Timeshares: Should we buy one?

During our trip to Orlando, we stayed at a Hilton Grand Vacation Club Resort.  The price was right:  $330 for four nights.  It was the sort of resort that you would expect to pay at least $150 per night.  The catch?  Sit through a 90 minute timeshare presentation, of course.

If you haven't been through one of these, I'll try to recount the experience with as much detail as I can remember.  It's a remarkable sales presentation, with answers for every question/objection.  So, here's how it goes.

They start by sitting you down at a table with a salesperson who comes off as very unassuming, very friendly.  He breaks the ice with "getting to know you" sort of questions.  He tells you a bit about himself and how he got into this business.  He assures you that there is no pressure to buy, and that this isn't for everyone, but "two out of four people who walk in end up being club members."  Whether true of not (and I think not), the idea is to assure you that it's a good buy and lots of other people have seen that.

Once he begins the sales presentation, he starts by asking you where your dream vacation is.  He asks about the last couple of vacations that we have taken.  They are trying to get an idea of whether we take large annual vacations or several small weekend getaway type trips.  This way they know what angle to play up.  Of course, they don't tell you how much "membership" costs at this point.

Next, we watch a ten minute video of good looking people and cute kids having a great time on beaches, golf courses, ski lodges, etc.  The voiceover is right out of your favorite Tony Robbins infomercial.  The idea is simple.  Everyone is supposed to walk out thinking, "man, I want that life!"

We are taken into another room with pictures taken right out of the video we just sat through.  He leads us to the "Vacation Calculator" and asks me if we regularly take two weeks of vacation per year. 

"No," I tell him, "generally one, or we travel to places where we have friends we can stay with."

"Would you say you spend $200 per night?"

"No way, maybe a hundred."

"And we have inflation at 5%, is that okay?"

"No (again), I would put 3%"

"And how many years do you plan to vacation?  Should we say 30?"

"Sure."

He plugs in the numbers and the super computer spits out a number of thirty six thousand dollars and some change.  Now, I didn't have my financial calculator with me, so I couldn't do any time value calculations, but I figured they just did a future value calculation with the numbers we agreed to.  But when I got home, I found that $700 per year at 3% for 30 years give you a future value of $33,302.79.  Not thirty six and change.  But whatever.

So, the strategy is obvious.  We have already committed to spending $36,000 in vacations in our lifetimes.  If he could offer us lifetime vacations for less than that, it's a good deal, right?  We'll see.

The first plan the he shows us is around $30,000.  Not even close.  He tries to use the angle that it's less than the $36,000 that we will spend over our lifetimes.  Of course, the time value of money tells us that $36,000 over the next 30 years is likely less in value than $30,000 today.  And, of course, they have payment plans at convenient financing rates of 11.9%!

In fact, the net present value of the cash flows we agreed to is $20,388.35.  So, even if we really are going to spend $700 per year on hotels, increasing 3% per year for inflation for the next thirty years, the most we should pay today in lieu is $20,885.  The problem is that, in real life we don't necessarily take vacations every year, and either stay with friends, use points, or find great deals for the times that we do.

So, after we firmly explain that we are not interested, he brings his manager over.  The manager offers a package for around $14,000 that gives us points every other year.  The problem is that it's the same deal.  Half the benefits, half the cost.

We explain that we are saving to buy a house, and this just doesn't fit our budget.  The manager whips out his calculator and says, "if I told you you could add less than $70 per month to your mortgage, and take a vacation every year for the rest of your life, would you do it?"  I chuckled.  It's a pretty clever response.  There are two problems with it.  First, you end up paying for the stupid timeshare for the next thirty years.  Second, $14,000 amortized over 30 years at 6% is eighty four bucks, not less than seventy.

It's an interesting idea, but here are the things that I wonder about.

1. How much commission do the salespeople make per sale?  I asked a cab driver what he thought, and he told me that they make $3k when they sell a $15k timeshare.
2. If the timeshares a such a great deal for the buyer, how is it so profitable for sellers?  How do we know it's so profitable?  Well, between Hilton, Marriott, Trendwest, Shell Vacations, and Westin, I get calls and emails pretty frequently to come to a presentation with dinners, movie tickets and weekend getaways thrown in whether or not we buy.  If they're willing to throw that much worth of goods at us, they must be making enough on each sale to make it well worth it.  So, why is it SO profitable?
3. Are most buyers happy with their purchase?  I know two people at work who own timeshares and both seem happy with it.  But I wonder if it really is a good deal.  If I overpaid for a weekend at the Ritz-Carlton, I may be happy with it, but I still overpaid.

Comments

[Dan]

I just got back from a vacation in Florida.

I went to the Hilton Vacation Club presentation supposedly 90min...

My experience was almost exactly as Spending Wisely initially reported...

Except I found the sale pitch to be extremely high pressure...

They brought in the manager after I informed the sales person TWICE that we (my girlfriend and I) would not purchase anything today. The manager must have had to much coffee and was very hyper, rude and simply not pleasant to work with.

I asked him for information on HVC packages so I could go home and read over the options, costs, small print and benefits, and he flatly tole me NO!

I told him we weren't interested and that we do not make $30k dollar purchases after a 2 hour pitch.

He told me that I would loose my incentive (7000 additional 1 time free points) and the sales person would not get the commission (I informed him the salesman was nice and friendly and that if I did buy later it would be through him).

I told him we didn't care... We don't spend $30k after a 2 hour sales pitch... period. I informed him I do 10-20 hours of research before buying a $1500 computer and I am in IT, lol!!!!

He said ok then had an overly friendly women come in to pitch a "trial" membership of 5000 pts for $1500. I again said I was not purchasing anything today.

So after 2 hours we finally got out of there with our Universal tickets...

I just don't get it... They refused to give me information to take home, they said its on the website. They gave me hilton.com no paperwork, no booklet etc...

How many people actually spend $30k after a 2 hours presentation with NO research... it baffles me.

You would think if they really wanted to sell the timeshare they would give me all the information I wanted and a phone number to call if I had any questions etc... Hell used car salesmen will give me their cards and tell me to call them anytime!!!!

I am just confused....

[Steve]

Attended sales pitch in Orlando last week 3/28/07. Soft sell (good cop)followed at the end of two hours with a high pressure hard sell from the "sales manager" (bad cop). We walked out when the "sales manager" became very rude and curt when we would not bite on the $585/month 5 year plan (7000 points) + booking fee + Home owners dues + tax’s + special assessments.

The magic computer calculated we would spend $168,000 in the next 30 years (21 days/year @ 110/ night 5% inflation) on vacation…… so $30,000 price was a tremendous value? And we give you a deed (woooooooooo!!!!!).

Complaints to the HGV people were well received but in hindsight I think the only reason was to give the appearance that they were surprised about the sales tactics. No follow up call from a manager regarding my complaint.

The only value was the discounted hotel stay in return for having to spend 2+ hours with them. $99 for 3 nights at the Double Tree Universal Studios.

[will]

Hi Inofo Seekers,

This is just a quick update on my ebook entitled "The Good, The Bad and The Ugly of Timeshare Ownership", it's still in the works and I'm compiling data as quickly as possible. I hope to have it available for you soon.

Interesting comments from readers who have emailed me because of reading "Its Just Money" ie,people all over the US and Canada stating that it seems REAL INSIDE INFORMATION about the timeshare industry is suspiciously IN SHORT SUPPLY. Here are a couple of exerts from some of the many emails I've recently received.

Big THANKS to Chris H. for his email. Also C. Campbell for his email.

Will
"I read your posting on Its Just Money ... I was researching for info on timeshares and many,
many clicks finally lead me to your posting, the first one that
really seemed to be providing inside dope. It is beginning to
appear to me that the timeshare industry has managed to purge just about all objective information
from the internet...there is just
about no information available that isn't sponsored in some way
or other by industry".(end of exert) Chris H.

The timeshare industry is BIG BUSINESS for those who don't know, there is SERIOUS $$$ "On the table" everyday and some people are being taken advantage of because of a lack of real knowledge when it comes down to the timeshare GAME.

Doctors,Lawyers and anybody, once they step through the resort doors are fair game to the "ether effect".

The "ether effect" in timeshare terminology is a form of physiological manipulation. That's the short answer,and usually
the misinformed and unsuspecting are the victims.

Trust me on this one, I could post email after email form people who have attend timeshare presentations and as in one email, "They could make a used car salesman weep in shame"... (end of excerpt)

This may seem like a joke but it's not. Professional timeshare sales and management people are highly skilled at using this! Here is another email I recently received.

Will,
I just attended one of these 90 minutes Shell Vacation Club and smelled a skunk from the get go.
I came home and searched the blogs and thank you for having posted your comments. C. Cambell

Also NEW: If your hart is still set to buy into timeshare, I
offer a service where you can get your questions answered Quickly,Truthfully and Straight to the Point, without the smoke and mirrors.

Remember, you are about to sign a
contract for $20,000 or $30,000 grand, based on a 90 min to 2 hour presentation...

If you are comfortable with that thought... you are supposed to feel that way. If you think you have all the information you need to make an informed decision...Welcome to Easter Island or should I "Ether" island...!!!
Get help fast!

Go to www.fastwebbz.com SKIP THE FIRST PAGE..It's a resort discount package promo I feel is a good deal right now. Go to the Aruba icon on the left and click. My service is not free because I have saved people THOUSANDS by revealing costly mistakes they were about to make.

Also, If you own timeshare and wish to attempt to cancel the contract, their are a couple of strategies and alternatives possible. Send me a (SHORT) email, if I can work with your situation I'll contact you back.

But always remember,"We are the sutarts of our own money"

Happy Vacationing,
Will

will5000@bellsouth.net

[stoverny]

Hi,

If you are looking at a timeshare as a financial investment it's probably not a great deal.

However, if you stick with the top hotel-branded timeshares (Hyatt, Marriott, etc.) and buy resale, it can be a good investment in quality vacations. My wife and I have taken family to beuatiful resorts in Tahoe, Naples, and Key West with our Hyatt timeshare. We would have never been able to afford the per-night charges for 2-BR units of this quality in these desirable locations. We paid $7100 resale for a week that would have cost over $15,000 direct from Hyatt.

The Washington Post recently did a buy-vs-rent comparison of the top timeshare companies, and in every case buying was financially superior (and that was based on direct purchase, not resale). The article is at

http://www.washingtonpost.com/wp-srv/artsandliving/daily/graphics/timeshare_121706/index.html

Enjoyed your blog and everyone's comments! Timesharing is obviously not for everyone but if you are smart about it you can stay in some awesome resorts for less than you'd pay on a per-night basis.

[NICK]

The last couple of years my wife and I have been going to Jamaica in Feb. for our annual 2 week vacation. They have been incredible but expensive trips. We stayed at all inclusive both times. We loved the climate and discussed maybe trying to purchase a time share. The amount of money you have to put out up front is one thing but the monthly fees didn't add up for me. In my search I've come across a deal that has tweaked my interest. Its a life time vacation deal called "Lifetime of Dream Vacations" , marketed by a company in Costa Rica called The Truman Group Holding SA ... They claim that they can give you 21 days per year to 3-4 star resorts and cruise lines at your choice of tens of thousands places around the world for the rest of your life. ... They are selling these life time memberships for $4750.00 US or a yearly membership for $720.00.. Now I am not advocating this deal as I've never heard of the Truman Group... but if this deal is legit ... its sounds much better the any time share I have looked at.... Has anyone heard of theses guys?

[Scott]

I heard of this "company" before (TRUMAN GROUP) and it's a TOTALLY SCAM!!!!. Please just do the math... They're 100% CON MEN.

[anonymous]

Does anyone know if there is a way out of the sales pitch? I prepaid for a vegas trip from Hilton Grand Vacations, but now i have a change of heart? Is it possible to cancel and get my money back?

[Howard]

We ae presently staying at a Marriott club at Disney Paris and enjoying it very much.
Originally we purchased at Newport, CA because we got hot for the location and did not do our homework. We should have looked for a resale and a location that had the lock off so we could give up one half and use the other.
In addition we felt stupid that we could have bought for about 50% or less if we had done some shopping.
We sat through the presentation here at Disney Paris and figured that if we bought and paid for the week plus maintenance for the next 10 years the average cost per night is $411 per night.
We have traveled in many countries in the world and have not paid over $400 per night and would not do so as there are so many choices.
You might ask why use 10 years. I am now 70 and figure that it reasonable to be traveling longer distances only over the next 10 years therefore I feel you have to amoritze over the use of time.

[Lonnie Howard]

Just last week, my family and I stayed at a Hilton Grand Vacation Club in Orlando for about $250 for the week (4 nights). We had no intentions of joining the club, so we didn't do any research beforehand. But, after sitting through the presentation, we decided--reluctantly--to buy their cheapest "manager-only" special that renewed points every other year. But, I think we're going to cancel it (which we have until this Friday to do). From WWW research, seems like we just should know much more about vacation clubs before buying, and we might get a better deal--even if we go with HGVC again. I was hoping ConsumerReports.org had some information on it, but they don't.

[Fred J.]

I have been the owner of a 16k Hilton Grand VC condo in Las Vegas on the strip for two years. Just recently was the first time we used it. We like the accomodations but I would like to know ways to better utilize what we have and how to expand it, either through HGVC or on the resale market. Is there a source for such information?

[Richard]

DD

[Richard]

Fred J.:

Please email me at robbinsrichard53@hotmail.com and I'll explain ways to maximize your HGV membership.

[Robert]

If you want a timeshare buy resale. We went to a Wyndham presentation and decided we liked it but fortunately didn't commit to it.

Truth is, a $14,000 new timeshare is lucky to sell for a thousand buck on Ebay. But at a thousand bucks the real cost becomes just the maintenance fee. We pay $550 for a year for a weeks vacation and can rent another week for about the same. The facilities we found are usually better than you could get for $80 a night, so for us it's a good deal.

[j496]

I just went throught the same presentation. It is almost as if we had the same salesman - your description was basically EXACT as to what I saw.

Only difference, the guy initially mentioned that if I wasn't blown away with it, I shouldnt do it. Then, at the end, he puts a 16.9% interest rate on the table on top of a 36k package. to say I wasn't blown away is an understatement. He acted dumbfounded as to why I didn't want it. I also had other salespeople come over and pitch various other bad ideas. Why would people making good money that have credit ratings over 800 just simply agree to a 16.9% interest rate after just a brief intro to timeshares?

The salesman also mentioned that he is "doing very well" there and is about to retire. Mainly, I didn't feel bad turning him down since he is already rich and clearly making plenty of money off interest rates like 16.9%. I mentioned the rate to the manager, and he said the lowest rate is 11.9%. The first guy said that 16.9% is non-negociable. overall, the pressure wasn't bad at all until the end, when it got more annoying than anything with 3 other people coming at you.

[dindia zitek]

Don't buy one from ShellVC. their paperwork is very misleading. i have been happy with worldmark, but the resale market is a MUCH better deal

[John]

Hi I cant believe people are still saying they would rather stay on the cheap! Attending a 90 minute presentation, wasting the poor sales guys time, knowing you are just going to say no is purely unfair and not nice. Why not just stand in line at the all you can eat buffet and eat till you vomit feeling like you beat someone out for free. My daughter sells time share because she lost her job, and its horrible how much pressure people create when they pretend to be interested, or take up her time when she mandatorly must spend 90 minutes by her company guidelines like creeps like you people. Your sick, and waste peoples time and your own in the presentations so you can save money on the less fortunate. God bless internet people they come in all types. Cheap and horrible.

[John]

Hi I cant believe people are still saying they would rather stay on the cheap! Attending a 90 minute presentation, wasting the poor sales guys time, knowing you are just going to say no is purely unfair and not nice. Why not just stand in line at the all you can eat buffet and eat till you vomit feeling like you beat someone out for free. My daughter sells time share because she lost her job, and its horrible how much pressure people create when they pretend to be interested, or take up her time when she mandatorly must spend 90 minutes by her company guidelines like creeps like you people. Your sick, and waste peoples time and your own in the presentations so you can save money on the less fortunate. God bless internet people they come in all types. Cheap and horrible. I work at http://www.1800marryme.com
and I tell you people on the internet are gross...and timeshare free viewings is right up their gross alley.

[Stupid in Florida]

Hi. You have all this experience with timeshare companies, so do you know what they do with delinquent mortgage payers? We bought one for $5000.00, and then the economy did what it did. I found out I was having a late in life pregnancy, and I was very sick, husband disabled, etc. etc. etc. What's going to happen to us if we can't pay anymore? (We qualify for foodstamps now)
Thanks

[will5090]

Hi,
I'm Will5000.
For: "Stupid in Fla"

First, Sorry about your current situation, to shed some light on your question about delinquent Timeshare Payments: OK, here it goes. Because you signed a binding legal agreement they can request you continue to honor you obligation. As I stated in one of my posts out there somewhere, If you miss a payment or two, timeshare companies can request that you pay them in full. Also, once in delinquency, your right to use the property or your points will probably be suspended, meaning you won't be able to use anything you purchased. This is only a suggestion, This isn't legal advice. You should if necessary seek legal services always in contractual matters. That being said, you should if possible, speak with the resorts finance person face to face and explain your situation sincerely.

While they can be a heartless group of money grubbing
sharks at times, you may be able persuade them to drop the contract based on Financial Hardship. But please don't get your hopes up to high here. I've worked in the industry many years, and while not probable, it has under certain FINANCIAL HARDSHIP circumstances happened.

More than likely you may be able to work out a lower comfortable monthly payment. If that's not possible, they may foreclosure after 6 to 12 or more months depending on the company.

The banks look at foreclosure of timeshares similar to property foreclosure. Foreclosure will affect your ability to acquire big ticket items and lasts for 7 years,so if you need
to brace yourselves for that
possibility, now would the best time to start.
The good news is people recover from it.

Regards,

Will5090@yahoo.com
Formally: will500

[Mikel A, Long]

Hilton does not work with any body on the problems in today's broken job market they told me flat out we do not work with any body on their payments you signed a contract but at the time i was making good money and working over forty hours a week but now i have been out of work over a year and can not afford to pay any body so i am just screwed by Hilton over and over taking money out of my checking account with out my authorizing it and over drafting my checking account please do not make the same mistake i did do not buy Hilton time shears you'll be glad you didn't

[Barb]

I purchased a time share from Hilton and was stupid enough to upgrade it the following year. I did not realize the MF was going to more than triple. I would give anything to get out of this, way too expensive. Barb