Members of Interval International got a rude surprise recently, when they discovered a new fee has been added to many timeshare exchanges. Depending on what you’re trading, this could add $100, $200, or even $300+ to the cost of your transaction. Ouch! 🙁
On the other hand, many owners won’t see any effect. It all depends on your exchange strategies.
Aside from the fee itself, the fact that Interval put it in place with no warning and no announcement angered owners, too. Reactions in the community varied from disappointment to outrage, with some owners saying they’ll vote with their feet, and seek other exchange channels.
So what’s the big deal?A new fee from Interval could mean busier credit cards
Upgrade fees – How this works
- If you exchange your timeshare week for a larger unit, you now need to pay an upgrade fee, on top of your normal exchange fee.
- The upgrade fee is $99 per step. In other words,
Studio -> 1BR = 1 step = $99
1BR -> 3BR = 2 steps = $198
Studio -> 3BR = 3 steps = $297
- If you’re exchanging up 2 steps, say a studio to a 2-BR, your fees just went from $179 (exchange fee only) to $377 (exchange + upgrade). That’s more than double.
- Interval Gold and Platinum members pay lower upgrade fees: $79 per step for Gold members, and $59 per step for Platinum members.
- Upgrade fees DO NOT apply to instant exchanges done during Flexchange. (See What is Flexchange, and how can it help you…)
- Upgrade fees DO apply to EPlus retrades, if you are trading to a larger unit than the one that you currently have confirmed, unless it’s during Flexchange.
Here’s the FAQ from Interval (relevant questions start about halfway down).
Who does this hurt?
The primary people that are adversely affected by this are owners of high-quality, high-value smaller units (studios and 1-bedrooms), who are used to trading their weeks for larger, lower-value or off-season timeshares.
If you own an upscale studio in Hawaii, you paid for this through a higher purchase price and higher maintenance fees every year. The principles of trading power and comparable value exchanges made that worth a 2-bedroom in Branson off-season.
Now Interval is saying that you’d have to pay an additional $198 to get that Branson week, on top of the higher cost you’re already paying for that Hawaii week.Size matters with II – now more than ever
Unhappiness in the owner community
Members of the Interval community have been active in expressing their displeasure at this change. A few of the common themes are:
- So a trade I looked at yesterday suddenly costs more today, with no warning? If you at least told me what was coming, I could have made plans accordingly.
- Another fee for something that used to be free!
- Now to trade my high-value 1-BR into a lower-value 3-BR, I’ll have to pay $198 more. I guess now it doesn’t matter how highly your resort is rated.
- If you’re charging a fee to trade up in unit size, then there should also be a credit for somebody who’s trading down in unit size.
- It seems like it’s not fair that owners of small, high-demand, high-season weeks have to pay for an upgrade in unit size, while they’re accepting a downgrade in all the other factors (location, resort quality, season).
Interval did post a response in the community forum. Here’s what they wrote:
Hello Interval members,
We have heard your concerns and apologize for not providing advance notice about the new unit-size upgrade fee. We assure you that we will improve our communications in the future.
Prior to launching this fee, we reviewed data and conducted member research to better understand member behavior and inventory utilization. We learned that members often confirm larger units than are necessary to accommodate their travel party. This finding, along with the fact that points-based members already relinquish more points when receiving a larger unit, the trend toward shorter booking windows, and other factors, influenced the introduction of the unit-size upgrade fee. As always, if a unit-size upgrade is offered during Flexchange, there is no additional fee.
The unit-size upgrade fee supports Interval’s commitment to providing comparable exchanges to members around the world. Our inventory control and optimization processes are designed to create the greatest number of exchange opportunities possible for members, while maintaining fairness across the system.
Here’s how I see it…
- The first point on their FAQ page says “The goal of our ‘comparable exchange’ concept is to parallel the supply of and demand for both the week that you relinquish and the week that you request in exchange.” Adding a fee undermines this concept – in effect, it’s saying that one factor (size) takes precedence over the combined supply and demand factors (ie. trading power).
- Interval is taking a page from the small exchange companies, who have traditionally charged unit size upgrade fees. With those companies, it’s a simple a “week-for-week” exchange, plus an upgrade fee. II and RCI have used a more powerful approach based on trading power calculations.This seems like a step backwards to me, in terms of system sophistication.
- They mention as one of their reasons that “points-based members already relinquish more points when receiving a larger unit“. True, but they also relinquish fewer points when booking a smaller unit. This upgrade fee is one-way only – they take more for upgrades, but don’t take less for downgrades.
- While we’re talking about points, let’s notice that points charts take other factors into account besides unit size. Interval’s own II points grid makes it abundantly clear that they value some 1-BRs as much as other 2-BRs:
– A 1-BR with TDI 135-150 gets up to 99,000 II points
– A 2-BR with TDI 90-110 gets a maximum of 77,000 II points.
How is it fair that the owner of the high-value 1BR week has to pay a fee to “upgrade” into that lower-value 2BR?
- To me, it looks like it’s just a way to boost their revenues, like the airlines have been doing with all their fees for this, that, and the other. Unfortunately, unlike no-frills airlines, we aren’t seeing lower base prices to go with these add-on fees.
- This could also be intended to boost their Gold and Platinum membership levels, since these members get a discount on the new fee.
How this compares to RCI
Personally I prefer RCI’s transparent system, where every deposit and exchange has a number of Trading Power Units assigned. In Interval, trading power has always been invisible, which makes it a guessing game.
- Right now, a quick search on RCI shows a Hawaii Studio week worth 32 TPUs, and an off-season Myrtle Beach 2-BR week worth 6 TPUs. IMHO, RCI is properly recognizing the value of the high-demand Hawaii property, and the low demand for Myrtle Beach in the winter.
- If you want to do off-season travel, with RCI, you could get 5 of those 2-BR weeks for the TPUs you get from your Hawaii studio. RCI has a higher exchange fee, but no upgrade fee, so each of those 5 weeks would cost you $219.
- On the other hand, if you were doing the same trade right now on II, you’d get just 1 off-season week and pay $377 for the exchange (upgrade + exchange fees). That’s on top of giving up your high-value Hawaii week. This makes no sense!
What effects could this have down the line?
This is conjecture on my part, but here’s what I can see happening as a result of this move…
- Fewer high quality studio and 1-BR deposits. Owners with high-value smaller units may find that they get a better deal by trading those through another company like RCI or SFX. That means if you’re on II looking for a studio in Maui, these may get harder to find in the future, as a result of these owners taking their deposits elsewhere.
- Some people may switch to renting. What if you can’t move to RCI? If you’ve got the high-value unit, you may find more value from renting it out. With rentals, the market prices them based on demand for different resorts, seasons and unit sizes. If you’ve got something in demand, then you may be able to get more for it this way.
- Less demand for trades into larger, low-value units. Let’s say last year, you could trade your primo ski week 1-BR for a 3-BR in Orlando, but now it’s going to cost $198 more to do that. Would you still do that? Some people will not, which means the demand for those lower-value larger units could decline. Theoretically, lower demand could mean their trading power declines, too.
- Expanding what a studio/1BR can see? Some II users are reporting that they can now see additional exchange options when searching with a studio. (I don’t have an accurate baseline search for comparison, myself.) If II wants to boost the demand back for those larger, off-season units, they might make them visible to more small unit exchangers, who previously didn’t have enough trading power to see them. As an extra bonus for II, if they can encourage more upgrades by opening these up to more people, they get more upgrade fees, too.
- Low-priced large units better for trading. Let’s say you could purchase the high-priced Maui beachfront studio, or the cheap 2-bedroom in Branson. If you could use either of these to exchange through Interval into a 2-BR in Tahoe, it would cost you an extra $198 with the studio, so the cheap 2BR has an advantage as a trader.
- Fewer people doing ePlus retrades. Before, you could take the smaller unit, and then wait to see if you get a better deal on retrade. Now, that better deal would cost you the ePlus fee + upgrade fee. Is it still a better deal? Some people will likely decide that it’s not.
- Flexchange more important than ever. You can still get size uptrades without the fee IF you do them during Flexchange. That makes working the Flexchange period more important than ever, and could increase the number of people trying to rely on that strategy.
- More fees? For upgrading season? Resort quality? ** I HOPE NOT! ** Unfortunately, it makes just as much sense to me to charge extra for season upgrades as it does for unit size upgrades. Once again, that’s supposed to be factored into trading power and comparable exchanges, but the lure of extra fees can be powerful. Hopefully they won’t expand to additional upgrade fees, because that would make trading through Interval less and less appealing.
What do you think of this new fee? Have you done unit size upgrade exchanges with Interval before? Do you think you will do so in the future? Will this change the way you plan your deposits and exchanges?