Published on July 15th, 2017 | by William Charles99
Economics Of Owning A Timeshare
This is a guest post written by The Timeshare Guru. He has previously written ‘Benefits Of Owning A Timeshare‘, ‘Complete Guide To Renting Timeshare Properties On The Cheap‘ & ‘An Introduction To Timeshare Offers‘. If you like those posts or this post please check out his site.
One of the reasons that timeshares have such an awful reputation is that they are simply not transparent. They lure your into to attend a timeshare presentation and make broad statements of being able to travel around the world in luxurious accommodations for a fraction of the cost. They make these broad statements and then pressure you to make a significant financial commitment during this 2-hour presentation for a financial commitment that can last a lifetime and even beyond.
While a lot of the broad statements are half-truths or partial truths, one of the major issues with timeshares is the lack of transparency. I am trying to fix this major issue by explaining the systems and showing readers how to maximize timeshares.
In order to do so, I think one of the best things that I can do is to show readers how I use one of my timeshares. I currently own a 2-bedroom unit at the Hyatt Beach House in Key West, Florida. I HAVE NEVER BEEN TO THIS RESORT AND I LIKELY WILL NEVER GO!
It’s hard to imagine purchasing a timeshare or owning a timeshare in a destination that I have never been and may never go, but the truth is that I bought this Hyatt timeshare solely for the points. Click here for an overview of the Hyatt system in case you are interested in learning more.I purchased my Hyatt timeshare on the resale market in 2007, just before the recession. I purchased this unit for about $6,500. During the 5+ years following the recessions, weeks like mine were selling for $1.00 or possibly a little more but way less than what I paid. A similar week purchased from the developer were selling for somewhere around $25,000. Compared to the developer pricing, I got a discount but definitely did not purchase at the very bottom of the market.
My Hyatt Week
The Hyatt system is a hybrid system where I can use my week or exchange my week into points. As I said, I never use my week and likely never will as the points provide me a tremendous amount of value. For my week, I receive 2,000 Hyatt Residence Club points. Hyatt can trade through their internal system or through Interval International. Knowing whether a particular timeshare trades through RCI or Interval International is intensely important as I think that the best value is actually exchanging your unit through these external exchanges. Internal exchanges do provide some value but I think that the external exchanges can be the most advantageous.
External Exchanges With Hyatt
With Hyatt, if you elect to convert your week into points, you can transfer them into Interval International or make an internal exchange. For my particular week, I pay approximately $1,200 per year for maintenance fees. When I originally purchased my week in 2007, I was paying about $900 per year so it has been a decent jump in fees. This seems like a decent amount of money for one week but through exchanges, I can get almost 4 weeks of vacation. Here is how I do it. As I mentioned, I receive 2,000 Hyatt Residence Club points. These convert 1 to 1 to Interval International points. Here is the exchange chart for Interval International:
As you can see, they have three different seasons. Generally, I would ignore yellow and green as these are low demand areas and generally will be at times and resorts that you will not likely to go. There are some exceptions but almost all my exchanged weeks are “red” weeks.
For families, a 1 or 2 bedroom is likely needed as these are generally fairly large and far surpass a hotel room. A 1 bedroom unit is generally bigger than most “suites” that I have received in hotels. Truthfully, many studio units are actually bigger than a lot of “suites” that I have received through Marriott and Hyatt hotels as I have held top tier status of both of these chains. For couples, studio units are very spacious especially if you are comparing it to a hotel room. Since most DoC readers are likely points fanatics like I am, for this post, I will use Studio units as they are the best comparison to a hotel room.
By doing some quick math, (2000 / 430 = 4.65), you can see that I can get over 4 weeks in a studio for my one Hyatt week. Exchange fees are expensive so you need to factor this in to see how much a week will cost.
As I mentioned, I pay $1,200 in maintenance fees per year and it cost $179 per week to exchange. Therefore, it costs me approximately $479 per week. $1200 / 4 = $300 per week plus $179 per week for an exchange fee. Therefore, it costs me approximately $68 per night for vacations in a studio unit. $68 for night for most hotels is generally pretty good but it can be an absolute steal for great resorts and during prime seasons.
Comparison To Retail Rates
For example, this year, I am mostly using my timeshare weeks for ski vacations. I currently have reserved three ski weeks in Park City in a studio unit. I have a studio reserved at the Marriott Summit Watch (directly on Main Street) in mid-December, a week at the Marriott Summit Watch in January on the tail end of the Sundance Film Festival and Spring break at the Westgate Park City at the base of the Canyons ski resort (ski-in/ ski-out). These are three very high demand weeks at very high quality resorts.
Retail rates for these weeks are as follows:
- Marriott Summit Watch (mid-December): Approximately $2,300 for the week
- Marriott Summit Watch (January – February week): Approximately $3,300
- Westgate Park City (Mid-March): Approximately $3,300.
Essentially, for this year, I am paying about $479 per week for the above weeks while the going retail rates are 5-8x more.
Can I get the same weeks year after year? Probably not. Can I get the same value year after year? Probably not as well but I would say that I comfortably pay approximately $500 per week for resorts where the current retail rates are around $2,000.
In order to get these weeks, there are various tips and tricks. I generally put in a request as far as possible into the future (about 2 years) and pick multiple destinations that I would like to travel. These can be ski weeks, Caribbean or Mexican weeks, Hawaii weeks, urban weeks (Boston, New York, etc.), Disney weeks or any other destination that has high quality resorts that I would like to visit. I have been doing this for about 10 years since my original purchase and some years, I do better than others in terms of value as compared to retail rates but I almost always get outsized value from the use of my timeshare. I travel multiple times per year so I know that I will use it.
Some years, timeshares do not fit into my schedule as availability is an issue or flights (almost always free due to frequent flyer miles) do not work out properly. In those years, I can simply bank my points to use the next year provided I make that decision early enough in the process.
Again, I say this constantly but timeshares are not for everyone. For me, they work great. For now, with my family, I need larger units where even hotel suites are not spacious enough for my family of four so during some years, I do not get 4 plus weeks but I still generally 2-3 weeks in a 1 bedroom unit which can be very comfortable for a family of four. As you can see, I have ignored the initial cost of the timeshare in my overall analysis. Some will likely fault me for this but I think that even if you included it in my analysis, it would only take a couple of years to recoup your investment provided that you are able to reserve high valued weeks.
My goal is to provide more transparency to a system that preys on unverified promises. Do you own a timeshare and do you get similar value? What have been some of your best exchanges? Let me know what questions readers have so I can provide additional information. As usual, thanks to Will and the Doctor of Credit team for their ongoing support!
Note from Will: Big thanks again to The Time Share Guru for this series of posts. If you haven’t already, check out their site.