I was talking to a friend recently, who owns a fair amount of timeshare points. She said "Timeshares aren't really about timeshares anymore. It's now about your entire travel experience."
What does that mean? Is it true? Is it a good thing for timeshare owners?Is this what timeshares are about these days?
Here's the pitch
At my friend's latest owner update, the salesman was pushing this concept...
Rather than focusing on the timeshare itself, think of the company as your sole travel provider -- your points can give you so much more than just timeshare accommodations. You can book your plane tickets with points, or hotel stays, or cruises, etc. It's like a one stop shop for all things travel related.
What's more, this such a good deal that it would be foolish not to take advantage of this opportunity! You could be paying $0.14/point in maintenance fees, and getting a value of $0.30/point when you use these for hotels. Sounds like a no-brainer, right?
That's the gist of the sales pitch. What do you think? Here's my take on it...
Smart move from the company's standpoint
From the company's perspective, this seems like a great idea!
- Existing owners buy more points. They can sell you more points, even if you don't want to take any more timeshare vacations. Surely there are other travel expenses you'll have, so why not buy more points for those, too?
- On-going revenue stream. Once you buy the points, they've locked in that extra revenue for years to come. If you buy a plane ticket from American Airlines, the airline only gets your money that one time, but if you buy points to use for airfare, the timeshare company gets that money year after year.
- More attractive sales proposition. Providing more options makes a purchase seem more attractive. A potential buyer can see a whole range of possibilities, rather than one narrow avenue to use their points. Everything the company can add to the mix to make their offering more attractive could increase sales.
- Rental income. Let's say a company has a billion timeshare points outstanding, which are tied to a corresponding amount of timeshare inventory. Now let's say that 10% of these points are never used to actually stay at a timeshare, but instead owners use them for airplane tickets etc. What happens to that 10% of the inventory? Could they rent it out for additional revenue?
What about the owner's perspective?
First of all, I'd like to say that I'm in favor of anything that gives timeshare owners more options. So I think it's great that a company wants to give you more choices. But...What could this mean for YOU?
* Advantages *
- Potential savings. You could get a good deal on travel purchases by using your points this way. I put this one as "potential" savings, because unless you shop around, you don't really know what kind of a deal you're getting. Paying $0.14 for $0.30 worth of value sounds good in principle, but often there are discounts on hotels or airfare available through other channels that could be competitive.
- Simplicity. You get a one stop shop. This is probably appealing for many people, though it doesn't work for me. I prefer to do my own shopping around, and don't feel like I'm getting the best deal unless I've done that research myself.
- More options. If you have more points than you need for your timeshare vacations, this gives you another way to use them. That's GOOD! Now hopefully you don't own more points than you need on a regular basis, but we all know sometimes things come up to prevent taking the vacation you want. If that happens, it's nice to have more options for how to use those points.
* Disadvantages *
- The missing $$. This "no brainer" deal doesn't include the purchase price! It's looking only at the annual maintenance fees, not the substantial buy-in price. That changes the economics considerably.
It reminds me of the line in some timeshare sales presentations where they say you get "prepaid vacations for life", conveniently omitting the fact that you still need to pay every year. Make sure to count ALL the costs!
- Deal may not continue. There's no guarantee how long this deal will continue. There's probably some legalese in the terms and conditions along the lines of "company reserves the right to modify the terms of this program or discontinue it, at the company's sole discretion." Instead of paying a $0.14 fee for $0.30 of value, it could be $0.18 for $0.20 of value next year, or the entire program for hotel stays could be discontinued.
It's like buying enough points to reach the next membership level, because that will give you free guest certificates, only to discover a year later that they no longer include that benefit. Unfortunately, it's easy for them to discontinue a benefit, but much harder for you to discontinue the fees you pay on those extra points!
- Many eggs in one basket. If you buy enough points to cover all of your travel needs, that's putting a whole lot of money and trust in one company. What happens when they change ownership, or change their business model, or cancel one or more of the benefits you rely on? You're stuck with the fees, but you may have a significantly different deal.
- You can't shop around. Well, actually, you can still look around, but you're already locked in to one solution. If you see a super-duper deal on a trip to Bora Bora, available only if you book directly through some other company (i.e. not possible with your timeshare points), then you've got a dilemma.
You're paying for the points anyway, so do you (a) use your points & pay a higher price for the trip (missing out on the super special), or (b) pay for the points AND buy the outside vacation deal separately, or (c) skip Bora Bora and take some other vacation instead? None of these seem ideal. If you weren't locked into the points, you could just buy the super-duper deal and be on your way to Tahiti.
- You lose control. When you keep your travel money yourself, you make all the decisions. You decide how much to spend every year, and where to spend it. If you purchase enough points to cover all your travel needs, then you no longer have that level of control. You're locked into paying at least that amount every year, to one particular company.
- Your expenditures go up every year. About the only thing you can count on for sure here is that your annual fees WILL keep going up every year. You don't know how much airfare those points and dollars will buy you, but you do know you'll be spending more every year, whether you want to or not.
Does this mean timeshares are a bad idea?
Now I know that some of the above points could also be viewed as an argument against timeshares entirely. However, staying in a timeshare unit can be a fundamentally different experience from staying at a hotel. The timeshare itself does provide a product that is differentiated.
However, booking an airplane flight delivers exactly the same product to you, whether you book it with your timeshare points, or use your credit card on Delta.com. There is no differentiation of the product, the only difference is the method to get there.
Personally, I'd rather stick to buying what's in the contract.
When you buy a timeshare, you're entering a contractual relationship that will be with you for years. You will have an on-going obligation to pay the fees, which can be significant.
On the other side of the contract, what is the company's obligation to you?You're obligated to pay $$. What is their obligation?
If you're buying a timeshare in order to have rights to stay at a timeshare, and that's what your contract says, then this all makes sense, right? You pay them money, they give you a timeshare to stay in, and it's all documented in writing.
But if you're buying timeshare points in order to get a good deal on hotel rooms or airfare, then think about it. Does your contract say anything about ensuring that you'll continue to get deals on airfares and hotels?
What do you think? Do you use timeshare points for other travel expenses? Is it a good deal for you doing it this way? Let us know in the Reply section below!