How to Save Money on a Timeshare

Here are some amazing numbers! I knew that selling timeshares was a big business, but I didn't know how big. Consider these facts:

More than 4.4 million U.S. households have been bitten by the “vacation ownership” bug and have purchased time shares, according to the American Resort Development Association. Time-share sales surpassed $10 billion last year.

Holy cow! $10 billion!!!!!

The piece linked above goes on to list "ten tips for saving on timeshares", but I'm going to give you the quick Free Money Finance version of how to save on them: don't buy one.

To me, timeshares seem to be a way to lock in an expensive vacation for a long, long time -- something that most people shouldn't do and can't afford. That said, I'm interested in hearing from those of you who do have timeshares and like the setup, costs, etc. Maybe I'm missing something.

Comments

[Dave]

I sat through a pitch last year, and being a financial analyst, I put together a financial model for my non-financially literate friends. Unless you spend $1,000 a year on your vacation lodging, this is not the deal for you.

The maintenance fee is usually more than I spend in a year on vacation hotels, let alone the onetime $5-10k "costs" of the timeshare. Put your cash in an investment, then use Hotwire or rent a timeshare! Look at eBay and time share rental websites and you'll see that people can't sell these "investments" fast enough.

[Matt]

Gregory Karp's Living Rich by Spending Smart has a good section on this. The bottom line is if you're smoking enough crack (or as I actually saw on one of those "tours", drinking enough champaign at 8:30 in the morning) to think a timeshare is a good idea, at least wait and buy used. In the secondary market, to the extent it exists at all, people are so desperate to get rid of these things that they'll sell for pennies on the dollar. But then, why would you want it if they're so desperate to get rid of it? Hmmm...

On the other hand, going on one of those tours is a good way to get a free luxury hotel stay as long as you have the willpower (and don't mind spending the time) to say no, no, NO! to the sales pitch. They'll even offer you a package for a few hundred bucks as a last desperate ploy. Say no to that too, and you're home-free. The salespeople are highly incentivized and wily, so you might even have to be a tiny bit rude towards the end or contradict your earlier story a little bit as the offers change, but stick to your guns no matter what. You don't have to make the salespeople happy or even make perfect sense, you just have to keep saying no.

[Rob]

I've sat through two of these pitches, and the salespeople get more aggressive each time you say no. It takes forever to get them to give up. But I agree. Bad investment. Although, sometimes I think part of the appeal is the ability to tell other people you have a timeshare. It is somewhat of a status symbol.

[JM]

Funny enough I actually used to be a timeshare sales agent when I was twenty years old for Marriott. I eventually ended up leaving since its hard selling a product you don't believe in. However as mentioned above if anyone ever wants one its always best to buy one second hand and I personally wouldn't even waste my time sitting through a pitch. I know all the upper management folks I worked with all bought them second hand and they used the company discount to boot.

[No Debt Plan]

You're not missing out on anything.

Waste of time.

Waste of money. 'Nuff said.

[Matt]

Believe it or not, it was our salesman who told us exactly how to run the gauntlet of "closers". I think we would have escaped unscathed anyway, but his specific suggestions certainly didn't hurt. He said he wanted to help us out because we reminded him of his son and daughter in law. I guess he didn't believe in the product he was selling either.

If you maintain a good detachment, the tours can actually be kind of funny. There's cheesy videos with narrators saying things like "Ahh! This IS the life!" and then people being offered (and accepting!) wine and champaign at 9:00 AM while they conduct business. I haven't even seen a car salesman with the audacity to offer booze before negotiating begins! Well, I guess you have to have a pretty mean sense of humor. A more compassionate person would find the scene deeply pathetic.

JM, it's funny you mention a timeshare as a possible status symbol. It certainly wouldn't be among my friends and family. I'm quite sure I would have been ridiculed if I'd actually fallen for the pitch and bought anything on that tour.

[fathersez]

Hmm....I am with you. And I speak with authority. We own a timeshare and have not used it enough to make any dent in the holding costs.

I have now put it up for sale. Perhaps it may be useful for those with a large extended family who like to travel frequently and at different times of the year.

[Trent D.]

What about timeshares that, if unused, can be traded towards points? My grandmother trades her usage towards Marriott points when she doesn't use it, and uses the points for air travel and lodgings elsewhere. She also transfers weeks from Orlando (where she "owns") to other places like Hawaii. Has anyone analyzed the cost/benefit there?

[Philip Robert]

Your quick free money finance version should be highlighted. This is the most important part of the entire post. DON'T BUY A TIMESHARE

[becky]

I unfortunately fell prey to a timeshare seller (one of those totally cheap vacation packages where we just had to go to a one-hour timeshare presentation). I have pretty much enjoyed using it (I use it about 1-2 times per year, depending on how big of a place I get); although, my frustration comes in the fact that you have to book one year in advance or more to get the nice locations (unless your going to a spot in the 'off-season'). I booked a Hawaiian trip a year in advance and our hotel was mid-rate. I booked a Puerta Vuerta trip and that hotel was fabulous - we got the penthouse and it only cost us $150 (this doesn't include the yearly maintenance fee). I've looked into selling my timeshare, but I wouldn't even make 1/3 of what I paid for it, so that doesn't work for me. So, I'm stuck with owning the timeshare and making the best of it by paying my fees one year or more in advance so that I can book my vacations one year or more in advance (talk about planning!!).

My advice - stay as far away from timeshare presentations as you can no matter what else they offer for free/discount in the package. I will never go to one again, no matter what - they are just too high pressure.

[Veteran Military Wife at Life Lessons of a Military Wife]

It's basically just a prepaid vacation plan...you don't really own anything! With that being said, if you absolutely want to fit in with the "timeshare in crowd", then just buy one second hand...you get a discount of anywhere from 50-90% doing that.

[savvy]

I guess I'm the lone voice of dissent. If you travel a lot, a timeshare can be worthwhile. For example, we (hubby and I) probably spent $10K on travel last year. We like to travel and do it often. We have a timeshare and it definitely decreases the amount we spend on travel.

We have 5000 annual points with HGVC (Hilton's timeshare program). You can purchase the same for ~$5K on eBay. Maintenance costs are ~$700/year. If you travel like we do, you would come out ahead in less than five years.

As an example, we spent a week at a Hilton resort in Mexico for our honeymoon. The rooms were normally ~$300/night. We only paid a $69 fee through HGVC and our $700 annual fee. So we paid $769 instead of $2100. That's a $1331 savings. It doesn't take that long to recoup the $5000 purchase price.

[mbhunter]

"Don't buy one."

Hah -- that was the answer I thought of just reading the title of your post. Bravo!

Actually my timeshare has let me stay in places I would normally not be able to afford, on the beach in Hawaii, European travel, I think people who just go to the presentation for the free gift are such moochers. If you don't want to hear a sales presentation then don't go to one.

[Jeff D]

I guess it does depend on how much you vacation and the deal you are getting. We own a timeshare at a ski resort, but with it comes free skiing for up to 6 people every time we use it. So if we go for a week, the rooms would cost us about $400/night and there would be about $400 per day in lift tickets. That's about $5,600 for a week. For us, this costs us a $70 cleaning fee plus $1,200 yearly fee. Total savings $4,330.

We also get another week in the summer. Again, about $400 a night, but we also get free camp for the kids where the counselors are awesome and the kids can't wait to go. That's $75/day/kid or about $1,600 worht of camp. Total cost of the vacation would be about $4,300. With vacations like that, you can recoup the money you spent on the timeshare in under 5 years.

The timeshare is also part of the RCI network, so we can not use the weeks and convert them to points and use them at about 4,000 resorts worldwide. So when we hit Disney next year, the hotel is paid for.

Now, granted I dont think you make your money back as fast on the rci part of it, but it's still nice to have the option. And for timeshares that dont include the perks mine has (free skiiing and camp for the kids) the payback period would be a lot longer and tougher to justify.