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Are Timeshares Worth the Investment?

Posted on December 17, 2020

The question whether timeshares are worth the investment is as old as timeshare itself. Consumers for decades have asked themselves whether it is worth it to buy a timeshare. Many are happy with their purchase, but others don’t see the value. The answer tends to reside in the terminology itself as well as a proper understanding of the product.

Most owners are happy with their timeshares. According to figures released by the American Resort Development Association (ARDA), 87 percent of owners say their timeshare experience is either excellent, very good or good. This bodes well for the industry, but that also leave 13 percent, or about 1.3 million people, less than satisfied with their ownership.   

Is It an Investment?

For years, the salespeople at the resort sold timeshare as a financial investment, similar to the way traditional real estate is sold. Because the earlier timeshare products were almost exclusively deeded ownership products where the buyer owned an actual share in the resort, theoretically this seemed to make sense.

In hindsight, the use of the term investment was a misnomer because it gave the impression that the timeshare would increase in value, like a real estate purchase. In reality, timeshare depreciates and financially operates more like a car purchase than a home.

The industry’s use of the term investment in connection with timeshares has changed over the years. Nowadays, the industry uses terms such as “lifestyle investment” when describing a timeshare purchase, since the benefit is more about health and wellbeing rather than a financial gain.

Last year, ARDA published an article discussing the health and productivity benefits of taking an annual vacation. The numbers show that the more vacation time taken, the healthier, happier and more productive the person. This may seem like a no-brainer, but more than half of American workers did not take all of their allotted vacation days prior to the COVID outbreak. This figure is expected to increase this year as workers were obviously limited in their ability to travel for a vacation.

So is the money spent on owning a timeshare worth it? The answer is yes, but much of this depends on how the timeshare was purchased and the ongoing use of the product. This goes to the understanding of the product and how the sales operations function.


Cost Breakdown of a Timeshare

Let’s take the average price of a timeshare sold at the resort. According to ARDA, the average price of a week of timeshare sold at the resort is about $23,000. Adding in the average cost of the annual maintenance fees, which is about $1,000 per year, the overall cost over a 30 year period breaks down to about $1,766 per year, or per annual vacation.  We’ve used the 30 year period since that reflects the potential employment period of an owner when the costs tend to be more affordable.

Now, understand that the prices of timeshares sold at the resorts include marketing costs and sales commissions that can be as much as 60 percent of the overall price of a timeshare. This is why timeshares for sale on the resale market seem like such a bargain compared to the resort prices – because those costs are not factored into resale prices.

So, for the sake of the example, we’ll take the new sale average and reduce it by 60 percent. That leaves us with a resale price of about $9,200. Factor in the maintenance fees and the cost prorated over 30 years for a resale timeshare would be about $1,300 per vacation.

Does it Compare to a Hotel Stay?

Compare these costs to the cost of booking a unit for a week and you’ll get an idea of how timeshare costs stack up. Remember, you’ll always be able to get the Motel 6-type hotel accommodation, but the true advantages of timeshares are the larger units with multiple bedrooms, living areas and kitchens for healthy meal prep.

Since the most popular timeshare configuration is a two-bedroom unit according to ARDA, we’ll use a two-bedroom unit at The Grove Resort hotel in Orlando as an example. To book the least expensive unit on Booking.com for next week, the total cost including tax would be $1,359.06. I realize this is Christmas week, but keep in mind the lower rates being advertised due to COVID. Even the least expensive two bedroom unit in the third week in January would run $1,311.24. When travel returns to pre-COVID levels and these prices start going up, it’s easy to see that locking in today’s costs with a timeshare is a good deal.

Comparing this hotel rate with the cost of a timeshare resale and the rates are more than comparable, but keep in mind the added benefits of a timeshare such as internal exchanges within the brands like Wyndham and Marriott. Wyndham has over 200 resorts within its network, while Marriott has nearly 70. Owning within such groups gives flexibility beyond looking for hotel deals every year.

Just Use It

The key is using your timeshare every year. Timeshare is a use product, so the value is in using the product rather than skipping your vacation. Because timeshares are essentially pre-paid vacations, there is very little reason not to use it unless perhaps an unexpected medical emergency comes up (as we’ve seen this year too many times).

Today’s timeshare products are flexible enough to work around potential work or scheduling conflicts. With exchange companies such as RCI and Interval International, you can exchange the use of your timeshare to choose from over 3,000 resorts worldwide for your next vacation.

Several drive-to destinations are available with timeshare exchanges, so taking flights are not mandatory for your vacations. Wyndham Vacation Club estimates that 72 percent of its guests currently drive to its resorts and is expecting as many as 90 percent of its guests to arrive by car next year as COVID protocols remain in place for travel.

So Are Timeshares Worth It?

We’ve demonstrated that the costs are very reasonable compared to hotels, especially when bought as timeshare resales, so that shouldn’t be an issue. When you realize that this is a use product and shouldn’t be viewed as a financial investment, the issue becomes clearer since the real benefit is possessing a secured, prepaid vacation with the health benefits and family memories that it provides.

The satisfaction numbers certainly show that the overwhelming majority of owners think timeshares are worth it. Where some owners become disheartened with timeshare is when they don’t use it. Maybe because of situations such as changes in the family structure or advanced age, annual vacations may not be a priority like they once were. Many owners have had decades of great vacations to look back on, and they would say it was worth it. But the time eventually comes to sell since it is part of the ownership cycle. 

Anyone looking to sell or buy a timeshare can always contact one of our licensed agents at 877-624-6889 and they would be happy to go over options with you.

Author

Author Pic
Steve Luba
Chief Communications Officer
Steve manages the public relations, social media and content creation efforts of the company. Previously the Chief Operating Officer for Perspective International, Steve provided oversight and contributed articles for the five regional vacation ownership trade magazines under the Perspective Magazine banner. With 34 years’ experience in various roles in radio and television, sales and marketing, public relations, media and government liaison initiatives, he brings a well-rounded outlook to our industry.