Your Guide To Different Types of Timeshare

Transcription

1 Your Guide To Different Types of Timeshare 1

2 Contents 3 Introduction Type 1: The Points-Based Timeshare System 6 9 Type 2: Floating Weeks, Fixed Weeks & Fixed Seasons Type 3: Fractional Timeshare 12 Type : Travel Clubs and Vacation Clubs 1 Type 5: Exchange Companies 17 Some Other Terms 18 Features Tables 19 Timeshare Features Comparison By Type 20 Conclusion 21 Thank you & Contact 2

3 Introduction Timeshare comes in all shapes and sizes, some with more flexibility and cost-effectiveness than others. Whether you re looking to find out more about timeshare or wish to understand more about the timeshare you have, it can be hard to work out the bare facts. Most things you ll read about different types of timeshare give you a biased view, either from the side of the timeshare companies or from the perspective of anti-timeshare advocates. Both sides have their facts as much as their fictions, so it s hard to get a balanced idea of the truth about the types of timeshare out there. With this in mind, drawing on our long-term knowledge and experience of the world of timeshare, we have put together this guide to the features, and the pros and cons, of different kinds of timeshare. 3

4 Type 1: The Points-Based Timeshare System Points-based timeshares are one of the most popular types of timeshare. In this system, a holder will receive an annual allotment of points to trade for any resort within the brand s inventory or its affiliate resorts. They can also use exchange programmes like RCI/II. They may also be able to choose to holiday at their home resort if they wish. Unit types (i.e. accommodation) and weeks of the year are apportioned a specific number of points based on the location of the resort, the size of the unit, on the time of year (school holidays, e.g. desirable seasons are more expensive as they are more popular), and the general desirability of the resort or destination. Rather than a fixed week timeshare, in which the holder has access for one set week of the year with no room for manoeuvre, the points system allows the holder more flexibility in the time of year they choose to take their trip. Even so, the cost based on week popularity still applies. Timeshare points are spent within the system like currency, and as such can be topped up by paying money for more points should the holder wish to upgrade their holiday. These points can also sometimes be used against airfares and rentals, as well as some other related holiday expenses, which will be made clear as part of the incentive to purchase. It all sounds pretty straightforward and positive, but - as is often the case with timeshare - it is not always all it s cracked up to be. Developers often maintain sales rooms, in-house concierge and special guest services at sold-out resorts, as an incentive to bring in new members. Impressed by the high quality service and amenities, people excitedly sign up. On booking their first holiday, however, these new members sometimes find that the great services they experienced are only available to non-members or higher-owning members, and some even find that their home resort is not even the one they initially viewed, but another in a different location at a resort that does not live up to the standards they d been led to expect. It is also a common complaint from those on a points-based system that their points do not guarantee them the holiday they re after. Availability can be curiously hard to come by, even when booking a long time in advance, and their points only buy them a particular level of resort that they feel doesn t match the quality they d been guaranteed when they signed up.

5 Developers reserve the right to add or remove resort properties from the system without letting their members have their say. Provided the total number of points that are available to members corresponds with the number of units offered within the system, the developer has usually done nothing wrong. If any of these problems sound familiar to you, seek advice from a trained timeshare expert to find out how to put things right. Points Based Timeshare Annual Allotment Of Points Per Year Higher Desirability = More Points Choice Of When To Holiday Choice Of Resort and Destination Can Buy More Points For Money Can be difficult to secure booking Bookings Subject To Availability 5

6 Type 2: Floating Weeks, Fixed Weeks & Fixed Seasons Fixed Weeks allow you the use of the unit for that specific week each year (or alternate years, whatever is specified in the contract) for as long as your contract lasts. Fixed weeks generally start on a Friday or over the weekend. You have the same unit type and amenities for every single trip. As the name suggests, everything about your holiday is fixed with little room for change or variety. If you are happy with knowing exactly what to expect from your holiday every year, then fixed week timeshares can be an attractive option. Provided your resort is well maintained, that your annual maintenance fees are put to good use, the standard should remain constant throughout the lifetime of your contract. However, this is not always the case, and some unhappy members have found themselves paying increasingly high maintenance fees, which happens even more when new management companies take over, whilst the quality of their resort seems to deteriorate year on year. Timeshare resorts have a duty to spend members maintenance fees appropriately to maintain the quality of the resort. If you do not feel that this is the case, that your maintenance fees are being diverted or squandered, the issue may require further investigation. Find out more by contacting a timeshare expert who ll be able to talk you through what your next steps should be. If you want to exchange your fixed week timeshare for a holiday at another resort, you ll have to be signed up to an external exchange programme, incurring an additional cost. More on those later. Fixed Week Timeshare Predictable Exchange Bookings Are Subject To Availability Right of use for specific period each year Same unit type and amenities every time Must enlist external exchange program to swap resort/ destination 6

7 Floating Weeks mean you are able to use the unit any time during the year based upon a resort s availability. That s the theory, anyway. In practice, booking can be an absolute nightmare. Some members have failed to secure their desired booking even when attempting to do so two years in advance. There have been instances of resorts reserving accommodation meant for members use, but instead giving it to their own staff or rental, thus making it harder still for members to achieve the booking they desire. If you suspect this to be the case, contact us to find out more about asserting your rights. It s worth noting that it is easier to get a cheaper rental week via Booking.com or TripAdvisor than to pay annual maintenance, not to mention the upfront cost of obtaining a timeshare in the first place. Floating Week Timeshare Can be difficult to secure booking Can book unit for any time of year Bookings Subject To Availability 7

8 Fixed season timeshares are similar to floating weeks, but come with different restrictions. With a fixed season timeshare, there are set seasons in which you are allowed to use your holiday week. Some of these seasonal weeks are defined by colours, such as red weeks and blue weeks, which correspond to different levels of popularity (usually based on high/low season). So, for example, if you own a red week contract, you can take your timeshare week during any week within the red timeframe. The most popular time at one location can differ from that in another location (based on weather, for example), so a red week at one resort may be different to that at another. Fixed Season Timeshare Can be difficult to secure booking Limited Internal exchange available Bookings Subject To Availability Seasons differ by destination Seasons often defined by colour, e.g. red week/ white week / blue week Set seasons for when you can use your timeshare 8

9 Type 3: Fractional Timeshare A fractional timeshare contract is often shorter in duration than other types of timeshares, typically between 15 and 19 years. They are sold with a promise of a capital sum paid out when the timeshare is then resold at the end of the period. These features make the fractional timeshare an appealing option, particularly when you re told that the sum you ll be paid at the end of your contract will be a large one. However, this is sadly not always the case. It is pretty much unheard of for a timeshare to accrue in value over time, so despite what you may have been told, a fractional timeshare may not be an investment and the sum you are set to receive at the end is highly likely to be significantly less than the money you put in at the start. It is illegal to sell a timeshare as an investment, and timeshare companies know this. As such, they may not use the word timeshare when selling you the product. But if it sounds like a timeshare, it probably is. If you re confused about what you ve been sold, or if anybody mentioned investment to you in the sales pitch, you should get legal advice to avoid finding yourself worse off at the end of your contract term. Fractional timeshare is usually tied to a pointsbased system or a right to use agreement in which you have a specific unit and time period, as with a fixed timeshare week. Signature Club La Costa is an example of a timeshare company offering this sort of fractional timeshare arrangement. Fractional timeshares are often mistaken for fractional ownership. Fractional ownership (sometimes called shared property ownership ) offers holders a share in the real estate itself, which is usually between ¼ and ½ of the property. The property itself is often much more luxurious than other types of holiday resorts, so the cost can exceed 100,000 in order to buy a stake. With a fractional ownership, the holder tends to have a longer period in which they can access the property, often two months of the year or more. Because you own a piece of the real estate, a fractional ownership is more likely to hold value than any kind of timeshare, when the product is sold legitimately. Things can go wrong with fractional ownership. Lots of people have made the mistake of handing over money for a property (such as a villa or luxury apartment/unit in a resort) that is still in development. Having been assured that the development will shortly be completed, they confidently await completion so that they can use the property as promised. In all too many cases, the development is never completed, and the company who sold them the fractional ownership disappear or go bankrupt. Rest assured, should this 9

10 have happened to you, you do have legal rights, which you should exercise in order to return your lost money. Very well-off holidaymakers sometimes opt for Private Residence Clubs. These offer the ultimate in luxury, with everything from private luxury car use to your own butler and chef during your stay. These contracts involve equity ownership in the real estate of the property, and they get an awful lot for their money. Because they are so highend, there are very few instances of these sort of timeshares going wrong. Shorter duration than other timeshare types May be sold under another name Duration years Fractional Timeshare Often tied to a points-based system or right-to-use agreement Not an investment Can be difficult to secure booking Promise of capital sum at end of period Bookings Subject To Availability 10

11 Also known as shared property ownership More luxurious than other types of timeshare Share in real estate of a property Fractional Ownership Typically longer allotted period of use Share is usually between ¼ and ½ of the property More likely to hold value than timeshare 11

12 Type : Travel Clubs and Vacation Clubs Travel clubs are often sold as an exclusive membership, allowing access to numerous accommodations, services, amenities, attractions at the resort and destination area, and travel insurance, all for discounted prices. Essentially, a travel club is little more than a prepaid service with package deals on holiday options, for which you pay an annual membership fee. Often, these travel clubs do not have their own inventory or resorts. They simply use travel agencies and the internet to book holidays for their members. Whilst some of these can offer discounts as the club has relationships with travel agents and booking sites, others take members money to essentially do the same job the person could do themselves, with very little in the way of meaningful discounts. Travel clubs can also face members with the same issue as other systems, where achieving the desired booking is fraught with difficulty, forcing them to take a trip they don t necessarily want. particular resort brand and works off a pointsbased system with annual fees for access to luxurious resorts (travel clubs tend to offer much more run-of-the-mill package holidays). Examples include: Hilton Grand Vacations, Marriott Vacation Club, Hyatt Vacation Club. For more moneyed individuals, there are Destination Clubs, which offer a lot of the same luxuries as Private Residence Clubs but without equity ownership. Membership is also not vested in a particular property. Instead, the Destination Club company tends to own or lease from its portfolio of luxury homes in a selection of exclusive locations. Members then have access to all of the homes within the portfolio, subject to availability. Some travel clubs will sell themselves as this kind of luxury Destination Club, but do not offer the level of luxury of the true examples of this category. A good travel club is one that does own its own inventory or its own resorts, like Club Med. When considering signing up with a travel club, make sure that they have their own resorts or set inventory of resorts and concrete evidence of discounts. Vacation or holiday club membership is much the same, though is usually associated with a 12

13 Company does not own inventory or resorts (though best ones do) Booking can be difficult Travel Clubs Sold as exclusive memberships Discounts on accommodation, attractions, amenities, services and other travel-related products Annual membership fee payable 13

14 Type 5: Exchange Companies Exchange companies are not timeshare companies. Instead, they are an ancillary service for timeshare owners, allowing them to exchange their timeshare week for another in a different resort or destination from their home resort. All timeshare holders, regardless of their contract or whether their timeshare company has its own internal or affiliated exchange system, have the right to use whatever exchange company they like. Exchanges work on an equivalence basis, a bit like timeshare points. Indeed, many exchange companies operate using a points-value system. With this kind of system, your exchange can be only up to the same value. Many companies allow members to buy different levels of holiday exchange membership which allow them upgrades for a better class of exchange holiday. RCI is probably the biggest and most well-known timeshare exchange company, though there s also Dial-An-Exchange and Interval International. 1

15 RCI states: Members in compliance with the Program Documents may deposit Vacation Time into the Program during the time period from twenty four (2) months to fourteen (1) days before the start date of the Vacation Time to be deposited. To receive the maximum Deposit Trading Power, Vacation Time should be deposited at least two hundred seventy one (271) days prior to the start date of such Vacation Time. Vacation Time deposited less than two hundred seventy one (271) days from the start date may receive a lower Deposit Trading Power in accordance with the Trading Power Adjustment Schedule found on RCI.com. RCI may, in its sole discretion, accept a Deposit of Vacation Time less than fourteen (1) days before the start date of the Vacation Time and may require the payment of an additional fee. RCI generally considers requests for such Deposits only in areas where there is high demand for Inventory. 271 dates over 9 months. RCI does not guarantee particular Exchange Requests, including specific Inventory or Alternative Inventory choices, Resort choices, regions, travel dates, types or sizes of accommodations or specific unit assignments for example and no third-parties are authorized by RCI to make any such representations. INVENTORY IS SUBJECT TO AVAILABILITY AND IS OFFERED ON A SPACE AVAILABLE, FIRST-COME, FIRST-SERVED BASIS EXCEPT AS OTHERWISE INDICATED HEREIN. ALL EXCHANGE REQUESTS ARE CONTINGENT UPON THE MEMBER MAKING THE EXCHANGE REQUEST HAVING SUFFICIENT DEPOSIT TRADING POWER TO OBTAIN THE EXCHANGE AND BEING IN COMPLIANCE WITH THE PROGRAM DOCUMENTS. RESTRICTIONS OR LIMITATIONS MAY APPLY. GENERALLY, THE EARLIER AN EXCHANGE REQUEST IS MADE, THE BETTER THE POSSIBILITY A CONFIRMED EXCHANGE CAN BE OBTAINED. 13. Losing the Opportunity to Exchange Vacation Time. There are some circumstances in which Members can lose the use of deposited Vacation Time they have deposited with RCI and/or be ineligible to receive a Confirmed Exchange for that deposited Vacation Time: A. If the Member does not properly submit an Exchange Request and/or does not accept an available alternative resort choice and/or travel date within twenty-four (2) months after the start date of the deposited Vacation Time (or longer if the Member has obtained Deposit Extension(s)). B. If (i) the Affiliated Resort, its developer or owners association fails or is unable to perform any contractual obligations to RCI; or (ii) if the resort s Affiliation Agreement expires without renewal or is terminated, either by RCI or by the Affiliated Resort or as a matter of law. C. If the Member s payment is rejected by the Member s bank or credit card company, or the Member has failed to meet any of the obligations described in these Terms and Conditions. D. Upon Cancellation, Termination or Suspension of a Member s membership pursuant D. MEMBER ACKNOWLEDGES AND UNDERSTANDS THAT NEITHER RCI NOR ANY INDEMNITEE HAS THE ABILITY TO CONTROL THE OPERATIONS OF RESORTS, INVENTORY PROVIDERS OR ALTERNATIVE INVENTORY PROVIDERS (TO THE EXTENT ALTERNATIVE INVENTORY IS MADE AVAILABLE), INCLUDING THE FORM OF ACCESS PROVIDED TO THEIR FACILITIES (INCLUDING ACCESS FOR INDIVIDUALS WITH DISABILITIES), AND NEITHER RCI NOR THE INDEMNITEE SHALL BE RESPONSIBLE FOR THE ACTIONS OR OMISSIONS OF RESORTS, INVENTORY PROVIDERS OR ALTERNATIVE INVENTORY PROVIDERS. 15

16 Most of the time, timeshare exchange programs are a great option for existing timeshare members. However, they do incur an extra cost on top of whatever you are paying for your timeshare itself. Exchange programs can also be subject to the same availability issues as other kinds of timeshare booking systems, with members unable to secure their desired holiday. Occasionally, this is down to malpractice on behalf of the exchange company. If you suspect malpractice within the exchange booking system, contact a timeshare legal expert to find out more about setting things right. 16

17 Some Other Terms You may come across any of these terms when researching timeshare contract types. Here s what they mean. Fee Simple Usually relating to fractional ownership, fee simple means that you own deeded interest in the real estate, which is recorded with the Land Registry or equivalent in the destination country. You then receive the title deeds to your percentage ownership in perpetuity (i.e. forever). legal ownership of the resort in which your unit is located is vested with a trust company. Your right to use of the timeshare expires after a stated number of years, which can legally be up to 50. Leasehold With leasehold, you have the same basic ownership rights as with a fee simple agreement. You also receive the same protections and interests, as well as the same obligations towards the property. These are, however, not in perpetuity, and will thus have a fixed end date to the contract. Leasehold agreements on timeshare are much less common now, as resort developers tend to purchase ownership rights to the land itself. Right to Use Right to use is the most common type of timeshare agreement. In this, you do not own any interest in the real estate whatsoever. The 17

18 Features Tables Fixed Weeks Leasehold Right To Use (Club) Hold Title Deeds Protections Most Common Deeded Interest Obligations To Property No Interest in Real Estate Applies To Fractional Ownership Applies To Fractional Ownership Ownership Of Real Estate Belongs To Trust Company Obligations To Property Fixed Contract End Date Limited Rights To Use At Certain Times Specified In Contract Ownership In Perpetuity Less Common Contract Can Last Up To 50 Years 18

19 Timeshare Features Comparison By Type Scores 1 (min) to 5 (max) Type Flexibility Luxury Rating Availability Other Ancillary Services Internal Exchange Cost Points-Based Timeshare Varies Varies 2 Varies 2 Varies Floating Weeks 3 Varies 1 2 Fixed Week 5 Varies 5 1 Varies Fixed Season 3 Varies 1 Fractional Timeshare Fractional Ownership Travel Club Destination Club Private Residence Club Varies

20 Conclusion Timeshare, as we have seen, is a many-headed hydra. Each type has an array of benefits as well as its potential pitfalls. The pitfalls are often widely covered in the media and on forums across the internet. Mostly, people will only take the time to share a story when it is negative, as those who are happy are usually busy enjoying themselves, hence why there are more horror stories around than there are positive ones! Nonetheless, the downsides are there, and you should be fully aware of them before making any decision regarding timeshare. If you feel that you have been misled or badly treated by your timeshare company, or if you simply want out, please get in touch with a member of our team of timeshare experts. Our experienced, trained representatives are there to offer advice and guidance, and will only suggest pursuing a legal route should it be entirely necessary. Give us a call today to find out how we can help you with your timeshare problems. Regardless of the sort of timeshare membership you hold, whenever something goes wrong you should know that you have rights. Rules and restrictions form a key part of any contract, but these do not just apply to the consumers. Timeshare companies are subject to legal regulations about how they can conduct business, which differ subtly between the different types of timeshare we have explored in this paper. 20

21 Thank You Contact us