What's wrong with Timeshares and can the industry survive these issues?

[trooters]

Advertising and promotion is not 50% of the expenses for the timeshare companies. Building the resorts themselves is the largest portions of their costs. Just operating the resorts is expensive too. Cypress Harbour must have hundreds of employees to keep it in tip top shape.

Actually, if you look at the 2023 Marriott Vacation Worldwide annual report, Marketing and Sales totaled 56% of sales revenues for 2023. So the rough 50% claim is indeed accurate.

What you are referring to is the cost of operating the actual resort. Those operating costs fall under 'Cost Reimbursement' in the same financial statement, which is really funded by maintenance fees.

Lastly, in the same annual report, the cost of acquiring the time share inventory (to sell) is roughly $0.15 on the dollar for what the revenue generates.

 

[boyblue]

But isn't that one of the selling points the sales people give buyers? "Why rent when you can own?" "If you buy at our 'special' rate today, you can easily turn around and sell it down the road for a lot more than what we're selling it for you today for."

They first hit us with two big truths, we deserve a break & buying will insure we take a break. Then the half truth, when you don't want to come, you can use your TS to go anywhere. You can, but it's not easy and there are lots of hidden costs. After that there are some lies sprinkled in before the closer comes in with givaways to close the deal. Generally, they wouldn't bring up the question of resale and of course they would lie because it's only what's in the contract that matters.

I own Magic Tree in Orlando. Mf's are $625 which is what I was told they were about 20 yrs ago. They actually lowered mf's to $600 during COVID and are now going back to $625 in 2025. Bought my first one in 2019 and now own 3. They will give you a 1bd for free. 2bd usually between 1k and 2k. if they have one. I have a total of 3500 for my 3 weeks which are 2bds They also do a quick deed when you buy which cost around $100. and your done so buy right from the resort. They are floating weeks but I never have a problem getting the week I want but I book early. I have booked Christmas & new years since we bought without any problems. This year staying spring break also. It is a gold crown resort and trades well. I just got here from key west which I traded a week for. $600 + $250 trading fee. I know Orlando is overbought but it trades well.

Magic Tree has some really good stuff going, but you can't build a TS for $1K per unit and of course no one on TUG would pay the cost much less a moderate profit for the developer

Those free gifts costs pennies to the developers.

It turns out I was wrong on this one, develo[ers don't pay for this stuff, the buyer does. It's all put into closing cost and financed along with the cost of the TS. It is not considered a part of the purchase price.

We purchased in part to force us to take vacations. Work is always present and many times we spend a couple hours a day on vacation with laptops and coffee looking at the ocean.....

I wouldn't call it complete freedom vacation, but it doesn’t seem like work either.... Compromise to live a better life. Some might even say must be nice!

This has been my experiance, so no matter the cost, I love timesharing.

100% untrue.

The OPC who ropes people in for a timeshare tour are typically the most well-paid people in the entire operation. They don't have to do anything besides lure people in with "free" gifts. They get paid whether the salesperson closes the deal or not. And they get paid even more when a sale is made. And even more if quotas are reached.

THAT is where all the money goes. It it weren't for the OPCs, timeshares wouldn't be any more of a dumb financial purchase than a new car. It'd depreciate about as much once the ink dried. And it would have more resale value because it wasn't egregiously overpriced to begin with.

This is actually the case. OPC's gets paid for every one that shows up as long as they meet the developer's requirements, and as TS become a more difficult sell their pay is increasing. I've heard of as much as $300 per qualified person

Actually, if you look at the 2023 Marriott Vacation Worldwide annual report, Marketing and Sales totaled 56% of sales revenues for 2023. So the rough 50% claim is indeed accurate.

What you are referring to is the cost of operating the actual resort. Those operating costs fall under 'Cost Reimbursement' in the same financial statement, which is really funded by maintenance fees.

Lastly, in the same annual report, the cost of acquiring the time share inventory (to sell) is roughly $0.15 on the dollar for what the revenue generates.

When I first considered this issue, I thought Mariott should let ROFR kick in at a higher price to protect the brand, but if the owner doesn't appreciate the value of his ownership and is willing to give it away that shouldn't matter to Mariott and it doesn't. Their value is established by the owners that use and enjoy their timeshares and the resale owners that appreciate the gift of heavily discounted ownership.

 

[ScoopKona]

It turns out I was wrong on this one, develo[ers don't pay for this stuff, the buyer does. It's all put into closing cost and financed along with the cost of the TS. It is not considered a part of the purchase price.

The buyer pays for everything. It's the same with a regular real estate transaction. Who pays the commissions? ALL the commissions? The buyer. Where the money falls on the line-item statements is irrelevant. The buyer writes the big check, and then everyone gets paid from that.

People who figure this out can do well as real estate investors. Those who think buyer's agents are "free" will never do well with real estate.

 

[rickandcindy23]

Magic Tree is a very old resort, the developer already made the money many years ago. @boyblue It's been updated to get status with RCI, but it's still an old resort. I wouldn't buy it, and I don't understand why it has been rated higher than some of the better resorts in Orlando.

We own at a very small resort in Frisco, CO. It's older, built in the early 80's, and it needs major updates to bring it up to the level deserving of the area and of the value of the underlying real estate. Can we afford to update it? Nope.

 

[boyblue]

Magic Tree is a very old resort, the developer already made the money many years ago. @boyblue It's been updated to get status with RCI, but it's still an old resort. I wouldn't buy it, and I don't understand why it has been rated higher than some of the better resorts in Orlando.

We own at a very small resort in Frisco, CO. It's older, built in the early 80's, and it needs major updates to bring it up to the level deserving of the area and of the value of the underlying real estate. Can we afford to update it? Nope.

Hey R&C, 34k posts, you guys are like senior statesmen (and women) now, that's pretty cool. I may be wrong but didn't Cindy most if not all of the posting?

I have a question for you, TUG is what it is, we're here to make good out of other people's throwaways, but I was wondering if a developer were to build something like Magic Tree today, with MF around $600 in an area where you can rent easily for $1,000 what do you say would be a fair price?

 

[dioxide45]

Hey R&C, 34k posts, you guys are like senior statesmen (and women) now, that's pretty cool. I may be wrong but didn't Cindy most if not all of the posting?

I have a question for you, TUG is what it is, we're here to make good out of other people's throwaways, but I was wondering if a developer were to build something like Magic Tree today, with MF around $600 in an area where you can rent easily for $1,000 what do you say would be a fair price?

Your posts really seem to be about a lot of hypotheticals. I think you are putting too much emphasis on rental price in how most people value a timeshare. Very few owners actually rent their timeshares and most don't buy comparing it to rental values. They buy it because they were in a state of euphoria when on vacation and put into a pressure cooker presentation. Even if a resort could rent for $1000 with a $600 MF in Orlando, it would probably still resell for $0.

 

[rickandcindy23]

Hey R&C, 34k posts, you guys are like senior statesmen (and women) now, that's pretty cool. I may be wrong but didn't Cindy most if not all of the posting?

I have a question for you, TUG is what it is, we're here to make good out of other people's throwaways, but I was wondering if a developer were to build something like Magic Tree today, with MF around $600 in an area where you can rent easily for $1,000 what do you say would be a fair price?

You could not easily rent Magic Tree for even $600 for the week. No profit there.

Orlando is overbuilt with much nicer resorts that rent for MF's. Bonnet Creek is a resort you can make money by renting, but you can also get into big trouble doing it, which is what happened to us.

 

[boyblue]

You could not easily rent Magic Tree for even $600 for the week. No profit there.

Orlando is overbuilt with much nicer resorts that rent for MF's. Bonnet Creek is a resort you can make money by renting, but you can also get into big trouble doing it, which is what happened to us.

I'm sorry, I realize I wasn't clear at all. I meant if an independent developer were to do a small resort keeping fees low like Magic Tree, in a place where rent is at least double MF and although there's currently a shortage, anticipate there will come a time when units will go unrented...

In your opinion, what's a fair developer price?

 

[AwayWeGo]

In your opinion, what's a fair developer price?

My opinion is biased against all developer prices for timeshares.

That's because of the horrific gap between what developers charge -- i.e., $25,000 & up -- & the actual real world, free market value of those same timeshare units, which is lots closer to zero.

It's also because of the high-pressure, psychologically manipulative, guilt-tripping, truth-stretching, misleading, underhanded sales methods typically used to get timeshare rookies to sign on the dotted line for timeshares they had no idea they wanted when they walked in, much less any knowledge of the true value of what they ended up buying for big bux.

-- Alan Cole, McLean (Fairfax County), Virginia, USA.​

 

[boyblue]

My opinion is biased against all developer prices for timeshares.

That's because of the horrific gap between what developers charge -- i.e., $25,000 & up -- & the actual real world, free market value of those same timeshare units, which is lots closer to zero.

It's also because of the high-pressure, psychologically manipulative, guilt-tripping, truth-stretching, misleading, underhanded sales methods typically used to get timeshare rookies to sign on the dotted line for timeshares they had no idea they wanted when they walked in, much less any knowledge of the true value of what they ended up buying for big bux.

-- Alan Cole, McLean (Fairfax County), Virginia, USA.​

So I guess the right price is in the middle of the $22,390 average (Google) and zero, but that's inaccurate. Just because the resale was paid for and given away doesn't make it worthless. Most of those monstrosities cost a lot more than $11,195 per unit to build.

 

[rapmarks]

Your posts really seem to be about a lot of hypotheticals. I think you are putting too much emphasis on rental price in how most people value a timeshare. Very few owners actually rent their timeshares and most don't buy comparing it to rental values. They buy it because they were in a state of euphoria when on vacation and put into a pressure cooker presentation. Even if a resort could rent for $1000 with a $600 MF in Orlando, it would probably still resell for $0.

And with those maintenance fees, I wonder how much the reserves are.

 

[boyblue]

Your posts really seem to be about a lot of hypotheticals. I think you are putting too much emphasis on rental price in how most people value a timeshare. Very few owners actually rent their timeshares and most don't buy comparing it to rental values. They buy it because they were in a state of euphoria when on vacation and put into a pressure cooker presentation. Even if a resort could rent for $1000 with a $600 MF in Orlando, it would probably still resell for $0.

100% agreed! this is actually my pet peeve. TS salesmen are no longer selling their location, they're selling RCI or multiple location TS companies. I suggest that trading is expensive and should be avoided. They're renting our best weeks anyway and giving us leftovers. We should all buy where we can easily rent and rent when we don't go there.

 

[ScoopKona]

I suggest that trading is expensive and should be avoided. They're renting our best weeks anyway and giving us leftovers. We should all buy where we can easily rent and rent when we don't go there.

Trading isn't expensive. And I've been doing this for more than 20 years. I've never once stayed in what I own. I used to live there. I have better options for accommodations if I return home.

I think you should rent timeshares for a few more years to see how they work. Ownership right now would be a mistake. Furthermore, I see rental as "the last resort" in a use-it-or-lose-it scenario. The value (if any) of owning a timeshare is using it to take vacations. It isn't an investment. Anyone who wants an investment could drop money into VTSAX and do better than owning a timeshare.

 

[WaikikiFirst]

that's inaccurate. Just because the resale was paid for and given away doesn't make it worthless. Most of those monstrosities cost a lot more than $11,195 per unit to build

many things end up being worth less than they cost to construct or to acquire. GAAP even has std methodologies for when this is true and it happens all the time to maybe the majority of large companies.
Why would the room(s) that make up a TS, in particular, end up being less than their proportion of the cost to build the whole place? My guess is that the OVERHEAD of being a TS is just too much and part of that is simply due to the attitudes of the vacationers. If they spend $200K building a condo, it then gets sold to a person who lives there. Maybe there is a person who mans a front desk. But there is not constant check-in/out, no cleaning service, and no group of stragners telling the person when & how they have to "maintain" the place with the latest & greatest fads.
For a TS, the OVERHEAD of constant flow of traffic thru the place and the extra service and BLING that vacationers want drives up MFs and it is the high MFs that make the TS worth little, regardless of how much it cost to build.
or not ....
but if people wanted their TS to be worth more and if they could trust the HOA (developer) to not stuff the budget, they could just stop demanding so much BLING. But then it wouldn't rent as well to non-owners, cuz the non-owners come for the BLING.

 

[WaikikiFirst]

putting too much emphasis on rental price in how most people value a timeshare. Very few owners actually rent their timeshares and most don't buy comparing it to rental values

now you're getting into the delta between retail and resale buyers. You're discussing retail buyers. This whole thread (not that I can say I read it all or track the convoluted offshoots) seems to be about just that difference. I, for one, 100% bought mine comparing to rental values.
"I think I will travel here to stay in this place or one very much like it every year for the next 10 yrs, and I don't have a GO-TO place to stay. It seems owning this will save me $1000/yr (maybe more) vs the std rental price of some place very much like this, AND it will save me hours of headaches (place a value on that) deciding where and reserving a place to stay every year. Let's do it.)

Somewhere in one of these threads someone said sarcastically "sure, because so many people wake up in the morning thinking they want to buy a TS". Again, the retail and resale buyers are not the same. The sarcasm is just wrong when discussing resale buyers

That is roughly how I decided to buy mine. I was offered a presentation when I arrived in town. I declined. After a few days I decided "Yeah, I will come back here annually for the next 10 yrs." I sat down and did the calculations. Sat PM I heard Sunday would be rainy til late afternoon. We were planning a hike. So, I called to see if they had a presentation Sun AM, while it was raining. They did. I got up Sunday thinking "I am going to buy a TS, JUST NOT FROM THEM. I saw the unit, pinned down some details, though not entirely trusting the sales person, cuz, why would I? Left the presentation thinking "There MUST be a resale mkt for these due to all the buyer's remorse." Sun night googled around, found broker names and 6 months later; done.

 

[boyblue]

Trading isn't expensive. And I've been doing this for more than 20 years. I've never once stayed in what I own. I used to live there. I have better options for accommodations if I return home.

I think you should rent timeshares for a few more years to see how they work. Ownership right now would be a mistake. Furthermore, I see rental as "the last resort" in a use-it-or-lose-it scenario. The value (if any) of owning a timeshare is using it to take vacations. It isn't an investment. Anyone who wants an investment could drop money into VTSAX and do better than owning a timeshare.

I've owned and traded through RCI for 20 years. I'm not suggesting we rent to go. I'm suggesting we own where we want to go and when we don't go rent to others. Have you noticed how huge RCI has gotten renting our TS, when for a long time they claimed they weren't? But you present an intresting point, what if Booking.com got into trading, that would be cool

 

[boyblue]

many things end up being worth less than they cost to construct or to acquire. GAAP even has std methodologies for when this is true and it happens all the time to maybe the majority of large companies.
Why would the room(s) that make up a TS, in particular, end up being less than their proportion of the cost to build the whole place? My guess is that the OVERHEAD of being a TS is just too much and part of that is simply due to the attitudes of the vacationers. If they spend $200K building a condo, it then gets sold to a person who lives there. Maybe there is a person who mans a front desk. But there is not constant check-in/out, no cleaning service, and no group of stragners telling the person when & how they have to "maintain" the place with the latest & greatest fads.
For a TS, the OVERHEAD of constant flow of traffic thru the place and the extra service and BLING that vacationers want drives up MFs and it is the high MFs that make the TS worth little, regardless of how much it cost to build.
or not ....
but if people wanted their TS to be worth more and if they could trust the HOA (developer) to not stuff the budget, they could just stop demanding so much BLING. But then it wouldn't rent as well to non-owners, cuz the non-owners come for the BLING.

I am just suggesting that there is more inherent value than the low market prices suggest but that does not matter, the glutt of resales have doomed them all to worthless. That being said I'm still curious about the inherent value. If only because there will come a time when someone is looking at a reasonably priced developer sold TS in a location where there is no resales available and they'll pass on it thinking it's priced unreasonably.

 

[boyblue]

now you're getting into the delta between retail and resale buyers. You're discussing retail buyers. This whole thread (not that I can say I read it all or track the convoluted offshoots) seems to be about just that difference. I, for one, 100% bought mine comparing to rental values.
"I think I will travel here to stay in this place or one very much like it every year for the next 10 yrs, and I don't have a GO-TO place to stay. It seems owning this will save me $1000/yr (maybe more) vs the std rental price of some place very much like this, AND it will save me hours of headaches (place a value on that) deciding where and reserving a place to stay every year. Let's do it.)

Somewhere in one of these threads someone said sarcastically "sure, because so many people wake up in the morning thinking they want to buy a TS". Again, the retail and resale buyers are not the same. The sarcasm is just wrong when discussing resale buyers

That is roughly how I decided to buy mine. I was offered a presentation when I arrived in town. I declined. After a few days I decided "Yeah, I will come back here annually for the next 10 yrs." I sat down and did the calculations. Sat PM I heard Sunday would be rainy til late afternoon. We were planning a hike. So, I called to see if they had a presentation Sun AM, while it was raining. They did. I got up Sunday thinking "I am going to buy a TS, JUST NOT FROM THEM. I saw the unit, pinned down some details, though not entirely trusting the sales person, cuz, why would I? Left the presentation thinking "There MUST be a resale mkt for these due to all the buyer's remorse." Sun night googled around, found broker names and 6 months later; done.

There was no rain to save me, after sleeping on it, simply because I refused to be be pressured, I did the do. To the main point I'm suggesting we all do what you did. There are so many resales out there you can find one that has a decent MF and rents well. Trading companies have been our back stop for years. Renting just adds another option.

 

[4TimeAway]

I am just suggesting that there is more inherent value than the low market prices suggest but that does not matter, the glutt of resales have doomed them all to worthless. That being said I'm still curious about the inherent value. If only because there will come a time when someone is looking at a reasonably priced developer sold TS in a location where there is no resales available and they'll pass on it thinking it's priced unreasonably.

It's just supply and demand. Resale has nobody really pushing it. People on TUG are probably the largest sales agency for resale timeshares, but I feel its <10% of the total market.

That said, have you seen the prices for good resale timeshares, you know the ones that really have positive ROI?
They are NOT "FREE" by a long shot.

Look at Disney, even some HGVC Plat weeks at places with amazing MF/$ ratios. They are out there but at a much higher initial price to other options.
Much of this is an optimization problem that TUG helps define as people learn the timeshare game.


On the point of rentals vs trading, I think it's mostly semantics as RCI, II, SFX, GPX, etc. are trading platforms that also work as rentals. I see rentals as you going on Koala or Redweek and getting $$$ per week rented to others, but some people feel that trading platforms are renting out weeks. In the end, both can be correct.

 

[boyblue]

It's just supply and demand. Resale has nobody really pushing it. People on TUG are probably the largest sales agency for resale timeshares, but I feel its <10% of the total market.

There are indeed a lot of them and there is very little demand . Problem is we tend to throw away the baby with the bath water. Gems that may be worth something are tossed asside with blue weeks that are truly worthless.

That said, have you seen the prices for good resale timeshares, you know the ones that really have positive ROI?
They are NOT "FREE" by a long shot.

Look at Disney, even some HGVC Plat weeks at places with amazing MF/$ ratios. They are out there but at a much higher initial price to other options.
Much of this is an optimization problem that TUG helps define as people learn the timeshare game.

I've never dealt with those higher end TS, how much do they go for? I'm sure it's a small fraction of developer prices.

On the point of rentals vs trading, I think it's mostly semantics as RCI, II, SFX, GPX, etc. are trading platforms that also work as rentals. I see rentals as you going on Koala or Redweek and getting $$$ per week rented to others, but some people feel that trading platforms are renting out weeks. In the end, both can be correct.

There are just too many weeks that would go unused so I don't blame them for renting weeks. I just wish they would be honest and open about the whole process, so we could be sure that owners get first dibs.