what kind of people actually buy vacation club properties?
 

I recently sat through a 2-hour sales pitch... for a $300 gift card from a major hotel chain.

$300 for 2 hours... I thought it was worth it. Hey, when I was in high school back in the '70s, I could manage to sit through the entire day of classes while pretending to be listening to the teachers... :D

However, I'm not sure if it's the sales tactic or the personality of the salespeople... Even if I had any intention of buying into it before attending the presentation, they totally turned me off on the idea... :(

Obviously there are people who do pay good money and sign on the dotted line... I'm just curious as to what sort of people would do that...(age, kids, large family, or what?)

Thanks!

There is a very helpful newsforum called the "Timeshare Users Group". It can be found at www.tug2.net. If you want to find out more about the ins/outs, benefits and such about timeshares/vacation ownership/vacation clubs/etc, then this is the place.

I think you will find that timeshares draw a fairly diverse group of people. If you spend any time there, you will find there there are large and small families, young and old, kids and no kids, etc.

1st rule is that they are generally people on relatively fixed incomes (not necessarily low, but fixed) and more importantly those that have more or less fixed vacation times (Teachers, civil servants, etc).

The timeshare forum did a survey of sorts and they really are diverse and can be on fixed incomes, but can also be 6 figure types.
I own Marriott vacation club and when we bought it we were empty nesters in the top 1% of salaries in the country. We have enjoyed being able to share our vacations with our adult children/grandchildren with plenty of room in great places.
However, I did buy resale which is the smart way to buy.

I would worry about potential selection bias in TUG's survey. This is because people who took the survey had already "self-selected" themselves as inviduals looking to learn the most about the economics of timeshare ownership. As such, the survey may not be representative of the whole population of timeshare owners.

As far as I know, there was no such survey done on TUG and I've been a member for 10 years.

My husband and I just discussed this while we vacationed last week at the Marriott timeshare in Aruba, and came to pretty much the same conclusion.

We saw couples being escorted by timeshare presenters every time we turned around to get another mai tai at the pool ;) and we sat there trying to figure out who would really pay $30,000 for a week in Aruba PLUS $1000 a year maintenance. And then have the added hassle (as many of our friends who are timeshare owners are seeing at this time of year) of not being able to get the primo locations (Hawaii, etc) that you want, and not getting the week that you want.

If you break it down, your timeshare is costing you at least $2000 per week. To us, it seems more logical to just take that $2000 and reserve a hotel room anywhere we want, at dates that are convenient to us.

To us, there seems no "up-side" to ownership. Resale values are a fraction of what you pay so there is no real asset there except for personal use.

Our conclusion was that the timeshares work mostly for people (seemingly so many NYers ;) ) that are making decent salaries but still at or below the $100k mark; own their modest home, and vacation one week a year and want to have that familiarity of the same place and the same people. Owning a timeshare makes them feel like they have this magical vacation home. Since payments are offered, they can pay for it much like another lease on a car. We concluded that most of these people are cops, teachers, or people in other professions where their income doesn't fluctuate much year to year, and they also have little chance of increasing their income by any substantial amount.

We've never felt that timeshare ownership was a good option for us (even though we stayed in a Marriott timeshare unit in Aruba, we were there strictly as hotel-paying guests). Considering all of the hotel points we've accumulated over the years, we don't have a continual need for a budgeted vacation every year. Additionally, our family makeup (3 kids) means that sometimes we need 2 rooms; sometimes a suite. We take many vacations so some are done on the cheap and some are more extravagant. Also, my husbands job comes with bonuses and we often use those bonuses towards an additional vacation.

It must work for a lot of people, however, as the Marriott Vacation Club in Aruba can't build the units fast enough, and there were hoardes of people going on timeshare tours while we were there.

I think your numbers are correct. However, consider the following:

(FYI I am using a cost of $22,000 which is what we paid at Aruba Marriott for a 2 bedroom with April-November usuage. The $30,000 is for a 3 bedroom during winter months.)

At $2000/week, we paid for 11 years of vacations up front. (Plus $800/year in fees) So actual cost is about $2800/year. BUT, this is for a fully stocked 2 bedroom condo (including an in unit washer and dryer) beachfront in Aruba with unbelievable resort facilities.

After those 11 years, its only $800/year. I wonder, with inflation, how much $2000 will get you at a top resort for 7 nights.


We are there this year from Oct 15-22. The Marriott Stellaris resort in Aruba is $2443.00 plus tax for a standard beach front room. We would need 2 rooms for our family, plus not having a kitchen will make food costs greatly increased.

Our income is well into 6 fixgures. We enjoy the condo accomdations we get through the timeshare program. It takes a little work and flexiblity to exchange to another resort, but it works.

In the 70's the timeshare industry rightly took a beating. Fixed week usuage etc was horrible. However, (except for some pushy sales people) the industry is much better.

Its not for everyone. But, it works for us.

Bonuses
 

I know people are skeptical of bonuses but, with time share purchase, you get a boatload of Marriott Points.

When we purchased in Aruba, we received 190,000 Marriott points. Good for more that 7 nights in a cat 7 Marriott. So the first year, we actually get TWO weeks accomodations.

We also own a Marriott week in Phuket, Thailand. When we purchased there, we received 150,000 points PLUS a certificate for 5 night stay at a Ritz Carlton.

For the Phuket bonus, we went to Ritz Laguna Niguel. 5 nights were $2375 plus tax. 150000 points is 7 nights in a category 7 hotel. So for this first year, we got 1 week time share, 1 week Cat 7 and 5 nights Ritz.

I dont think anyone should buy a time share because of bonuses. But, if you figure the value of the bonuses, they can be quite substantial.

We get away 3 times a year or so, plus long weekends. Twice we go for 1 week, and we also take a two week vacation per year.

I love when timeshare people start quoting rack rate equivalents. In the real world with the right shopping you would have to try hard to break a grand at that property.

Timeshares are for all kinds of people, some people love them - some will hate them. While yes there is a deompgraphic that these companies target I have found timeshare owners to be across an array of different socioeconomic and demographics.

My family does not fit the typical mold, but we have 4 timeshares (two from Fairfield and two from PuebloBonito). We very much enjoy our vacation ownership and yes in the beginning we had "problems" but honestly once you educate yourself (which you should do before buying) it can become a great way to vacation.

We have a large extended family and travel easily 6-8 at a time - all the properties we own are two bedrooms or larger - hence it makes sense for us when we take a "big family vacation" I however still maintain my SPG Platinum because I value that for my work and personal travel.

-Vincent

I am sure.

I am Marriott Platinum. I was giving you my currently available rates with their "Look no further guarantee."

Even so, I would need 2 rooms, give up a kitchen etc.

If you dont like timeshares, its up to you. But you CANNOT get 7 nights in Aruba at a Marriott level resort on the beach for $1000.00 in October.

Hotels.com currently lists Marriott for $325/night for 7 days in October plus tax.

But you're not taking into account present values. The present value of $800/year at 7% interest is ~$11,000. The present value of $22,000 is, well, $22,000. So the present value of all of your payments is ~$33,000, assuming you don't sell the timeshare.

Assuming the same 7% interest rate, your interest (compounded daily) on that $33,000 would be ~$2392/year.

So, you could either spend $33,000 and get a week each year at a Marriott, or you could take the same $33,000 and have $2392 to spend each year on whatever you want. If you're getting $5000 of value each year, then buying into the scheme might be a good deal for you.

I appreciate your insight. I am not a huge fan of the word scheme. :)

I believe I am getting that much value from the program.

Also-I am not a finance "guru", so this may be wrong. But it appears that your $33000 (at $2392/year) runs out in 14 years. Ours continues forever because it is deeded property. We still have the $800/year maintenance fees.

I also appreciate that this is not for everyone.

I just get frustrated when people say that under NO circumstances is it a good idea. It is a great idea when you are trying to bring in-laws, kids, kids friends etc.

The other option we have as owners is resale.

If anyone tells you your timeshare will appreciate, they are crazy. But, lets say you use it for 10-15 years and then sell for 1/2 or so of your purchase price.

Not a bad deal.

I dunno, personally I would never stay at a Marriott for a holiday, and find Aruba way too pedestrian, but then again everyone has different tastes/needs.

What he is saying is that 33K invested at 7% interest will yield 2,300 dollars in interest each year. (From now until forever) Of course, inflation would reduce the value of the 2,300 each year. If you controlled for inflation (so that the real value of your annuity payment remained constant) you would have approximately 1,300 2006 dollars to spend each year on vacation. (Assuming you set aside enough money each year to add to the principal in order to keep the value constant).

That's fair. But, as I stated I believe the accomadations value is much higher than $2300/year that when you factor in the cost for similar lodging at a hotel of the same calibre.

I think some people just like the idea/convenience of vacation ownership and don't worry too much about the financials. Mr. 757 came very close to buying into a Marriott Resort in Orlando before we moved there permanently, and we considered Disney Vacation Club off and on for years. We couldn't justify the financials (remember, those maintenance fees go up so you can't count the whole expense as "fixed"). But he really, really just liked the idea of having a timeshare...something to "own" in FL without any hassles. If we hadn't moved here, we probably eventually would have bought one, but we wouldn't have done so because it is a "cheaper" way to vacation...we've savvy shoppers, so that wouldn't have been true for us no matter how a salesman might have sliced and diced the numbers.

Yes, it is most amusing.

In the real world, nobody except suckers and very wealthy people pay rack rate. And most of the very wealthy simply buy their vacation homes outright so they don't have to share.

In the real world, you can find one-week timeshares for rent on ebay for $400-2000.

In the real world you can buy timeshares on the resale market for 10%-50% of the original cost.

In the real world, people discover that they cannot trade a Gold primo week in Williamsburg or Phoenix for a week in Maui or Orlando (particularly through II or RCI).

In the real world, you can find equivalent condos in Hawaii for $700-1500 per week, with flexible checkin dates and time periods.

In the real world, most people could be paying off debt instead of buying a timeshare, so the actual opportunity cost is much higher than they think.

In the real world, many people have discovered that they can buy vacations homes as an investment and rent them out, thereby acquiring an appreciating asset rather than a depreciating timeshare.

Did I hear someone say vacation ownership? Yes that is what it is as you only own the concept of a vacation and pretty much nothing else? (try using your timeshare week as collateral for a loan!)

I am sure you are right about directly borrowing against the timeshare as collateral, but, we just refinanced our house and the lender listed both Marriott timeshares as assets.

When completing the application, we were asked to list "other property including, second homes, vacation home, time share property."

We asked if they were serious and the lender said yes.

They counted as assets towards our net worth

I was very surprised about this.

So am I, although I have heard of baseball cards and comic books counted toward net worth when properly investigated/appraised.

The $33,000, returning $2392/year, will last forever if you earn a constant return of 7%. The $33,000 included the $22,000 you paid and the present value of the $800/year. Once you get out past 15 or 16 years, each extra year does not add much the the present value, so the present value of $800 over the next 16 years is not much lower than the present value of $800 over the next 1000 years.

It's good that you realize you won't be getting your $22,000 back when you sell; but that also means you could probably have bought the same unit for less than half what you paid. So if the perks that you got are worth more than ~$14,000 (I'm thinking you could have paid ~$8,000 for your unit had you looked hard enough), then again you came out ahead. However, "worth more than ~$14,000" does not mean rack rate of $14,000. It means would you have paid $14,000 for the bonus itself, absent the purchase of the timeshare itself. If not, then you paid too much for the timeshare.

I stand by my use of the word "scheme." Marriott sold you a 1/52 interest in a condo for $22,000. That puts the value of the condo at $1.144 million, while a similar unit in a regular condo with similar amenities and location might run $500,000. And that regular condo will likely appreciate because you would have paid market value for it and the market value will likely increase. Timeshares usually don't appreciate because people pay way over the market value at the start.

I should have included my Mickey Mantle rookie cards. :p

And, dont forget, Michael Jackson's entire life is financed by the Beatle and Sony Catalogs.


I just think timeshare owners don't always have to be crazy.

We like them, they work for us and if something else is better for you, that's great.

Reselling Marriott Time Shares
 

In 2005, we did look at the secondary market (Century 21 timeshare resales) for Marriott Aruba before buying. Here's what we found:

When a current owner of a Marriott timeshare offers it up for resale, Marriott gets first right of refusal of the agreed to price.

Someone had a timeshare listed at $15,000. The agent said there was no way for us to get it at that price, Marriott would buy it back. We would need to be $17,500 plus.

Marriott will buy back any timeshare generally within 15% or so of the current market value and resell it themselves.

In order to generally be able to buy Marriott successfully on the secondary market, the owner has to list between 85%-100% of current Marriott costs.

Since Marriott offers other incentives, it is reasonable to think any successful sale would need to be at the 85% level.

I could get about $18000 for my timeshare now.

This "first right of refusal" is more and more common among the top timeshare resorts. There are some out there for sure that don't require this.

Is there any need to be so insulting in this thread? Did a timeshare kill your father?

Nope, they've just wasted my time and I think them to be a terrible "investment".

BTW, just did a search and see that a bunch of 2 BDR's are going in Gold Week etc, for prices starting at $14k, I see 1BR's as low as $8k, hell some of them have 2006 maintanence aid already and many are willing to further negotiate. While there are one or two pe in the sky prices out there, it would not seem that Marriott is doing a good job of protecting the prices.

Saying Timeshares = Bad, is a broad statement. There are 1000’s of timeshare resorts with prices ranging for few hundred $ to several hundred thousand $. I’ve owned a couple purchased on the secondary market. I sold one a couple of months ago on Ebay that I had owned for 7 years, and it went for 30% more than I had paid for it. I’m not suggesting by any stretch of the imagination that they are a good investment, but units on the resale market can be a good value.

They will protect them. It is very difficult to buy at that price. If you enter into a contract for $8000.00 then the owner must offer it to Marriott for $8000 first. At $8000, Marriott would buy it back.

Were those Aruba properties? I know some Myrtle Beach Marriott seasons sell for as little as $7500 retail.

I don't have access to TUG anymore, but it has a historical sales database. I'm sure someone here can tell us what these units have actually traded for in the resale market.

This topic always seems to encourage an active discussion with pros and cons. Generally the people who are in favour say "Hey it works for me" and those against end up saying "You must be crazy, the figures don't make sense", some even get more insulting and personal (like Boraxo in a recent thread elsewhere). The fact is that in many instances there is no right and wrong. It's a question of personal preference.

My parents have four timeshare weeks and have had for over 10 years. They love them and use them to vacation with their grandchildren at various different locations. They couldn't be happier.

We had two weeks and vacationed with our sons when we were pretty much tied to school vacations. Now that our sons are doing their own thing, my wife and I felt that it no longer suited our lifestyle and we sold our weeks. The resort is a popular one and we didn't lose our shirts. We probably broke even over the years. And that is fine. We didn't have the hassle of property maintenance (and I know all about that, I own a holiday property too) and we could try out different places, knowing that the standard of the property would be pretty much in line with our expectations.

It is not all about sums, NPV, payback etc... somethings in life are about enjoyment and convenience. If the hat fits wear it, if it doesn't, let it be.

To each his own. :)

Nope, your property in Aruba. Just type in something Marriott Aruba Timeshare sales, and you'll find a lot of sites with listings for them. Really doesn't look like Marriott is doing what they are supposed to (unless of course they accept those prices as just slightly below the market rate??)

Five years and a Four Seasons timeshare later, Vacation ownership stilll makes sense to me. The demographic described earlier in this thread fits your average timeshare owner. However, you are looking at a different demographic with respect to Marriott, Hilton, Starwood & Four Seasons timeshare owners.

Call them tips, tricks or just simple anecdotes about hotel timeshares.

* Always buy resale to keep the costs down.
* Where you buy does not matter in some cases. HGVC Orlando is 40% less than HGVC Hawaii and the only thing you are limited to is a 9 month window instead of a 12 month one.
* Almost all hotel timeshares are located in the same resort area as their hotel counterpart. Westin St John, HHV, Westin Keirland, HWV, Four Seasons Aviara. For a slower pace at the villa side, you get more spacious accomodation with full kitchen. People tend to buy timeshares when they need more space. Paying for two hotel rooms or sharing one with kids is no fun anymore.
* When comparing numbers, keep the cost of capital in mind. Remember, you are paying tomorrow's vacation in today's dollors. The maintenance fee will go up but so would inflation and your requirement for more space. i.e. bigger family or older kids.
* Like Point Strechers & Cash and Points, timeshare points can be streched by using them for a smaller(1Br) unit or in a different season. Also, smaller exchange companies go all out to get your premium quality deposit.(SFX and its 3 week for 1 promo).
* For the past few years, I have rented half my HGVC points for double of my Maintenance fees. The other half has been banked with SFX for resort exchanges like Grand Mayan, Hawaii, Westin Keirland etc.
* It may be anecdotal but my total out of pocket expense for the week at Westin Keirland Villas was $129 for the week. At $18+ per night, I am not complaining.

I know those properties are listed at low prices. What I am saying is that ANYONE can list for any price they want and Marriott has the right to buy it first-after contract with a potential seller.

I don't believe there is access to data indicating the sales price of Marriott to another individual on the secondary market, but I doubt you would see settled prices in the ranges you describe. Most of these end up back with Marriott. That is what happened to a week at Aruba we looked into.

As for one aspect of the OP's question, many timeshare operations won't let you even sit in on the presentation unless you're married.

I sure don't fancy myself a timeshare-type of person, but next week my girlfriend and I will be staying in one in Maui for a 6 days. My buddy's father let him use it this year for his 10 year wedding anniversary. He invited us to stay there with him and his wife for free. From my perspective, it ain't too shabby...but I'm not the one paying for it. :) Used miles for the flights and credits for the convertible, of course.

So anyway, I'll get the chance to experience the timeshare thing for the first time. Regardless of how things turn out, I won't be buying one. I still haven't found the place where I'd want to vacation at every year into the forseeable future (yeah, yeah, I know you can swap for another place for another fee). It will be interesting to check it out, however.

I never thought I'd be into all-inclusive resorts either, until I went to Sans Souci Lido in Jamaica for another buddy's wedding a number of years ago. That place was awesome! I tried pretty hard to get my money's worth from the bar and restaurants/room service. :cool:

The top end vacation club is www.exclusiveresorts.com - Their villas and apartments are stunning and worth several millions and nobody could ever get into these at the price of Exclusive Resorts. Unfortunately the locations are not good for Europeans and 45 days is a long time to purchase.
Thus we opted for two weeks at the Four Seasons Residence Club Aviara, good for golfing in the sun with friends. And the accomodation is far superior to almost any hotel suite. One gets good golf privileges, can exchange for the Scottsdale and soon hopefully Punta Mita property, etc.

http://www.fourseasonshotel.com/resi.../villa_49.html

Annual fees are 1838 per week, but considering Four Seasons rents the villas out for 9100 per week, this is a good deal.

As I stated earlier, TUG has a database of timeshare sales. Although the data points are self-reported, there's no reason to believe that they're inaccurate.

I'm starting to think this "protected" scheme that Marriott uses is solely to try to keep the resale prices artificially high. Buyer goes to broker, says they want to buy Marriott Aruba, broker says there's one listed for $12k but tells buyer that Marriott would never let the unit change hands for that little, so buyer then says either "what the hell, I'll offer $12k and see what happens" or "maybe I should offer a little more than $12k." That way, the unit changes hands for at least the listed amount and prospective buyers will rarely offer less than the asking price, even though there's a great chance that the seller will accept and that Marriott won't object.

I think you are correct. Marriott has unlimited resources. It is in their interest to buy the property at $12k and resell higher.

Because Marriott processes the change of ownership, it is almost impossible to sell to another party without following the procedure for offering the price to Marriott before settlement.

No matter what they may put in a contract regarding a 'put" in actual fact there may be little if anything that they could do about it. I can think of at least a dozen ways that one could sell or transfer ownership in ways that Marriott could not interfere with, and those would be if it were only happening in one country. In this case you are talking about at least two. I would be really curious to know if Marriott ever actually really put money up, or its just a talking game to give people confidence and is rarel if ever acted upon.

The only info I can give is anecdotal.

When we looked into purchasing on the secondary market, the broker we were working with told us that the "low ball" prices would be scooped up by Marriott.

The trick is that the "low ball" prices are people that need to get out fast. But, Marriott will not buy at all until another party offers a contract at a certain price.

As far as Marriott controlling it, the deed/contract with Marriott gives them first right of refusal. All ownership info, maintenance fees and usage is maintained through them, any title work would be flagged at settlement. You are buying deeded property. I bet their is a lien or note on the deed or something.

Even if all paperwork was signed, I bet Marriott could initiate a cause of action against the original owner (if they wanted to).


They could, at least, make it impossible or difficult for the new owner to use.