Timeshare: The good, the bad and the downright waste of money

2018-07-02 06:30 - Kavitha Pillay
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Travelling the world to your heart’s desires during the current economic climate is not as simple as we wish it could be, so finding ways to be a savvy tourist is vital in meeting those travel goals.

Apart from booking tours in groups, jumping on travel deals, planning trips during off-peak seasons and practicing simple financial steps every day to save towards your travel bucket-list, another way to make your travel wishes a reality is through purchasing of timeshares.

SEE: Why buying timeshare is a good idea

Timeshares allow people to own a share of a unit or apartment within a resort. It is priced according to the size, amenities and location of a unit, as well as the season in which it is sold.

According to Tsogo Sun, timeshare interest is the exclusive use of accommodation within a property for a determined period of time annually, and owners pay an annual levy.

However, while this may come across as straightforward, a recent timeshare court case proves that not all timeshares result in happy vacations, and it is up to buyers to do their research and plan accordingly when it comes managing timeshares.

Do your research

According to a City Press report, consumers who felt locked into contracts or ripped off by the timeshare industry locally, began class action hearings in early 2018. The case is still pending, due to the outcome report by the National Consumer Commission (NCC).

Amanda Allen, who was one of the affected timeshare owners involved in the case, told Traveller24 that what was promised with her timeshare “was not followed through”.

Allen entered a competition to win an all-expenses paid holiday to KwaZulu-Natal and accepted an invitation to attend the draw where she was guaranteed a prize, as well as membership with Dream Vacation Club. When she did more research after signing with the Club, she found loopholes in the offer and wanted to cancel.

SEE: Fighting for clients' time share rights

“It was a lie and when we wanted to cancel we couldn't, so we got a lawyer involved and got out of it,” she says, explaining that while she got her timeshare money back, she “lost double that in legal fees in the end”.

She advises consumers not to rush into signing anything, to read the entire contract before signing, and not hesitate to contact a lawyer if you think you’re being deceived.

timeshare research

(photo: iStock)

Consider the long term fees

Trudie Broekmann, an attorney specialising in consumer law who has been involved in the case, confirmed with Traveller24 that the report from NCC is pending, and shares advice to vacationers interested in buying timeshares.

“The main tip I can offer is to never become a timeshare owner,” she says, explaining that many of her clients have requested to cancel their timeshare contracts.

She says that their reasons for cancellation include no longer being able to afford it, never being able to get a booking, not understanding what they got into, and never receiving what was promised. 

“Distrust whatever the person marketing the timeshare to you says. My clients have been falsely assured that timeshare is a good investment of all your retirement savings, that they will be able to book holidays overseas - when they don’t have enough points for a long weekend in peak season, that their points are worth the many thousands they pay for them - while they are offered for free on Gumtree,” she says, giving examples of how clients are duped. 

For those people who are still considering timeshares, Broekmann advises them to think about it long-term.

“Will you still be able to afford a steep management fee when you are retired and living on a reduced income, especially if you find you can never get a holiday booking from the call centre? Are you happy to keep paying the management fee even if you emigrate and cannot make use of the accommodation, even if you had managed to secure a booking? Your parent or spouse has just died, and you are being pressurised to take over their timeshare- can you really afford and use it?” she poses in her examples of what to consider ahead of signing up.

So, while timeshares can be one way of getting a much-needed break, the combination of deceitful companies in the industry and the lack of understanding and planning from clients can lead to chaos and unhappy consumers.

timeshare contract

(Photo: iStock)

How to be a happy timeshare owner

If you already own timeshares or would still be interested in purchasing, here are more tips to consider based on global industry practice.

Associated Press shares advice on being a savvy timeshare owner, compiled by Liz Weston - a columnist for personal finance website NerdWallet.com, and Brian Rogers, owner of Timeshare Users Group.

  • Understand that timeshare is not a financial investment 
The average cost of timeshares sold by resort developers has risen over time and now tops R269 904 ($20 000), according to the American Resort Development Association, an industry trade group.
Unethical salespeople use that fact to imply, or even assert, that the timeshare you buy will increase in value. That's not true. On the resale market, the typical timeshare sells for 10% or less of what the original owner paid, Rogers says. TUG, eBay and other sites are full of "for sale" ads from owners willing to sell for just a penny.
  • Don't buy a timeshare on vacation 
Timeshare salespeople are often much better at selling than you are at resisting — especially when you're relaxed and having a great time. That's no state of mind to be in when you need to scan the details of a contract, assess potential exchange options and uncover things that can go wrong, such as rising annual maintenance fees or problems trading your share.
If you're interested in a property, Rogers recommends renting from an existing timeshare owner to see how much you like it. But don't sign up on the spot.
  • Don't pay retail
A retired couple, Angie and Mike McCaffery of Los Angeles, paid as little as 50 cents for "used" timeshares. They've parlayed their timeshare weeks at four mainland US resorts into affordable stays in England, Spain, Costa Rica, Hawaii, Mexico and the Caribbean.
"You hear all the nightmare stories, but if you know how to work it and you can plan ahead, it's the best thing ever," says Angie McCaffery, 71.
The McCafferys bought their first timeshare in 1994 from a developer, paying R202 428 ($15 000) for a two-bedroom condo in Palm Desert, California. Later they learned they could save thousands buying directly from other timeshare owners who no longer wanted to pay their annual maintenance fees. People who simply stop paying their fees risk having the debts turned over to collection agencies, which can sue them and trash their credit.

CHECK OUT THESE Hotel Holiday Hacks: Seven tips and tricks to save some coin at hotels

In 2006, the McCafferys bought a one-bedroom timeshare in Park City, Utah, for R13 495 ($100) on eBay. Four years later, they paid R13.50 ($1) total for two timeshares, a one-bedroom unit in New Orleans and a two-bedroom unit in Ruidoso, New Mexico.
Developers often offer incentives for buying retail, such as frequent traveller points or VIP treatment, but "those are almost never worth paying $19 000 or $20 000 (about R256 408 or R269 904) extra for," Rogers says. "For that money, I'll get my own limo from the airport."
  • Buy in attractive locations
Don't buy a timeshare in an undesirable location on the promise you can trade it to stay in more desirable ones. If you don't want to vacation there, chances are potential exchange partners won't, either.
The McCafferys prefer buying fixed-week timeshares. That way, if they don't want to trade for another property, they're guaranteed access to their properties each year without having to make advance reservations. Floating-week and point systems typically require more planning, since desirable weeks are snapped up early or require more points the longer people delay.
  • Enjoy research and planning
Learning the ins and outs of each timeshare system takes effort. While point systems are often touted as a way for people to vacation at the last minute, the reality is that the best deals have to be secured nine to 12 months in advance, Rogers says.