Is Time-Sharing Ready for Prime Time?
I was enjoying a stroll through historic Charleston, S.C., when I was offered $100 to attend a two-hour presentation. Sure, I thought. Why not? Big mistake. I soon found out why time-share was a much-loathed word among vacationers. I spent the next three hours listening to nattily dressed salespeople use every bit of charm and arm-twisting under the sun to sell me part-ownership in a vacation home. In that high-pressure atmosphere, I was urged to sign a contract on the spot or lose a "special" 15% discount. Some people succumbed, but most, like me, left with a bitter aftertaste.
That was three years ago, even though the entry of hotel chains such as Marriott International, Four Seasons, Hilton, Ritz Carlton, Starwood, and Walt Disney into the time-sharing business starting in the mid-'80s was supposed to have cleaned up the industry's act. "We have a great deal at stake. Our reputation rests on our thoughtful way of communication, and we're not willing to sacrifice that," says Duffy Keys, senior vice-president at Four Seasons Residential Properties.
Indeed, these companies have softened the pitch and don't even use the T-word anymore. Instead, they call them interval or fractional ownerships, or vacation and private-club residences. Their offerings have more flexible exchange privileges than what developers allowed earlier--say, swapping your ski condo in Vail, Colo., for a beachfront unit in Aruba. They'll even let you trade your time-share week for a stay in one of their hotels or for airline tickets.
You can also find a deal to suit every budget. On the high end are the private-club residences of Ritz Carlton in Aspen or St. Thomas in the U.S. Virgin Islands, which start at $90,000 for a peak-season week. Folks with young children might prefer buying into one of Disney's five resorts, which cost as little as $11,500 and go as high as $150,000. Marriott sells intervals at 51 resorts for $7,500 to $60,000.
Hard sell or soft, the basic pitch is the same. For what you'd pay to rent a room or condo at a resort over the next five years or so, you can buy the right to use that room or condo on a particular week year after year. On the surface, it seems reasonable. But the purchase price isn't the only cost (table). Every year, you'll also pay maintenance fees that could run from $225 to $1,000 per unit per week, plus repair and cleaning costs. And as a practical matter, you have little recourse but to pay whatever the management company asks. And not every time-share goes on into perpetuity. Disney's expire in 2042, so your grandchildren may not be able to visit with Mickey and Minnie the way you did.
As an investment, forget it. "People shouldn't expect it to appreciate in value, as there are too many of them around," says Robert Webb, an attorney in the time-share industry and a partner at Baker & Hostetler LLP in Orlando. "You buy it to enjoy it. It's like a car--use it, but it depreciates in value." Indeed, a sampling of time-share resale ads on such Internet sites as eBay show asking prices that are 50% or more below what time-share marketers are selling new units for. EBay listed about 143 properties recently, including a two-bedroom ocean-view villa in Cancun's five-star Royal Islander resort that the owner would sell for $10,000 a week, even as the management company says it has a resale value of $19,500.
WEB HELP. Anyone considering fractional ownership should visit the Web sites devoted to time-sharing. Time-share Users Group's www.tug2.net is a good spot because owners, not marketers, run it. Besides checking out what's for sale, you can pick up good information on the pros and cons of ownership. Timesharedirect.com is just a compilation of listings. If you're leery of the sales pitch you're getting, read the Federal Trade Commission's guidelines on time-shares at www.ftc.gov/bcp/conline/pubs/homes/timeshr.htm.
Despite the industry's claims to the contrary, there's plenty of evidence that sales practices haven't improved all that much. Michael Blumenfeld, CEO of Dallas sporting-goods company Collegiate Pacific, was attracted to advertisements for the Four Seasons' "interval ownerships" because he liked staying at Four Seasons hotels while on business trips. Last November, he called for a sample sales contract. But he claims the Four Seasons rep would not send a contract for examination until Blumenfeld put down a 10% refundable deposit on a $150,000 time-share at the company's Punta Mita resort in Mexico. Blumenfeld said he was taken aback but went for it anyway and charged the $15,000 on his credit card.
After reviewing the contract, Blumenfeld said he felt the ads showing several resorts were misleading, considering most of them weren't finished and he couldn't choose the actual apartment he could come back to year after year. He took his money back and now owns a time-share at a villa with an ocean view in Los Cabos, Mexico, run by the Auberge Resorts LLC. A Four Seasons spokesman insisted that the company doesn't ask for money if someone is just interested in seeing a sample contract and that it requires a 10% deposit only when a potential buyer signs up.
NOW OR NEVER? Why do time-share sales have to be so high-pressure? The thinking is that people are carefree during a vacation and more likely to buy at a place they like to visit than when they go back home to their busy lives. "The developers feel like if they don't get you when you're on vacation, they've lost you," says Jake Hoeschler, an insurance lawyer in Minneapolis who ran a time-share business in the 1970s but is now a time-share owner with Marriott.
Some companies lure people with promises of allowing them to swap their time-share for vacations anywhere in the world through organizations such as Interval International or Resorts Condominiums International. But if your unit isn't located in one of the most desirable, name-brand places at a choice time of the year, you may have to wait months to get the swap you want.
Most hoteliers also allow exchanges within their networks--and you don't necessarily have to take somebody else's time-share week. In fact, Disney and Starwood time-share owners get points based on their unit cost that they can use for hotel stays, river-rafting trips, or safaris. Some people choose to rent out their time-shares rather than swap, but if the management company finds you a tenant, it will take as much as half of the rental fee. And resorts that are trying to maintain an air of exclusivity, such as Ritz Carlton's, don't allow rentals.
The key to buying a time-share is to do so at place where you like to take vacations. You'll do best if you buy peak-season times at known resorts. And you'll be more satisfied with your purchase if you do it at your own pace--not with a high-pressure salesperson on your back.
By Pallavi Gogoi