The truth about vacation clubs

AskEd & AnswerEd
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Editor's Note: This story was originally published on August 18, 2005. To see the most recent SmarterTravel articles on related topics, please click on any of the following links: AskEd & AnswerEd, Ed Perkins, vacation package.

You've probably seen some ads—or even received some promotions—about joining a vacation club. Often the material you see is pretty vague, long on pictures of sandy beaches, short on facts. A reader recently asked about exactly what vacation clubs offer. "As a new subscriber to SmarterTravel.com's newsletters, I am wondering if you have ever discussed vacation clubs. What do they offer? Should I be interested?"

What you get

The short answer is that those clubs are nothing more than a variation of the basic timeshare theme. Since "timeshare" developed an unsavory reputation in its initial years, some hotel and resort chains, including Disney, Hilton, and Marriott, elected to merchandise their timeshare programs as "clubs."
Whether called a vacation club or just a timeshare program, the basic principles are the same.

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  • You buy into a program that entitles you to the use of a condo, hotel room, residence, or "villa" for an "interval" of time every year. The minimum interval is usually a week, but you can buy as many weeks as you wish.
  • Although you generally buy into a specific location, most programs allow you to trade your interval for a different location, different times, or both. Some of the larger exchange systems provide access to intervals in hundreds of different individual buildings. Typically, you use "points," based on the purchase price, to determine the quality and time available to you at other locations.
  • The buy-in price from a timeshare developer/operator can be as low as $5,000 or as high as $350,000. In addition, you pay some combination of annual "dues," occupancy charges for the time you actually spend at a facility, and maintenance fees.
  • In some programs, your ownership is permanent, like real estate; in others, ownership expires after a set number of years or upon your death.
  • With most programs, if you want to get out, it's up to you to sell your ownership for whatever you can get for it. A few upscale programs, however—the ones you pay $300,000 or so to join—offer a "guaranteed" buyback of 80 percent or more of your initial purchase price.
  • The only "club" element is the name; otherwise, it's the same timeshare game.

What you need to know

I've been covering timeshares for years, and my overall take remains the same. The timeshare product can be quite attractive, if you buy into it knowing the facts. Do not look at a timeshare purchase as an investment in the same sense that a vacation cabin or full-time condo ownership is a genuine real estate investment. You can expect most real estate investments to appreciate over time; most initial timeshare purchases depreciate, often quite rapidly.

If you like the timeshare idea, buy a resale. The developer's markup on an initial sale can often approach 50 percent of the selling price. Let someone else take that initial hit. However, although I don't ever expect to see resale prices that exceed purchase prices, I believe the gap between new and resale prices will narrow over the next 10 to 20 years.

Timeshare sales are still the focus of some extremely high-pressure, and often deceptive, sales practices at certain destination areas. Be very wary of accepting any "free" travel if it requires you to sit through a day or two of intense timeshare huckstering. Whether you want to buy or sell, you'll find dozens of online timeshare resale agencies—some sell worldwide, some specialize in a single vacation destination.

Timeshares, of course, aren't the only travel product that some suppliers try to sell through a "club" setup. The American Automobile Association (AAA) and a handful of operations sponsored by major petroleum companies operate "membership" clubs that provide a cluster of services catering to driving. A few other clubs offer a mix of discounts on hotels, tours, and other minor travel services—usually, in my experience, easily duplicated without your having to join anything.

But I'm pretty sure that when most people talk about vacation clubs, they're talking about those timeshare promotions. Some of the packages are attractive: I know that I, for one, much prefer to say in a one-bedroom condo than a single hotel room when I'm staying in a vacation destination for a week or more. Give them a look—many big hotel chains have vacation club adjuncts. But if you decide to buy, think first of a resale.

 
 
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