The following is the text from an article by Eva Schram, writing for FD in the Netherlands that I was happy to be interviewed for. There are some interesting comments in the article from all 3 sources. I’m unable to post the translated article as a full article, but here’s the entire text:
Back from never being gone: timeshares
The maligned timeshare industry in the US remains very much alive, despite all the warnings and bad experiences from people in the past. Eva Schram almost fell for it herself on her honeymoon in Hawaii. What makes this business so successful?
Before my eyes the radiant blue ocean glitters in all its glory in the sunlight, in the distance I see dolphins leaping out of the water. I watch this idyllic scene from the 11th-floor balcony of the Diamond Resort on the Hawaiian island of Maui. 'Can you imagine waking up in the morning, drinking your coffee here in this chair, and this is your view?' a saleswoman asks me. She leads us—my husband and I, on our honeymoon—around the corner of the balcony, where we suddenly look out over a spacious pool with cabanas and lounge chairs. "And there, in that corner, we do a free luau every week," the saleswoman says, referring to the traditional Hawaiian feast with food and theater (though most guests usually come for the open bar).
The tour of this 11th floor apartment is the culmination of a two-hour session in which the lady in question tries to sell us a timeshare. Timeshares are holiday apartments in which you buy a share, often for a week a year or every two years. So you own 1/52nd of that apartment. Unlike hotel rooms, timeshare apartments have a kitchenette and an extra bedroom, but like hotels, the complexes are equipped with a swimming pool, restaurant and other amenities. Timeshares are popular in the US, but also exist in Mexico, Asia and Europe.
For just over $10,000 and an annual contribution of about $1,000 to maintenance costs, we get to stay at the Maui timeshare for a week every other year. Or well, in an apartment at the back of the building, overlooking the car park. The ocean view costs much more.
Body snatchers
We ended up on this Diamond Resorts timeshare tour through another savvy seller in downtown Lahaina, the town where we are staying on our honeymoon. "A 'body snatcher' is what they call that person in the industry," said Andrew Meyer, a Florida attorney who specializes in canceling timeshare contracts. 'The sole purpose of body snatchers is to get you into a tour with so-called incentives, or just bribes. They are paid a commission for this. Then you have to deal with the seller who shows you an apartment with a beautiful view and then a third person comes along to make you an unmissable offer that is valid “only today” – you have to sign immediately. The whole process is quite sophisticated.'
I can confirm that. The night before we went on the tour, I shouted as loud as I could that I would never buy a timeshare in my life. But after two hours of sales talk, I was almost ready. Luckily my husband kept a cooler head. He called me to order. We wanted to save for a house, didn't we? And hadn't we just spent a lot of money on a wedding? Was this really that wise?
He was right, of course. Once away from the resort and the rousing sales tactics, I was happy that my husband had saved us from an expensive, lifetime contract that is difficult to cancel (and sometimes not at all).
Also millennials and generation x
Like many other sectors of the travel industry, the timeshare industry has bounced back with great success after the pandemic. According to the US industry association ARDA, the companies that run the resorts — well-known names such as Marriott, Hilton and Wyndham, although they are usually companies other than these hotel chains from a legal perspective — sold $8.1 billion worth of timeshares in 2021, compared to $4.9 billion in 2021. 2020. In the last pre-corona year 2019, the industry had realized a turnover of $10.5 billion with what it also calls 'holiday property'.
That term is less euphemistic than it may seem. More and more often, as a consumer, you do not buy a specific week in a specific resort, but you receive a number of points for the purchase amount that you can exchange for a stay in resorts at other locations. "That is perhaps the biggest misconception about timeshares: that it is still the same product as it was in 1980," said Jason Gamel, CEO of ARDA. 'The points system was introduced to offer the buyer flexibility. And if you don't want to use the points, you can often exchange them for a rental car or a hotel room.' Another misconception: only baby boomers buy timeshares. According to Gamel, the average buyer is 52 years old and more than half of the sales now go to millennials and Generation X'ers.
The tour of this 11th floor apartment is the culmination of a two-hour session in which the lady in question tries to sell us a timeshare. Timeshares are holiday apartments in which you buy a share, often for a week a year or every two years. So you own 1/52nd of that apartment. Unlike hotel rooms, timeshare apartments have a kitchenette and an extra bedroom, but like hotels, the complexes are equipped with a swimming pool, restaurant and other amenities. Timeshares are popular in the US, but also exist in Mexico, Asia and Europe.
For just over $10,000 and an annual contribution of about $1,000 to maintenance costs, we get to stay at the Maui timeshare for a week every other year. Or well, in an apartment at the back of the building, overlooking the car park. The ocean view costs much more.
Body snatchers
We ended up on this Diamond Resorts timeshare tour through another savvy seller in downtown Lahaina, the town where we are staying on our honeymoon. "A 'body snatcher' is what they call that person in the industry," said Andrew Meyer, a Florida attorney who specializes in canceling timeshare contracts. 'The sole purpose of body snatchers is to get you into a tour with so-called incentives, or just bribes. They are paid a commission for this. Then you have to deal with the seller who shows you an apartment with a beautiful view and then a third person comes along to make you an unmissable offer that is valid “only today” – you have to sign immediately. The whole process is quite sophisticated.'
I can confirm that. The night before we went on the tour, I shouted as loud as I could that I would never buy a timeshare in my life. But after two hours of sales talk, I was almost ready. Luckily my husband kept a cooler head. He called me to order. We wanted to save for a house, didn't we? And hadn't we just spent a lot of money on a wedding? Was this really that wise?
He was right, of course. Once away from the resort and the rousing sales tactics, I was happy that my husband had saved us from an expensive, lifetime contract that is difficult to cancel (and sometimes not at all).
Also millennials and generation x
Like many other sectors of the travel industry, the timeshare industry has bounced back with great success after the pandemic. According to the US industry association ARDA, the companies that run the resorts — well-known names such as Marriott, Hilton and Wyndham, although they are usually companies other than these hotel chains from a legal perspective — sold $8.1 billion worth of timeshares in 2021, compared to $4.9 billion in 2021. 2020. In the last pre-corona year 2019, the industry had realized a turnover of $10.5 billion with what it also calls 'holiday property'.
That term is less euphemistic than it may seem. More and more often, as a consumer, you do not buy a specific week in a specific resort, but you receive a number of points for the purchase amount that you can exchange for a stay in resorts at other locations. "That is perhaps the biggest misconception about timeshares: that it is still the same product as it was in 1980," said Jason Gamel, CEO of ARDA. 'The points system was introduced to offer the buyer flexibility. And if you don't want to use the points, you can often exchange them for a rental car or a hotel room.' Another misconception: only baby boomers buy timeshares. According to Gamel, the average buyer is 52 years old and more than half of the sales now go to millennials and Generation X'ers.
Popular due to inflation
According to Gamel, the pandemic shows that timeshares are not losing popularity. “Even in the midst of the pandemic, people were still buying $5 billion worth of timeshares. It remains a popular product. Even now, in times of high inflation, owning a timeshare is popular, because you don't have to deal with hotel room prices that rise by 65%.'
Gamel's point about inflation sounds familiar: the lady who tried to sell us a timeshare in Hawaii calculated how much we could save on our vacations over the next 40 years if we bought a timeshare now. With calculations that I couldn't control at the time, she came out at $40,000. Compared to that, the $10,000 for the timeshare was a steal. We'd be crazy if we didn't go along with that, wouldn't we? What about the $1,000 annual maintenance cost, which typically increases at about 5% per year? They wouldn't be worth anything if in the future we could always go on holiday for a week on this paradise island, or in any place on earth we wanted?
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It's this kind of sales pitch that timeshare activist Lisa Schreier most denounced. She spent five years in the industry, but realized that the marketing and sales tactics were not for her. "I decided I would be happier if I educated consumers about timeshares," she says. That's why Schreier started a blog, The Timeshare Crusader, to shed light on sales practices and other issues within the industry. “It starts with the fact that you never see ads for timeshares. Potential buyers are always lured to a tour with certain incentives," she says. For example, my husband and I received $150 worth of vouchers to use at local restaurants and a voucher for a week's free stay at a Hilton hotel.
But what bothers Schreier the most is the pressure put on buyers to decide within ten minutes whether they want to take the offer. “I don't know of any other product or service where the buyer has to decide so quickly and under such great pressure. The story is always that the offer is only valid today.' I recognize that too: with us the pitch was that because Diamond Resorts was recently bought by competitor Hilton Grand Vacations, we were dealing with a so-called Black Friday moment. It was now or never and we would be a thief of our own pockets if we didn't buy a timeshare now.
According to Schreier and lawyer Meyer, this high pressure means that buyers do not always realize what they are signing. 'A timeshare is a legally enforceable contract, usually without an end date. But it is not an investment where you can make a profit. Consumers need to understand that,' says Schreier. She even says that you should never use the words timeshare and investment in the same sentence.
According to Gamel, the pandemic shows that timeshares are not losing popularity. “Even in the midst of the pandemic, people were still buying $5 billion worth of timeshares. It remains a popular product. Even now, in times of high inflation, owning a timeshare is popular, because you don't have to deal with hotel room prices that rise by 65%.'
Gamel's point about inflation sounds familiar: the lady who tried to sell us a timeshare in Hawaii calculated how much we could save on our vacations over the next 40 years if we bought a timeshare now. With calculations that I couldn't control at the time, she came out at $40,000. Compared to that, the $10,000 for the timeshare was a steal. We'd be crazy if we didn't go along with that, wouldn't we? What about the $1,000 annual maintenance cost, which typically increases at about 5% per year? They wouldn't be worth anything if in the future we could always go on holiday for a week on this paradise island, or in any place on earth we wanted?
No ads
It's this kind of sales pitch that timeshare activist Lisa Schreier most denounced. She spent five years in the industry, but realized that the marketing and sales tactics were not for her. "I decided I would be happier if I educated consumers about timeshares," she says. That's why Schreier started a blog, The Timeshare Crusader, to shed light on sales practices and other issues within the industry. “It starts with the fact that you never see ads for timeshares. Potential buyers are always lured to a tour with certain incentives," she says. For example, my husband and I received $150 worth of vouchers to use at local restaurants and a voucher for a week's free stay at a Hilton hotel.
But what bothers Schreier the most is the pressure put on buyers to decide within ten minutes whether they want to take the offer. “I don't know of any other product or service where the buyer has to decide so quickly and under such great pressure. The story is always that the offer is only valid today.' I recognize that too: with us the pitch was that because Diamond Resorts was recently bought by competitor Hilton Grand Vacations, we were dealing with a so-called Black Friday moment. It was now or never and we would be a thief of our own pockets if we didn't buy a timeshare now.
According to Schreier and lawyer Meyer, this high pressure means that buyers do not always realize what they are signing. 'A timeshare is a legally enforceable contract, usually without an end date. But it is not an investment where you can make a profit. Consumers need to understand that,' says Schreier. She even says that you should never use the words timeshare and investment in the same sentence.
No investment
To be fair, you're not likely to hear timeshare sellers and developers claiming that the product they're selling is an investment. Gamel, of the trade association, says it himself: "You should only do it for personal use and pleasure."
According to Meyer, there's a good reason developers don't promote timeshares as an investment (apart from the fact that timeshares only very, very rarely increase in value after purchase – they usually become virtually worthless). 'A few years ago it was said that timeshares should be seen as tradable securities. The developers have strongly opposed this. That would mean that they would have to deal with much more regulation.'
At present, there is no regulation of the industry at the national level in the US. The individual states do have laws, but what they exactly mean differs from place to place. For example, in Florida, where 24% of US timeshare resorts are located, buyers are given ten days to withdraw. In Hawaii it is seven days.
Return
However, one crucial element of the contract is rarely defined: a validity period. Without such a paragraph, when you buy a timeshare, you take on the obligation to pay the annually increasing maintenance costs for life. But when my husband and I got our timeshare tour, we were told: if we ever wanted to get rid of our timeshare, we could do it without any problems. Once it's paid off (most buyers take out a loan for the purchase), you can return the timeshare to the real estate developer, in our case, Diamond Resorts, at any time. According to Gamel, all timeshare companies work like this.
But giving back is not that easy, warn Schreier and Meyer. "It often costs you money to cancel your contract after you've already paid thousands of dollars for the timeshare itself and thousands more in maintenance costs," says Schreier. "And even then , many developers only take back a limited number of timeshares per year."
The bottom line, Meyer says, is that the developers typically have no contractual obligation to take back the timeshare. "So it just depends on whether you have a desirable week in a desirable place." A developer probably wants to take back the week between Christmas and New Year's Eve in a winter sports resort - they can sell it again in no time. But with a week in August in Palm Springs, if it's above 40 degrees every day there, you're probably stuck as an owner.
Exit industry
It is Meyer's day job to help people cancel their timeshare contracts. He usually finds a solution, although he never makes that promise because sometimes it doesn't work. That makes it different from the countless small companies that are active in a shadowy industry that has arisen around timeshares: the so-called exit industry. Gamel, Schreier and Meyer all agree that consumers would do well to stay away from these dubious companies. 'It's very simple,' says Schreier, 'a timeshare is a contract and you need a lawyer to dissolve it.' Gamel has stories of people so desperate to get rid of their timeshares that they give a dubious company tens of thousands of dollars that they never see again.
Meyer also finds these practices objectionable. But at the same time, he says, 'you have to ask yourself why such an exit industry even exists. That stems from the fact that the timeshare industry makes it very difficult or impossible for you to get out of your contract.'
The common argument that many timeshare developers and sellers give (including us, when we were on our honeymoon) is that you prepay for your vacation for the rest of your life, and that's how you commit yourself to taking an annual vacation. Meyer thinks that's nonsense. 'They also say that when you join the gym, that you force yourself to exercise with your subscription. But it does not work like that. Sometimes life gets in the way. The difference is that you can cancel your gym subscription. But you can't cancel your timeshare.'
To be fair, you're not likely to hear timeshare sellers and developers claiming that the product they're selling is an investment. Gamel, of the trade association, says it himself: "You should only do it for personal use and pleasure."
According to Meyer, there's a good reason developers don't promote timeshares as an investment (apart from the fact that timeshares only very, very rarely increase in value after purchase – they usually become virtually worthless). 'A few years ago it was said that timeshares should be seen as tradable securities. The developers have strongly opposed this. That would mean that they would have to deal with much more regulation.'
At present, there is no regulation of the industry at the national level in the US. The individual states do have laws, but what they exactly mean differs from place to place. For example, in Florida, where 24% of US timeshare resorts are located, buyers are given ten days to withdraw. In Hawaii it is seven days.
Return
However, one crucial element of the contract is rarely defined: a validity period. Without such a paragraph, when you buy a timeshare, you take on the obligation to pay the annually increasing maintenance costs for life. But when my husband and I got our timeshare tour, we were told: if we ever wanted to get rid of our timeshare, we could do it without any problems. Once it's paid off (most buyers take out a loan for the purchase), you can return the timeshare to the real estate developer, in our case, Diamond Resorts, at any time. According to Gamel, all timeshare companies work like this.
But giving back is not that easy, warn Schreier and Meyer. "It often costs you money to cancel your contract after you've already paid thousands of dollars for the timeshare itself and thousands more in maintenance costs," says Schreier. "And even then , many developers only take back a limited number of timeshares per year."
The bottom line, Meyer says, is that the developers typically have no contractual obligation to take back the timeshare. "So it just depends on whether you have a desirable week in a desirable place." A developer probably wants to take back the week between Christmas and New Year's Eve in a winter sports resort - they can sell it again in no time. But with a week in August in Palm Springs, if it's above 40 degrees every day there, you're probably stuck as an owner.
Exit industry
It is Meyer's day job to help people cancel their timeshare contracts. He usually finds a solution, although he never makes that promise because sometimes it doesn't work. That makes it different from the countless small companies that are active in a shadowy industry that has arisen around timeshares: the so-called exit industry. Gamel, Schreier and Meyer all agree that consumers would do well to stay away from these dubious companies. 'It's very simple,' says Schreier, 'a timeshare is a contract and you need a lawyer to dissolve it.' Gamel has stories of people so desperate to get rid of their timeshares that they give a dubious company tens of thousands of dollars that they never see again.
Meyer also finds these practices objectionable. But at the same time, he says, 'you have to ask yourself why such an exit industry even exists. That stems from the fact that the timeshare industry makes it very difficult or impossible for you to get out of your contract.'
The common argument that many timeshare developers and sellers give (including us, when we were on our honeymoon) is that you prepay for your vacation for the rest of your life, and that's how you commit yourself to taking an annual vacation. Meyer thinks that's nonsense. 'They also say that when you join the gym, that you force yourself to exercise with your subscription. But it does not work like that. Sometimes life gets in the way. The difference is that you can cancel your gym subscription. But you can't cancel your timeshare.'
--
Cash flow bangers
How attractive are timeshare companies to investors? Most of them, such as Marriott Vacations Worldwide, Hilton Grand Vacations or Wyndham Vacation Ownership, are listed on the stock exchange. According to analyst Patrick Scholes of investment bank Truist, shares in these types of companies are attractive, “especially the free cash flow that these types of companies generate. That money is often paid back to investors through share buybacks and dividends.' In addition, according to Scholes, the companies are somewhat resilient to a recession because the product they sell is prepaid.
1 comment:
I love my timeshare. Don't believe everything in this Blog. Some true, some exaggerated, some false. They are trolling for complaints.
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