Time Share presentations- cutting through the hype.

You are browsing the wonders of Bass Pro Shops when you are approached by a salesperson with that fateful question- Do you have a minute? (You never do but you are polite.) Do you enjoy taking vacations? (duh). How would you like to come to "Slickerin Pigsnot" ski resort for three days and two nights on us. All you need to do is listen to a one hour presentation.

Rules (in small print): No children. All adults must bring ID and a credit card. Your one hour presentation will be scheduled in the middle of the most enjoyable time at the resort. Please allow three hours for your one hour presentation.

"Sure, why not!" you agree and all the paperwork is ready to complete. You will now experience the Time share sales interview.

The time comes and you pack your bags and head for "Slickerin". You have always loved the ski area there and the prospect is exciting. On arrival, you check into the beautiful resort (which may not be the one they present.) They assign the time for your interview and give you a list of things to do. In all likelihood, you will have a wonderful time. That is NOT said tongue-in-cheek.

When the time comes for your "interview", you will check in and shortly one of their salespeople will meet with you. They are usually well trained, very likable people who basically sell real estate a week at a time. The old days of high pressure sales are pretty much gone.They will determine your likes and dislikes, where you like to go, what you like to do, and when you like to do it. Next you are whisked into a room to watch a video about the timeshare company. Next they have you greet the VP or President or Timeshare god or whoever does the talking about the timeshare. He will let you know all of the advantages of timeshare ownership including the unit being a condo instead of a hotel, you will own a week a year that you can trade to go other places (more on this later). Your timeshare may be a studio to a three bedroom condo depending on your needs. You can trade in your week for credit for cruises, daily hotel nights wherever you want to go, rental cars, etc. The lights come back up and you rejoin your salesperson for the brass tacks. HOW MUCH!

Depending on your needs, timeshares can be pretty steep and as far as resale, they lose value quicker than a new car. If you are interested, be sure you or your family will use it. I have seen them priced from $16,000 to $65,000 for a week a year. I have also seen more exclusive units go for that price for a week every other year so be sure you understand what you are getting.

There are generally two types of time shares, Weeks and Points Resorts.

A weeks time share is one that you purchase a specific week each year. This week can be used or traded in (deposited) so that you can choose a different resort so there is some flexibility. There are also condo organizations that bank condos and offer them all over the world. The one we are a member of is RCI which requires an additional annual fee although it is pretty small. You deposit with them and choose where you want to go from their directory. Although the sales rep will make it sound like you can go anywhere you want, that isn't quite true. Many listed resorts either do not have condos available because their members do not trade theirs in, or they are so popular you have to get them by luck of the draw.

With points resorts, your home timeshare is automatically deposited each year and you follow the same routine however your home resort will have a predetermined point value. The resorts you choose also do. If you do not have the number of points required, you can either buy additional or borrow from the next year allotment. Disney resorts recently became part of the RCI group and fall in the "points" category. They tend to be pretty high on the points scale but have a lot to offer for the points.

So what is the breakdown of the costs of ownership. First, the cost of purchase. Let's say you decide that ownership is for you. After recovering from the $65,000 shell shock, and saying no thanks, the other unit costs start to role in. You have seen the Cadillac, now it's time for the Chevys. After more negotiating and more I don't think so's, the salesperson calls in the manager. (See why I use the auto comparison.) He comes in with the final offer. Here, no means no and they will thank you and let you go if you still don't agree on a price. Instead, though, you decide on a $20,000 one bedroom (sleeps four uncomfortably) unit. You decide to finance for 10 years at 6%. That's $222 per month for the unit or $2664 per year.

You are an owner, not a renter. You now own 1/52nd of the resort which can be deeded to your kids and rented or sold, whatever. That also means that upkeep and maintenance costs are paid by the owner. That's right, you have an annual maintenance fee. The fee runs anywhere from $450 to over $800 per year and is due on the anniversary date. If not paid, they can foreclose the unit and sell it. Let's say our unit is $650 per year. When you book your vacation, you will pay a small booking fee usually around $130. In addition, if you are a group member (RCI) its another $140 per year or thereabouts. So the total cost (for the ten years of the mortgage) is

$2664+$650+$130+$140 or $3586 for a one week vacation. OUTRAGIOUS YOU SAY! Maybe not. Keep in mind that at the end of the 10 years your cost drops to $920 (if the maintenance fees didn't go up).

What does a vacation actually cost? That is the question.

Remember that you have room for four with some privacy. If you rent a hotel room for seven nights, near Disney world during Spring Break, it will set you back anywhere from $750 to $1000 or even higher per room. If you want four in one room, plan about $850. Two rooms, $1500. This is for a basic room in Orlando.

Now the advantage of a timeshare condo. You do not have to eat out every meal. If you figure that you can do what Rachel Ray does and go $40 dollars a day per person, that is another $1120 dollars for food. Granted you will spend money on food for the condo but if you look at a typical family of four's bill, it usually runs about $200 a week.

Let's review- Purchase timeshare $3586

Rent a Hotel- $2,620

Hotel wins! Not quite. You are a member of RCI, remember? There are additional perks. Many timeshares go unsold or unused. These are offered up as Extra Vacations at hugely reduced prices. This year you decide you missed Epcot and want to go back or you want to go to the coast. You check the Extra Vacations and book Daytona Beach in August for $300 FOR THE WEEK! That's two weeks of vacations for $3886 because you don't pay any extra for your ownership. Now the two weeks in hotels will cost over $5000. You can book as many extra vacations as you want at varied prices. If you can travel at the drop of a hat, there are "Last Call Vacations" for $219 for a week.

Not all that they offer are good deals, however. If you trade for a cruise, the credit off the cost of the cruise will not even match the maintenance fee for your unit. In addition, trading for individual nights at hotels will be more expensive in the long run than just paying for the room. Rental cars- same problem. It's better than losing the points however so if that is a problem, by all means use them that way. In most cases, you can save points for one year and borrow from the coming year for those special vacations. The world is yours as RCI has hundreds of units all over the world.

I'm sure I missed some points but I will say this. We are owners in Colorado. We paid off the loan early so only have the RCI and maintenance fees to pay. At one point we thought about selling but now we are glad we didn't. We have been to Steamboat, Colorado (several times), Vero Beach and Clearwater, Florida, Walton Hall, near Stratford-upon-Avon, England, and Oberstaufen, Germany. We also have plans for it for years to come.

So when you have a chance and have a curiosity, give a listen. It may be worthwhile.

Stuart

Treasured Pasts.