Posted on October 23, 2020
No matter what product you buy, the question of whether that product is worth buying in the first place is always a primary consideration. Could be a car, a house or even a new pair of jeans. The issue generally boils down to the desire for the product in the mind of the consumer compared to the cost and likelihood of the product being used. When it comes to timeshares, the question of whether timeshares are really worth buying comes down to the same general factors. But with one major difference.
According to the American Resort Development Association (ARDA), 85 percent of owners have either an excellent, very good or good rating for their ownership. But many, if not most, of the other 15 percent of timeshare owners who are disillusioned with the product bought timeshare directly from the resort rather than as a timeshare resale.
Even so, the number of owners who are comparatively unhappy with the product is a small number compared with the overall number of satisfied owners.
However, that still leaves some owners questioning their purchase. This debate leads to commentary from notables such as Dave Ramsey, who prattles on about timeshares as a paid spokesman for a questionable timeshare exit company currently under Attorney General investigation.
So are timeshares really worth buying? Let’s look at the issues so you can judge for yourself.
The answer in most cases is yes, since who wouldn’t want to vacation in a luxury resort in a great vacation destination every year? Even in the midst of the current pandemic, 70 percent of U.S. and Canadian travelers say they plan to take a vacation next year. So if they want to vacation, they will look for destinations and the accommodation options to enjoy that destination.
In many cases, timeshare resorts will come out on top when comparing timeshare accommodations against hotels. Timeshares that are condo-style with multiple bedrooms, separate living and dining areas and kitchens to prepare healthy meals certainly have to outweigh the usual hotel room. Spreading out in a holiday apartment versus piling onto the hotel bed eating take out. Advantage, timeshare.
This can be a tricky one to predict. As we’ve all seen over the last eight months, travel plans can be upended in the blink of an eye. Circumstances can change and significantly alter people’s plans to vacation. But let’s look at this in terms of prioritizing vacations as a lifestyle decision.
At some stage the pandemic will recede and travel plans will resume as normal. It may take longer for some than others, but eventually people will start to vacation again on a regular basis. When this happens, the ones who prioritize an annual vacation will be in a perfect position to enjoy a timeshare.
The good news is that timeshares are being used even in the midst of the pandemic. Occupancy rates are up and higher than for hotels, with the hotel rate in August at just over 48 percent according to Statista.com. Compare that to Wyndham Destinations, the largest timeshare operator in the world, which had a 58 percent occupancy rate in August and 77 percent over the Labor Day weekend.
Bluegreen Resorts fared even better, with July occupancy at 68 percent for the most recent publicly available data. In its July earnings call, Hilton Grand Vacations reported very solid occupancy numbers in key states such as South Carolina (70-90% range) and Utah (85-95% range) since reopening its resorts.
The issue becomes one of prioritizing a vacation. According to a survey last year by the U.S. Travel Association, 55 percent of Americans did not use all of their allotted time off in 2018. Obviously 2020 will have lifted this percentage even higher. This is expected to improve next year, with the demand referenced earlier, as more people emerge from their various lockdowns eager to get out and vacation.
We talk to people on a regular basis who say that a main reason they want to sell is because they just don’t use their timeshare. Maybe they’ve used it once or twice but they don’t really understand how to use it or don’t make it a priority. There seems to be a correlation between satisfied owners who use their timeshare and unsatisfied ones who don’t use it. The issue doesn’t appear as connected to the quality of the actual product as much as the ability to use it.
Because of the way the product has evolved over the years to add more flexibility to ownership, especially with floating weeks and points programs, it is easier to use than in the early years of timeshare. This essentially gives owners a sliding scale to book their vacations, which can allow for changes in schedules and planning around major life events.
Vacations on a regular basis are also excellent for health reasons. That may seem obvious, but industry website VacationBetter.org cited a study a few years ago showing that regular vacations improved cardiovascular health in men and women and decreased depression. These are documented health benefits just by getting away on a vacation.
It seems simple. If it is a priority then people will get the benefit by using their timeshare. If not, they won’t.
This is the major difference I was referring to earlier, since the difference is whether a timeshare is bought as a new timeshare at the resort compared to a timeshare resale on the open market.
The average cost of a week’s worth of timeshare is just under $23,000 according to the latest ARDA statistics. Hidden factors are the sales and marketing costs that are part of that price tag since the resorts recoup those costs when new owners buy a timeshare at the resorts. It costs resorts money to get people on the premises and give them those gifts and discounted long weekend deals, in addition to paying the commissions to the sales people. Those costs add up to about 50-60 percent of the overall sale price.
On the timeshare resale market, a buyer is purchasing from an existing owner so those sales and marketing costs don’t factor in as much, if at all. By removing those costs, buyers can start with a more equitable idea of the cost of a timeshare before looking at factors such as the unit configuration, season and location of the resort.
With the substantial discounts on the resale market, it is easier to do a cost comparison for buying versus renting, which can be part of the process for prospective buyers. After all, vacationers who travel on an annual basis will pay one way or the other for accommodation, so the issue becomes whether it is worth buying a timeshare or just sticking to paying as you go.
Let’s take Marriott Grande Ocean resort in the Marriott Vacation Club as an example. The cost of staying at that resort in the first full week of June (week 23) by booking a two-bedroom unit online is $689/night as of the time of this writing. That adds up to $5,354 with taxes and fees for a week of accommodation, as you can see below.
A two-bedroom unit at the same resort for a floating Gold Season ownership (which includes week 23) is available on our site for an asking price of $16,400. Annual maintenance fees are about $1,450 for the week, so over a 20 year period the cost would average out to about $2270 per week or $324/night. That’s less than half the price of booking the unit online. Even over 10 years it averages $441/night and still a substantial saving over the online booking rate.
This example removes the impression that somehow timeshares are not worth buying. Sure, you can find smaller, cheaper accommodation elsewhere, but this apples-to-apples comparison shows that timeshares on the resale market can be a great buy if handled properly.
If you have any questions or need more information about buying timeshare, you can call us at 877-624-6889 and one of our licensed agents can consult with you over the phone.