David MacMillan is the President/Owner of Timeshare Relief, Inc.
When you strip away all the hoopla of timeshares – the fancy resorts, wonderful locations, and persuasive presentations, timeshares are merely prepaid vacation accommodations that require annual payments as well. All the payments are required for “ownership” regardless of whether you use the timeshare or not. This is one of the major reasons why many financial advisors tell their clients to not buy a timeshare.
But let’s take a closer look at the costs so that you can make an informed decision if you do end up in a timeshare presentation room while on vacation…
In 2008, timeshare owners paid an average of $20,152 upfront for a timeshare according to ARDA, the American Resort Development Association. Doing some quick math, if you use the purchased timeshare every year for 20 years, that’s over $1,000 a year for a week of accommodations. While we are in this economic limbo, families might not spend a $1,000 just for accommodation. So does it make sense to pay it upfront?
Yes, many timeshares have upscale rooms that allow at least four people to a suite for a week. So, there is some value as long as timeshare owners use the timeshare over 20 years. If you were use it only five times, that’s $4,000 paid per week. How nice a vacation could you have for THAT amount? You could probably have room service every day, a butler, some nice massages and more.
Now, imagine that all the upfront cost disappeared, and the only cost of a timeshare was the annual maintenance fee. Again, according to ARDA in 2008, the average maintenance fee for a timeshare was $646. That certainly sounds like a great deal for a week at a fine timeshare resort.
But, let’s examine the details of maintenance fees. They certainly increase over time. What if they doubled or tripled through the years like they have for some timeshare owners? Also, maintenance fees must be paid every year regardless of whether a timeshare owner uses the timeshare. After missing a few years, the cost per vacation week jumps by $646 or more for every missed vacation at the timeshare.
Hopefully, you recognize that timeshares must be used consistently over a long period of time in order to have any financial value to a timeshare owner. This analysis considers only the upfront fee and maintenance fees. If you add in the special assessment fees, exchange fees and cost of vacationing like transportation, dining and entertainment, the cost of a timeshare rarely makes financial sense.