Times have changed in the 25 years since Art Merrick, who lives on an island outside Seattle, bought a time share that guaranteed him four weeks of vacation at a Washington state resort near Cascade National Park.
Melting away are the days of the high-pressure sales presentation in which customers were given incomplete or inaccurate information and forced to decide within minutes whether to spend thousands of dollars on a resort that was nothing more than a few drawings and some blueprints.
Fading, too, are most of the telemarketing calls that used to flood consumers with offers of a “virtually free” vacation in return for sitting through a sales presentation. The Federal Trade Commission’s do-not-call list and trouble with prequalifying potential customers have all but ended that practice.
And apparently gone are the fly-by-night operators that prompted federal and state investigations and lawsuits from the 1970s to early 1990s. Today, there are major hotel chains pushing the product, and they don’t want to damage their reputation over a $15,000 time share.
One thing, however, hasn’t changed. Just like a new automobile, most time shares drop in value rather than appreciate.
“It’s a buyer’s market out there. It has been for years and years,” said Bill Rogers, founder of the Timeshare User’s Group Web site, www.tug2.net. “You can get a time share [from an existing owner] for less than 50 cents on the dollar.”
In fact, he said, consumers buying time shares from another consumer pay an average of $5,000 compared with the average $14,800 price if purchased from a developer.
Despite that issue, sales of new time shares are booming. Nearly $6 billion in sales were recorded in 2003 at the nearly 1,600 U.S. resorts offering time shares, an 11 percent increase over 2002, according to Vacation Ownership World, an industry trade publication. About 3 million U.S. households own time shares at U.S. resorts.
Helping drive sales is a dramatic change in what is being sold. Rather than focusing on selling the traditional one-week-at-one-resort time share called an interval vacation, most developers are selling points that allow you to make shorter stays at more resorts.
The points system also has made it easier to trade vacation time through exchange companies, which allow you to trade time at resorts worldwide.
“Trading has turned out to be almost as important as the [home] resort,” said Merrick, an account executive for a public affairs consulting company. “I’ve traded perhaps 30 times, and only once have I gone away disappointed.”
But the biggest change in the industry has occurred in the past decade, when some of the nation’s largest hotel companies entered the market. Now you can find the likes of Marriott, Hilton, Hyatt, Starwood Hotels & Resorts and Disney selling time shares.
“The publicly held companies brought to time sharing the Good Housekeeping seal of approval,” said Sheldon Ginsburg, chairman and chief executive of Northbrook, Ill.-based Shell Vacations Club, one of the nation’s 10 largest time-share companies.
“This past year, we had our eighth consecutive year of 20 percent increases in sales,” said Ed Kinney, a spokesman for Orlando-based Marriott Vacation Club International. Marriott Vacation Club, a subsidiary of the giant hotel operator Marriott International Inc., is the largest seller of time shares. It sold $1.22 billion in time shares in 2003.
“We have so much value at stake in our customers we couldn’t risk putting any pressure on them that would displace business out of our hotels. Branded companies just can’t risk those lifetime customers,” said Kinney.
“The big hotel chains more or less legitimized the business when they got into it in a big way three or four years ago,” said Rogers, who founded the Timeshare User’s Group after years of listening to friends complain about the tactics used by many time-share companies.
“Sure, there will be exceptions to the rule, but they’ve taken the pressure off the sales presentation. The whole industry has gotten quite a bit better.”
Despite the growing appeal of time shares, many problems remain, including brokers cropping up that offer to sell a time share in return for an upfront fee of several hundred dollars.
“Their goal is to get the fee and not sell the time share,” said Larry Hayden, owner of Timeshare Resales Worldwide.
“Education is the key to owning a time share,” said Rogers, who said it takes time to evaluate the company running the vacation destination as well as the company that sells the time share.
Merrick adds that time shares are not for everyone.
“You have to be pretty organized,” said Merrick, who begins planning his family’s vacations a year in advance.
Is there any way to recoup your investment if you want to sell your time share?
Resales have “always been the biggest weakness in time sharing,” said Ginsburg. Shell Vacations Club is testing a program to assist its time-share owners with selling their units.
Hayden, whose Web site (www.vacation-realty.com) provides a wealth of information for resellers, said that many owners receive 50 percent of what they paid, but there are many others who receive far less, as little as 30 percent of what they initially paid.
However, resales at premium resorts, operated by such companies as Marriott, Hilton and Hyatt, can be for as much as 85 percent of the original purchase price.
“It’s a lot like driving a new car off the dealer’s lot. Half the value is lost as soon as it is sold,” he said, noting there is little demand for studio units or off-season weeks.
Hayden said sellers must realize that when they sell, they’re getting more than the check the buyer gives them. They should focus on the obligations they are getting out of, “the maintenance fees and taxes which go on forever.”
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Online sites worth the time to check out
Information about the time-share industry is available from many sources, from the consumer-run Timeshare User’s Group (www.tug2.net) to company-run Web sites such as Your Guide to Timeshare (www.guidetotimeshare.com).
– American Resort Development Association (www.arda.org), the industry trade group, also has extensive consumer information at its Web site.
– Marriott Vacation Club International (www.vacationclub.com) is the largest seller of time shares. Cendant Corp., the second-largest time-share developer and one of the largest operators of hotels, operates two time-share development companies, Fairfield Resorts (www.efairfield.com) and Trendwest (www.trendwest.com), and the nation’s largest time-share exchange company, RCI Inc. (www.rci.com).
– Other major players include Hilton Grand Vacations Club (www.hgvc.com); Disney Vacation Club (http://dvc.disney.go.com/dvc/index); and Shell Vacations Club (www.shellvacationsclub.com).
–John Schmeltzer
