically lower than the average U.S. purchase price of $9,000

Cancun and Cozumel, Puerto Vallarta, Acapulco, Ixtapa, and Manzanillo, a regional resort area for Mexico City that is favored by Mexicans and typically offers even lower prices (less than $5,000) should be considered by prospective buyers. Contact the reputable multi-resort operator COSTAMEX at 305/267-7855 to get started in Mexico.

South America is a relatively new timesharing hotspot, but the industry is expanding rapidly. The Argentinian coast and mountains (skiing during the U.S. summer) are the most popular areas for development at the present time. Argentine visitors should investigate the options in Buenos Aires, Mar del Plata, Miramar, and the Cerro Catedral ski area. Punta del Este, a resort town on the Uruguayan coast, is also becoming a hub for timeshares.

Actually, timesharing originated in Europe before exploding in the United States. In Western Europe, the Mediterranean, and Scandinavia, there are a multitude of options. As expected, coastal areas and the Alps have the highest concentration of resorts.

Southern Spain is likely the sunniest timeshare destination in Europe. There are dozens of timeshare resorts in the Costa del Sol region. It’s simple to compare prices along the coast, but you should compare Club Riviera’s options (011-34-52-831252). The Canary Islands, Portugal, the French Riviera, Greece, and Turkey are also timeshare hotspots.

The Alps are attractive to many timeshare purchasers, and with good reason. A timeshare unit can save a great deal of money on ski trips and summer mountain vacations. There are numerous options in the French Alps, Switzerland, and Bavaria, Germany, but Austria appears to offer the best odds overall. The club-like Ferienclub Jausern in Sallbach-Hinterglemm (011-43-65-41-503) is typical of Austrian mountain resorts.

BUYERS BEWARE

Timesharing is not suitable for everyone. It is not a true “investment” in real estate, and the resale market is limited. Simply put, you should intend to purchase it, keep it, and enjoy it.

The industry association ARDA (see below) has numerous excellent publications on timeshare acquisition. Their office is an excellent starting point for prospective purchasers.

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