|Your Location: Timeshare Users Group Advice: Timeshare Deedbacks -updated: 11/30/07|
by Kurt J. Brown - TUG Member
big issue destroying the value
of timeshare ownership is the refusal of many resorts to take back
timeshares when there is no balance owing, or only the upcoming
maintenance fees owing.
Almost anyone advertising a timeshare for sale is approached by various scam operators, offering to help sell the timeshare in exchange for the owner giving $300-700 or more. The scam operator promising to sell the timeshare. Typically, the owner never hears again from the scam operator. There is at least one organization that invites owners to come to a local hotel ballroom and give the operator more than $2000 to get rid of the timeshare.
The resorts originally sold the intervals to the owners yet now many refuse to take them back even when the loans are paid off. Many purchasers have “buyers remorse” after the hard sell, and want to give them back. The resort operators and sales teams naturally don’t want to cancel a hard-earned sale. However, when events happen in a purchaser’s life; events that were unforeseen at the time of the purchase, there should be a reasonable way to give the timeshare back. Such events would be like serious illness, long-term loss of job, or death. People experiencing such life-changing events are easy prey for the scam artists.
By refusing to help the timeshare resale process, many resorts are contributing to the effect of timeshares becoming essentially worthless. The resorts are in the best position to resell or rent out unused or returned timeshares as the resorts are the centerpoint for the vacationer.
Timeshare owners know that maintenance fees are always going to increase. Yet, in many cases, why would one want to pay ever increasing amounts for a worthless timeshare. At many resorts, there is not enough money set aside for insurance and repairs and updates, leading many resorts to assess frequent special assessments - often without consulting owners or asking for owner vote/approval. Again, if the underlying interval has no value, why should the owner pay the increased maintenance fees and the ever-present special assessments, when the resorts themselves are telling the owners that the intervals have no value and are not worth taking back.
Many resorts give owners two unconscionable choices - pay maintenance fees and special assessments even if you are not using and cannot use the interval, or face foreclosure. Resort personnel have lifetime jobs. Since owners cannot sell their intervals, if they want to keep their credit, the owners must continue paying even when it causes even more financial problems to add to already desperate situations.
Like any other piece of real estate, the buildings are never going to get newer. If the resort does not have funds set aside for updates, upgrades and repairs, then the owners should have the option to close the operation, sell the facilities, with the owners getting a share of the resulting proceeds.
Timeshare resorts do not operate in a vacuum. Offseason exists for hotels, restaurants, shops, businesses, and residents in general. Like other brick-and-mortar operations, timeshare resorts have to deal with offseasonal usage.
Resorts can shut down, reduce staff to minimal levels for those owners who wish to stay at that time, actively market unsold and unused intervals both for rental and for sale. Some locations, including the resorts, can create offseason events to attract tourists - like Galveston’s Mardi Gras. The resorts can enter the corporate apartment business. Conventions and company getaways can be sought. Bonus time programs can be actively marketed to current owners. Resorts can align with hospitals to provide housing for family members of patients. There are more “suite hotels” being built as a strong indication that a furnished unit with full kitchen is attractive for individuals and families on an extended stay in an area. Real estate agents can provide contacts with people moving to the area and looking for temporary furnished housing. Resorts can band together with others in other locations to market together unused inventory with owners paying for the “exchange” privilege. These are only a few of the possibilities for an active, engaged resort management team to increase rentals and usage at the resort.
Resorts should without hesitation take back unwanted intervals - especially those fully paid for. If the resorts create a market for such intervals, the intervals can be resold or rented for some amount of money. If it is “impossible” for the resort to rent/resell such intervals, then there is a strong case for shutting down the resort as an uneconomic entity.
Resorts and individual owners can unaffiliate with certain exchange companies that thwart the lifeblood of the timeshare industry, by stopping the deposit of weeks into such systems. It is apparent to any timeshare owner that for various reasons, the exchange process has become a less and less desirable alternative to staying at one’s resort. Exchange and guest fees continue to rise, increasing the costs above the ever-increasing maintenance fee/special assessment model. RCI is involved in many conflicts of interest that work against timeshare owners. RCI now manages and operates resorts. Weeks owners who refuse to pay thousands more to purchase RCI Points are at a disadvantage in the exchange process. RCI markets to special interest groups including civil servants. Now, non-timeshare owners can get many of the benefits of the exchange process. RCI even has a “Fam2Friends” program. If one pays to send a friend to a resort, that friend or family member is subject to RCI marketing efforts. Again, there is no need to be a timeshare owner to participate in such programs. RCI has therefore helped destroy any underlying value for timeshares. Non-owners can stay for less than paying maintenance fees + special assessments + exchange fees + guest fees.
The resorts can operate in a way to alleviate the huge load of unwanted timeshares by creating a market for their own intervals, and by more actively renting and utilizing excess inventory.
Kurt J. Brown
Previously published in TimeSharing Today magazine www.tstoday.com Copyright TimeSharing Today, Inc. and published here with permission
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