The Concept of Vacation Ownership

"Vacation Ownership" is what hotels and resorts like to call a Timeshare theses days.   It's like the way "used cars" are now marketed as "pre-owned" vehicles.   An elegant new name for the same product.

The timeshare concept was invented in the mid 20th century in Europe at a ski lodge.  The owner figured that instead of renting out rooms, his or her guests would instead own a room at the lodge. 

To make the proposition appealing and affordable, instead of owning the room all year around, a guest would only own it for a short period of time each year.  This allowed the lodge owner to "sell" the same physical space many times over to multiple people.

The idea appealed to the masses and was largely successful.

Timeshares in The United States

The concept of owning your vacation destination for only a week had several people excited, many business men considered it pure genius and jumped right in on the chance to copy the idea.   When the concept finally made it to the United States it was improved with a nice little gimmick that allows you to "exchange" your timeshare for another. 

Not only can you exchange the time in which you use your owned property, but you could also "own" a property anywhere in the world for just a week.

In theory and on paper it sounds great.  You could stay anywhere in the world and avoid the pricey reservations.  In fact, it's this "feature" that is stressed most during the timeshare sales pitch. 

In America, it's not a ripoff unless you know your getting ripped-off!

Timeshares are not Real Estate

The salesman will convince you that a timeshare is real estate.  In fact, the entire process centers around an illusion that you are buying actual property, an investment.  The documents you sign are similar to what you would sign if you were buying a home.

Perhaps the salesman may mention how this property's value has increased over the last few years.  He may throw in some numbers showing the "previous" purchase price, hoping to get you excited about how much value this property could gain in the next few years. 

It all sounds legit, but this is where the Great American Scam begins.   The item you are investing in varies between resorts and hotels.  After all, their are many ways to pull off a scam/ripoff.  The more elaborate ones try to sell ownership in an organization or company created specifically for that purpose.  Some go as far as presenting you with a title deed.

Timeshare Worth

When you purchase a timeshare, you are buying an object for personal or family pleasure.  It's not an valued investment like real estate.  Unlike real estate property or valuable jewelery a timeshare has no resale value.  Contrary to what the salesman says, a timeshares value does not increase over time.

A timeshares value, is a matter of perspective to it's owner.  Travel and vacation memories may have more worth than any amount of money for some people.  The timeshare can be thought of a luxury item.  However, if you looking to gain equity from this timeshare purchase, you'll be very disappointed.

When you purchase a timeshare, you do not own land or property.  Instead, you own space for a specific moment in "time".  A bank will not accept a timeshare as collateral for a loan,  it wants something physical with monetary value that can be seized if the loan defaults. 

Seriously, think about it.  The concept of owning a moment in time does sound pretty absurd.

The High Cost of Vacation Ownership

Timeshares are expensive items.  So expensive that you'll end up taking on a mortgage that could last up to 15 years.  In addition to those monthly mortgage payments, you are responsible for what's called "Maintenance & Tax" fees.  These fees can be as high as several hundred to several thousand dollars each year.  Oh, and lets not forget the "hidden" costs such as exchange fees, yearly membership fees, interest, and travel expenses.

Supposedly, you will purchase a timeshare to save money on your yearly vacation.  After all, the most expensive part is the lodging.  During the sales pitch, the salesman will do some math and work it out so it appears you'll be saving money by carefully omitting the hidden costs.   

A scam is always well designed to look like it's beneficial to the "sucker".  The math while valid and convincing is merely an illusion.  It attempts to solve a problem that does not exist.

Let's do some math of our own.

Lets say you travel to the same place each year for 1 week (7 days and 7 nights).  With your timeshare, you pay nothing to stay at your destination, just the maintenance and tax each year.  The standard best available rate at this destination for the general public is $175 a night for the same unit.

With tax, the above comes out to a little over $1,300 for the 7 night stay.  So far so good, you've saved $600 this year... or no?

It's easy to forget that your paying a 15 year mortgage on this thing:

Add up the total spent on the monthly mortgage, tax, maintenance, and membership fees.   All of a sudden, your spending more that double on a vacation each year.

Assuming you decide not to take a trip one year, you are still responsible for the mortgage, tax, maintenance, and membership fees.  You'll pay more than double for a vacation you'll never take.  The salesman will mention you have the ability to rent out your unit to someone else.  Thing is, who would pay YOU almost $3,000 to stay at a hotel or resort they can book themselves for less than half the cost?  Oh, and did you know their is an additional fee for renting out your unit?  Lets also not forget this is considered additional income that you must declare on your tax return.

Sure, the mortgage will be paid off in 15 years.  However 2 things to point out:  The resort, will sooner or later pitch an "upgrade" offer to your unit.  Sure, go ahead upgrade to a 3 bedroom lock-off unit and lock yourself into another 15 year mortgage.  Secondly, how are you so sure you are going to be vacationing for 1 week every year for the rest of your life?

Hmm... this math isn't working out so well.  Unfortunately It gets worse.

Timeshare Show Stoppers

During the high impact sales pitch, the salesman will blurt out some words in regards to "availability".  It's something that very little attention is paid to.

This is where a timeshare really starts looking like a scam ( if you were not already convinced by the math and resale value).  Availability is such an import word, so important that the sales pitch will try to avoid dwelling on the subject as much as possible.

You see, as a timeshare owner, you work from a pool of rooms and destinations.  The majority of units are allocated based upon the actions of other owners.  This action is called a "deposit", and it's the core function of the timeshare exchange program.  When one owner decides to "deposit" their unit, it goes into this pool.  This unit becomes available to use by any other owner.

As an owner, you are guaranteed that your unit (if not deposited) will be available for use for the time you purchased it for.  The exchange program's available inventory is built mostly by owners who deposit their time/week.  In theory it sounds like genius, in reality it feels like a ripoff.

Your are led to believe you can stay at any resort for a small exchange fee.  When you try to  book a reservation, you quickly discover there is NO AVAILABILITY.  Timeshare owners have complained about this, and several hotels and resorts have responded by adding points systems, flexible units, and internal exchanges to the ownership package.

The primary problem is that all these "gimmicks" still work off of an isolated inventory of rooms set aside for owners.  Things get real ugly when that inventory runs low or is depleted.  There may come a time (more often than not) that your home resort has no availability for your travel dates.  You attempt to book your "owned" unit using exchange, points, or internal exchange and find out their are no rooms available.  Yet, the hotel has several rooms available on their reservations system for the standard nightly rate.

You could end up paying the standard nightly rate at your home resort while your "owned" unit remains useless.

The hotels and resorts do something real nasty here.  They "sell" rooms to travel agencies and partners.  Those rooms become unavailable to owners but remain available to the public.  In essence, owners are given lowest priority.  Worse, the hotel may actually have empty rooms that you as an owner can't use.

The Ugly Truth

The primary reason why hotels and resorts continue to successfully sell timeshares is ignorance.   Ever notice how these places specifically target tourists, or people who have no idea how timeshares work?

Here's the part that EVERY salesman will surely leave out...  The resale market.

Sadly, a timeshare IS completely worthless, it's the ugly truth to this dirty scam.  Every new timeshare owner quickly learns they have been ripped off and further realize they are stuck with it.  Stuck because the documents they sign are for a contract that lasts for not just your lifetime, but for every future generation.

It gets even more depressing to discover that people are so desperate to get rid of their timeshare burden that they are willing to donate or give it away for nothing.  In the worst situations, you'll find people PAYING someone to take it off their hands.

Putting an End to the Great American Timeshare Scam

The most powerful weapon in defeating this enemy is knowledge and education.  It's important to educate the people around us on this serious issue.

Please share this website with your friends, co-workers, enemies, and even complete strangers.  It's only through the power of information and knowledge that we can bring down these con-artists.  Their are several resources built into this website to make sharing this information easy.  From email to Facebook, lets get the word out on "Timeshares: The Great American Scam".