I don’t know about you, but the topic of timeshares has never been held with high esteem in my mind, and I had that view without even sitting through a ‘pitch’. I sat through two last week in Hawaii and now understand the disdain many have toward the whole industry and sales force employed within it.
First, let me say that I have close relatives who bought into a timeshare with Marriott nearly 10 years ago and they LOVE IT. That is the only saving grace for the whole industry in my opinion. The reason I bring up this subject is that I feel the whole process was missing some huge components, all centered around due diligence (“the care that a prudent person might be expected to exercise in the examination and evaluation of risks affecting a business transaction”) and would hate for anyone to get caught in the emotion of it all and make a decision that really wasn’t the wisest at the time. I’m not saying that timeshares don’t make sense for some, but the amount of people that were ‘buying’ around me last week made me think that most buy on the spot and don’t give much thought about it.
So here’s my attempt at giving you some things to think about and get answers to the next time you are being told “you’ll own this vacation the rest of your life and will save hundreds of thousands of dollars, too!”
1. How many of us travel to the same place every year and would enjoy doing that for years to come? Now I know you can exchange and use points to go other places, but that seems like just as much work, if not more, as planning a vacation from scratch with the only benefit being that you don’t have to charge it to your card.
2. When you do take vacation, do you always want to stay in a ‘Villa’ style room? There are many times that we just want to go somewhere and be pampered and don’t need a Villa. There again, the points and transfer issue.
3. Looking at the economics of the two offers we were given with two different companies (both very reputable, high quality, and established, large chains) the financial incentive doesn’t start paying off until year 11, assuming your average hotel stay is $400/night and inflation drives the cost up by 3% every year. You can benefit financially if you decide to sell at this point if the timeshare has gone up in value, but that’s if you sell and if it’s gone up in value.
Obviously there was no consideration for the emotional component in this analysis, but that was the whole point. We felt that EVERYTHING in the presentation was based on emotion and obviously lacked a lot on the financial analysis, because there wouldn’t be many who would buy something today that took 11 years to start paying off, so emotion is the hook to be wary of. This could lead to many other buying situations where you should be wary of the emotional sell, but I’ll save that for a later date.
