Investing in timeshares.Today's vacation clubs offer good value and accommodations for consumers looking to get away For their 10th anniversary, Willie and Elizabeth Hurd wanted to spend four days at Shutters on the Beach, the luxury hotel in Santa Monica, California For other uses, see Santa Monica (disambiguation). Santa Monica is a coastal city in western Los Angeles County, California, USA. Situated on Santa Monica Bay of the Pacific Ocean, it is surrounded by the City of Los Angeles — Pacific Palisades and Brentwood on the north, where they'd stayed during their second honeymoon Second Honeymoon was a game show modeled on The Newlywed Game in which three couples & their children answered questions to win (as the title says) a second honeymoon. . This time, they would need two bedrooms--the second for their two small boys--in a hotel where each room with a view cost about $500 per night. For the average traveler, that stay would cost about $4,000. But for the Hurds from Celebration, Florida Celebration, Florida is a census-designated place and an unincorporated master-planned community in Osceola County in the U.S. state of Florida, near Walt Disney World Resort. It was developed by The Walt Disney Company. , the financial considerations weren't that lofty. "We paid the exchange fee of $75 through the Disney Vacation Club's Concierge Collection and spent 20 of our 300 points." Points? Exchange fees? Vacation dubs? What are these? These are the currencies of the modern-day timeshare A form of shared property ownership, commonly in vacation or recreation condominium property, in which rights vest in several owners to use property for a specified period each year. or vacation ownership industry, a thriving business in which families invest in future vacations. Timeshare owners essentially purchase access to the equivalent of a home or condominium condominium In modern property law, individual ownership of one dwelling unit within a multidwelling building. Unit owners have undivided ownership interest in the land and those portions of the building shared in common. at a vacation ownership resort, then have access to equivalent facilities through a global exchange network. The ownership of a week or more may be for a specified period each year or for a given number of years. According to according to prep. 1. As stated or indicated by; on the authority of: according to historians. 2. In keeping with: according to instructions. 3. Chris Larsen Chris Larsen is the chairman and founder of E-loan and the co-founder of Prosper.com. Larsen received a B.S. degree from San Francisco State University and a M.B.A. from Stanford University. In 1996 Larsen founded the Palo Alto Funding Group which later became E-Loan in 1996. , spokesman for the travel industry's American Resort Development Association The American Resort Development Association ("ARDA") is a professional association representing the USA vacation ownership and resort development industry, also referred to as the timeshare industry. (ARDA Noun 1. ARDA - an agency of the Intelligence Community that conducts advanced research and development related to information technology Advanced Research and Development Activity ), vacation ownership is the fastest growing segment of the travel and tourism industry. "Last year, there were about $2.7 billion in timeshare sales, representing about 270,000 vacation weeks at an average cost of $10,000 a piece in the U.S.," says Larsen. "There are nearly 2 million owners in the U.S. now, and approaching 5 million timeshare owners worldwide." And they have access to some 1,200 American and 4,000 international resorts. Florida is the center of the American timeshare industry with about 24% of the resorts and sales of $838 million in 1996. The growth in the industry emanates from many major hotel chains and resort companies entering this segment of the travel market. This brings higher standards, greater flexibility in the types of offerings and a variety of financing plans. Some of the major players in the field now are Marriott, Four Seasons, Hyatt, Disney, Travelodge and Ramada ra·ma·da n. Southwestern U.S. 1. a. An open or semienclosed shelter roofed with brush or branches, designed especially to provide shade. b. An open porch or breezeway. 2. . According to the national Council of Better Business Bureaus (BBB BBB A medium grade assigned to a debt obligation by a rating agency to indicate an adequate ability to pay interest and repay principal. However, adverse developments are more likely to impair this ability than would be the case for bonds rated A and above. ), there are two basic types of timeshare arrangements: a simple fee plan in which the buyer purchases and owns part of a real estate unit; and the right-to-use plan which provides access to the firm's resort facilities, but not ownership in the properties. Marriott, with more than 120,000 owners and 38 resorts worldwide, is the industry leader. Under the point system, a buyer receives a type of vacation credit that is redeemable annually for a varying number of accommodations, depending on the season, day of the week, size of the unit and resort location. Marriott's prices start at $8,600 for a week, says Marriott Vacation Club spokesman Ed Kinney, "but prices go as high as $46,000 for one week in Park City, Utah Park City is a city located in Summit County, Utah, United States. It is one of two major resort towns in Utah, the other being Moab. It is considered to be part of the Wasatch Back and a part of the Salt Lake City metropolitan area. ." It should be noted that the cost of the property is not the only cost of a timeshare vacation. All timeshare units have maintenance fees, usually $400-$600 per year, and there may be other costs. What makes the timeshare concept work are the exchanges. Though all the resort companies permit owners to exchange weeks or days within their own resort network, a major attraction is the ability to exchange quality lodgings anywhere in the world at the same, one-time fixed price. These exchanges are made possible by two firms: Resort Condominiums International Resort Condominiums International (RCI) is a subsidiary of the firm Wyndham Worldwide (previously Cendant). Founded in 1974, RCI has grown to become one of the larger brokers of timeshare trades. (RCI RCI Royal Caribbean International RCI Radio Canada International RCI Rehabilitation Council of India RCI Residential Communities Initiative RCI Roof Consultants Institute RCI Remote Control Interface RCI Residential, Commercial, Industrial ) and Interval International Interval International is an affiliated exchange company that arranges vacation exchanges for timeshare owners. Their exchange network includes more than 2,200 resorts and nearly 2 million member families worldwide. Similar to RCI, Interval International, I.I. (II). Virtually all of the resort companies are affiliated with one of these firms. RCI is the dominant company with some 3,300 affiliated resorts and about 80% of the vacation exchanges, while II has about 1,600 resorts. The first year of membership with either RCI or II is usually included in the purchase price. After that, there is an annual fee, as well as fees for each exchange. Both companies have rating systems to ensure that travelers stay in condominiums of comparable quality to the one they purchased. ARDA has the following advice for people considering timeshares: * Remember that timeshares are not financial investments. If you're considering a purchase, you should think of it as an investment in future vacations, rather than an investment in property. * Learn as much as possible about the company. Not all firms offering timeshares are financially stable, national businesses. The BBB reported 18,570 inquiries into timeshare companies in 1996 and 574 complaints, says Chris Burgess BURGESS. A magistrate of a borough; generally, the chief officer of the corporation, who performs, within the borough, the same kind of duties which a mayor does in a city. In England, the word is sometimes applied to all the inhabitants of a borough, who are called burgesses sometimes it , director of operations for the Dallas BBB. These reports can be accessed through the BBB Web site at www.bbb.org. In addition, many local BBBs have 24-hour automated information services See Information Systems. that provide telephone summaries of the reports on a company if you provide the firm's 10-digit phone number. * Seek legal advice. A timeshare purchase is a long-term investment, more akin to buying a home than buying a car. Buyers should seek legal advice before signing purchase agreements. * Don't rush into a financial commitment. Reputable rep·u·ta·ble adj. Having a good reputation; honorable. rep  u·ta·bil timeshare
companies--particularly those affiliated with hotel chains--avoid
highp-ressure sales tactics.* Consider the resale potential. Owners need to consider the ease or difficulty in unloading Unloading Selling securities or commodities whose prices are dropping to minimize loss. the property in later years if circumstances should require it. Some companies, such as Marriott, have resale divisions and will buy back properties at the market rate. Others, such as Disney, require owners to offer the property first to the company, but they are not obligated ob·li·gate tr.v. ob·li·gat·ed, ob·li·gat·ing, ob·li·gates 1. To bind, compel, or constrain by a social, legal, or moral tie. See Synonyms at force. 2. To cause to be grateful or indebted; oblige. to buy it back. Many companies, however, provide no help with resale. In addition, accumulated points may or may not be transferable to new owners, which will affect the desirability of the property. * Examine the types of ownership. Some timeshares have actual deeded properties in which the buyer legally "owns" real estate, usually a particular unit within a complex. About 10% of resorts offer "Right-to-Use" contracts, which do not confer ownership of anything to the buyer but rights that may be sold. Buyers need to determine which type of ownership and product they want. Furthermore, "deeds deed n. 1. Something that is carried out; an act or action. 2. A usually praiseworthy act; a feat or exploit. 3. Action or performance in general: Deeds, not words, matter most. " in many European countries are essentially long-term leases--usually about 50 years--rather than complete ownership. Decide if a timeshare is something you want to use during your lifetime, or own and pass on to your heirs. * Consider exchangeability. If you're buying a property primarily to take advantage of the exchange benefit, then it's best to buy the largest unit in the most popular season, or the largest point package you can afford. This provides the greatest flexibility in exchanging time in desirable locations and seasons. * Examine the resort and its parent company. Before buying a property, visit one or more of the company's resort properties to see how well it's maintained and operated. Make sure the property exists in fact, rather than on paper. See if the company is a member of ARDA and subscribes to the industry's Code of Standards and Ethics. Many complaints come from people who bought property based on a brochure and were later disappointed when they saw their actual accommodations. * Choose a resort that fits your lifestyle. This is a long-term commitment, and the resort property you buy should be one you want to stay at often over the years or one with affiliated properties you want to stay at. Timesharing Resources For more information on vacation exchange clubs, contact the following timeshare organizations: American Resort Development Association 1220 L St. NW, Suite 500 Washington, DC 20005 202-371-6700 www.arda.org ARDA publishes a free 14-page booklet, "A Consumer Guide to Vacation Ownership" that outlines in more specific detail the timesharing industry, fees and how exchanges work. There's also more information on their Web site including links to some of the largest timeshare developers. Included are details on ARDA's Code of Standards and Ethics for vacation exchanges and member properties. Interval International Attn: Christina Wells 6262 Sunset Drive Miami, FL 33143 800-622-1861 www.interval-intl.com Indicate whether you're a consumer member wanting information on exchanges through II or a developer needing information on becoming affiliated with their network. At their Web site, you'll find information in four languages--English, Spanish, French and Dutch--that ranges from industry news to weather updates to travel links to member resorts. Membership information is restricted to members and not accessible online. A CDROM See CD-ROM. resort directory and vacation planner can be ordered online by members. Resort Condominiums International 3502 Woodview Trace Indianapolis, IN 46268-1104 317-876-1692 www.rci.com The largest of the vacation exchange clubs makes information on itself and affiliated properties in its network available online. The site includes information on timeshare exchanges and hotlinks to other vacation sites and information sources. Members can even make their travel exchange reservations online and have access to RCI's own travel agency network. |
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