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Fixed length RTU timeshares

gravityrules

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Why doesn't the TS industry sell fixed length RTU contracts? I understand some systems like Disney may have an end defined but it seems most of the systems do not.

There's a demographic wave coming, or already here, that is going to make selling perpetual, open ended contracts, particularly to existing 'members', more difficult.

Wouldn't it make sense (and be profitable) to offer 10 year, 15 year, 20 year contracts? Wouldn't that also lower the default rate and put a dent in the TS exit scams?
 

SteveinHNL

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Seems to me that TS companies would rather have you locked in for MFs for life rather than having them automatically revert at the end of a term, in which case the developer becomes responsible for those MFs until they can get them resold. I think the goal is to have us on the hook for MFs for the longest possible period, realizing that most perpetual deeds really are RTUs measured by the owner's life, at which time they are mostly likely to become non-performing and then thrown back into the pool. I'm guessing marketing and resale require a substantial amount of budget to maintain in place, so why would the developers and association sign up for that?
 

bnoble

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For most timeshare developers, the rate-limiting step is not the availability of inventory, but the willingness of a buyer to buy. Recycling inventory every ten (or fifteen or twenty) years doesn't really help them, but the DVC-style end dates (50 years) also don't really provide the exit that you seem to have in mind.
 

WaikikiFirst

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Why doesn't
Totally non-PC, but the TS industry sells full-price developer deeds to suckers. Once you get the sucker on your hook, why would you want to let him/her/them off after only 10 yrs? Hook em. Hook em good. Besides, what would happen to the "Lifetime of Awesome Vacations" pitch?

maybe more PC: selling $40K ... $50K ... $100K TS contracts is a predatory practice. There is not a fundamental exchange of equal value to it. Predators do not just take a nibble.
 

gravityrules

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Totally non-PC, but the TS industry sells full-price developer deeds to suckers. Once you get the sucker on your hook, why would you want to let him/her/them off after only 10 yrs? Hook em. Hook em good. Besides, what would happen to the "Lifetime of Awesome Vacations" pitch?

maybe more PC: selling $40K ... $50K ... $100K TS contracts is a predatory practice. There is not a fundamental exchange of equal value to it. Predators do not just take a nibble.

Aren't the majority of developers selling some form of RTU, i.e. points?

Yes, they can keep working the same 'model' but the marks are aging out. At some point the revenue from this model will decline. A term limited RTU is effectively a lifetime of vacations if you're a boomer.
 

silentg

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I had a RTU that expired and I have another that expires in 2029.
It makes sense especially because we are in our 70 s now. We want to keep traveling as long as we can. Lots of fun times ahead hopefully.
 

LannyPC

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Why doesn't the TS industry sell fixed length RTU contracts?
Because the idea that developers try to pitch to buyers is that the buyers are buying saleable real estate. For instance, you would not buy a house with a "fixed length RTU [contract]". It's something that you buy in perpetuity. And if you die while owning the house, this valuable, saleable asset goes to some lucky heir(s). Developers and TS companies try to compare owning a timeshare to owning, rather than renting, a house.
 

buzglyd

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From what I’ve been told, (not from a salesman) that it’s due to the way the developer has to pay tax on the sale. RTU the tax needs to be paid immediately and deed they can spread it out. I don’t know how accurate that is.
 

gravityrules

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I thought the sales pitch had moved away from the concept of real estate ownership to the idea of 'vacation ownership'. Beyond the sales pitch though, what is actually being sold today? Are the trust based points systems (Marriott, Wyndham, etc) deeded ? Is DVC deeded? Does 'deeded' equate to 'real estate ownership'?
 

WaikikiFirst

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idk why you equate trust-based pts with RTU, but I don't own TBPts, so maybe I am missing something?????????????
Don't TBPts require an annual payment (MF) in addition to annual member fee?
Do TBPts have a stated limited lifetime membership? ("fixed-length" in your header)
 

gravityrules

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Some points based TS systems are overlays on fractional real estate ownership, I expect those owners have deeds.

With a trust based TS system (whether points or weeks) doesn't ownership (and deeds) remain with the trust rather than the member? Perhaps that's only true for some systems. IDK, others more familiar with their system can provide details.

My TS is a membership based perpetual RTU. I do not have a deed.
 

sponger76

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Are the trust based points systems (Marriott, Wyndham, etc) deeded ? Is DVC deeded? Does 'deeded' equate to 'real estate ownership'?
I don't know about *all* systems, but trust-based points for Marriott, Sheraton and Westin are definitely deeded and are considered to be real estate ownership, with the deeds recorded by the relevant counties just like other real estate.
 
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easyrider

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Aren't the majority of developers selling some form of RTU, i.e. points?

Yes, they can keep working the same 'model' but the marks are aging out. At some point the revenue from this model will decline. A term limited RTU is effectively a lifetime of vacations if you're a boomer.

In the USA , we have Vacation Internationale that sells rtu's. Our first VI membership expired a couple of years ago. We were able to buy another to take it's place that will expire in about 8 years. Our Mexico memberships are older Premiere membership rtu's that started expiring a couple of years ago. Our last four weeks will be gone by 2030.

I think you are right about the demographic and revenue model. A fixed rtu makes sense in that the resort doesn't have to foreclose and the member eventually is out.

Bill
 

bizaro86

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RTU sales are an accounting issue for public companies. For a lease a public company recognizes the revenue from the lease equally over the length of the lease. Whereas for a sale they recognize all the revenue at the time of sale.

It doesn't change the actual economics, but would make their earnings look worse for wall street, which is a high priority for the developers.
 
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