Does Timesharing have A Future?

[Carolinian Super Moderator Find all posts View Profile Close Carolinian]

Steve, you have identified all the reasons I would never want to own at a mini. It is all about control and fees by the developer. I only own at resorts that are under member control.

Actually, Hapimag from what I understand of their system seems much more user friendly than these more recent mini-systems. What you own as a member of Hapimag is a share of stock, so you still have voting rights in Hapimag. They also have the best exit program in timesharing where they agree to buy back the stock at a percentage of the current offer price if a member has owned it a certain number of years. I don't recall the buy back price, but it seems it was somewhere in the 50-70% range.

The other drawback of a mini-system is in their name, as they are, well, ''mini'' with limited choices.

To my thinking, the current conditions are also driving the mini-systems.

First, the minis keep a significant portion of the exchanges in house. That means revenue that previously went to RCI or II now stays with the developer through the fees that are part of the mini-system.

Second, most systems are set up so that the memberships are not transferable, or transferable only in part. So there is opportunity to resell when someone drops out if the buyer wants the advantages of the mini.

Third, the minis usually allow flexible length stays. Again for most minis the flexible stays generate more income through the collection of additional reservation fees.

Fourth, most minis charge added fees for guest certificates (as do most exchange companies). So that is another revenue stream redirected from RCI or II to the developer.

Fifth, the mini-systems are easier to sell to newcomers. The prospects can see the list of resorts directly available. And it's a lot easier to explain to someone how they can get into another resort by booking directly instead of going through an exchange process.

Sixth, when the mini is set up as a club, most clubs effectively prohibit quasi-commercial renting by members. That means less competition for the developer's rental activities for it's own inventory.

Seventh, the mini is structured to lock the developer in as resort management, thus providing an additional and sustaining revenue stream.

******

I know minis have been around since the beginning of timeshare, with programs such as Hapimag. However, in the last 10 to 20 years they have become much more prominent. Developers are no longer building individual resorts, then moving on the next project. Instead they are more prone to building networks of resorts.

As you can guess I see the presence of the minis as a direct response by developers to take capture for themselves revenue that was going to RCI and II. With the current conditions, I think the future development projects will increasingly tilt toward mini-systems.

Meanwhile the older and independent resorts will continue to operate through the more traditional exchange mechanisms.

[Carolinian Super Moderator Find all posts View Profile Close Carolinian]

But you are undoubtedly calling Florida ''non-seasonal'' when you are quite aware of something called hurricane season that is the low season for Florida and the Caribbean. I have posted before the availibility tables from the European edition of the RCI directory which plainly show that as to timeshare usage, Florida is indeed quite seasonal, and beyond just hurricane season. If you want to look at resort areas where demand exceeds supply all year, you have to look at places, according to the same tables, like South Africa, Norway, Israel, Ireland, the Czech Republic, and Switzerland.

If what you called mud weeks could no longer trade for Orlando, your occupancy rate would plummet.

With a southern beach resort, yes we have a couple of slow months, but the majority of the year is right at 100% occupancy and in the highest demand periods, demand far exceeds supply. With the theory of giving people multiple weeks, I suspect that one of those summer beach weeks ought to be worth five or six weeks in an overbuilt area.

What you try to ignore is that it is a trade up as proven by demand. How do we know that? Because in the end the demand for the non or less seasonal unit that the mud week grabs as a trade up is GONE. Used. Demand absorbed it. But the mud week - the one with no value - still hangs around and dies unused. THAT is a worthless week and there is NO demand for it at any price. So supply and demand tells us those weeks are worth zero while the less than top but more valuable non-seasonal weeks are worth more as they are actually desirable enough to be taken & utilized. Demand has spoken and the seasonal weeks lose. It is a trade up even if only a small one.

Proof is easy. In the non-seasonal area year round the utilization is over 80%. No month is less than 74%. While the seasonal area has months of <30% TOTAL occupancy. So at the very least there is over twice the demand for the seasonal area units. When you go from a week that has a 30%- demand and claim a week that has a 74%+ demand that is the very definition of creating value & a trade UP!

[BWolf Senior Member Find all posts View Profile Close BWolf]

I really appreciate this discussion. You folks all bring some good knowledge to the table. This is one of the best threads I've read in quite some time.

[Timeshare junkie Member Find all posts View Profile Close Timeshare junkie]

This is a great thread.

Am I to presume a 'minis' means developers like Wyndham, Marriott, Starwood etc which offer their owners 10-25 resorts in their own system that their owners get first dibs at before they get deposited in to RCI or II.

The posters here understand TS'ing more than I do (and I thought I was pretty savvy).

Anyway, I would like to add something in to the mix.

John Citizen has just been lured in to a TS presentation with 2 free tix to Disney. He's heard of TS'ing, his aunt owns a fixed week in MA that she seems to like. He's just been given the price: for $20k up-front and $800/year he has access to a 2/bedroom unit in peak season at a choice of 15 locations. He feels confident 5 of them will be of use to him. He can get more time if he uses the resorts off-peak, or downgrades to a smaller unit, or splits up his week.

He does the math: if he buys a similar unit outright he will fork over $250k. And he will probably only ever use 4-6 weeks annually if he owns it outright. Timeshare offers him a chance to own only the time he will actually use, and instead of being locked in to 1-location, he can choose from 15 locations. And if he wants more options he can trade in to RCI or II.

Now, if he was to buy all 52 weeks of that unit he would be paying $500k, which is double what the unit is worth, but he is prepared to pay the premium because he able to buy in 1-week intervals.

Now John has never heard of resales and has no clue that if he doesn't like his investment he will get 5 cents on the dollar. Nor does he realize that Jim Smith is trying to offload the exact same package on ebay for $500 plus closing.

Isn't this the scenario that the sales team are trying to present to us. And I don't see that this scenario has changed that much. Timeshare does have a future so long as this model is still able to be presented by sales teams and believed by a certain % of potential buyers.

[1950bing Senior Member Find all posts View Profile Close 1950bing]

I see timesharing slowing down till it folds ( except for the very very rich). The numbers are just not there anymore. The costs continue to go up and up and there is no end in site. We have all heard that payback is heck. All the lies,lies,lies that all the timeshare salesmen/women told all the years ago just to get a sale has come due. No good will come when one lies for gain. I think it would have been strong today if that one person had not said let's make this business dirty and sleeze and try to extract all the money we can without thought of what people need/want. The day I finally unloaded that money pit was one of the most wonderful days of my life. Now when I vacation and I leave with my paid receipt knowing I do not have to pay for someone's pool or roof or pay club dues and expect yearly increasing maintenance fees or the SA. I can go where I want when I want and not have to pay anyone to do that.
Finally, I don't have to worry what to do with the thing when I'm too old to use it. It has proved over the years that timesharing is not for everyone which was what all the sales people thought. For the people who can make it work, you go for it. You are lucky. When you see them for sale on ebay for a $, it doesn't take a PHD to know something is rotten in the wood pile.

Timesharing: Good concept, poor marketing.

[T. R. Oglodyte Moderator Find all posts View Profile Close T. R. Oglodyte]

The other drawback of a mini-system is in their name, as they are, well, ''mini'' with limited choices.

Steve - I don't quibble with any of your points save this one. Being part of a mini does not significantly limit one's choices.

Most, if not all, minis include membership in one of the major exchange companies gratis as part of being part of the mini. So the mini-member still has access to all of the inventory of the major exchange company as a non-mini member, but in addition has vastly greater accessibility to resorts within the mini. Further, most of the minis leverage their clout with the exchange company to get preferential treatment. Thus, a person who joins their modest powered week to a mini system will often see a significant increase in availability. For example, a even a peak season regular weeks owner at Powhatten will find their week is a middle of the road trade. If the same owner joins the DRI Club, that same week will now be able to pull almost all of the inventory in II.

*****

As you and I have discussed previoiusly, you simply can't make a blanket statement that minis are "good" or "bad" regarding availability. If a persons are travel interests are such that a mini can cover 50% or more of the places that a person wants to travel, joining that mini can work extremely well.

That is a key reason why we own in both RCI and Diamond. Both of those systems have worked spectacularly for us in getting access to locations we wanted to visit without going through the vagaries of an exchange company.

Then a couple of weeks ago I had a business meeting in Fort Myers, FL, and VRI*ety came through spectacularly for me. I booked a three-day mid-week stay at a local VRI resort, and now I have a four-day balance that I can use for ski trip in Whistler or long weekend getaway with DW.

*****

The primary limitation on availability that can come with a mini is restrictions on the exchange company with whom one can deposit. For example, when a week is part of the DRI club, you are essentially locked into using II for exchanges. But that shouldn't be a surprise; when someone joins their week to the DRI club they explicitly surrender their rights to reserve and use the week. I find it a bit disingenuous when people complain about losing rights they have alread voluntarily surrendered. How can one complain about being denied a right that one has already ceded? The libertarian in me has little sympathy for those plaints.

For us this is not an issue. We continually use all of our DRI points within the DRI system.

We use our other ownerships to access inventory outside II. We use our Winners Circle, Pahio, and Raintree weeks to access RCI, TPI, SFX, and HTSE. we use DRI within the DRI system. We saved our DRI points from this year so that we can have a big family get together in Hawai'i next year. We'll use our other ownerships to piggyback some non-DRI weeks to create a longer vacation. Meanwhile, we're using SFX to get to Puerto Vallarta in February, do an Oregon wine country visit in the spring or fall, and squeeze in a ski trip to Whistler.

This is all stuff that would have been almost impossible to pull if if we were trying to do it using exchange companies.

****

So to say that minis entail a loss of flexibility is simply not an accurate statement. And in making that assertion you impair your credibility with those. like myself, who can attest from personal experience that your presumptions are not correct.

*****

All of the other items are certainly flags that people should consider before getting in bed with a developer. There are more than ample reasons to thing twice, and then a third, fourth, and fifth time before joining a mini. But loss often will not be one of those reasons; in fact it is likely to be the sole reason in favor of joining a mini.


****

Every person's situation is different. I totally understand and appreciate why minis don't work for you. But I think that you're overreaching when you continually assert that because minis doesn't work for you, ipso facto they must also be bad for every one else

[JWC Super Moderator Find all posts View Profile Close JWC]

The first timeshare we bought over 20 years ago was in a mini-system. It was one of original ones in the US. The developer was Glen Ivy and the resort we owned at was San Luis Bay Inn at Avila Beach, CA. We sold it a couple of years ago. The system was very much as Steve described except the HOA was made up of the owners after a few years.

The system was floating weeks only and called Preferred Status Exchange or "PSE". Glen Ivy managed it until they went bankrupt in 1992. RCIM took over the management and kept the system intact. The bankruptcy court order said that the PSE system had to remain unchanged. There wan no difference when RCIM took over and they kept most of the employees and managers from Glen Ivy. RCIM did a very good job.

There were 18 PSE resorts in California, Hawaii, Arizona, and Texas. Some were seasonal like Palm Springs resorts and some were not like our resort SLBI and Hawaii. Basically you could reserve your use week at any of the PSE resorts. There were no exchange fees or other fees except for seasonal and/or size upgrades. Because our resort was non-seasonal ( red: 1-52 ) we had no seasonal upgrade fee. We could split our weeks and carry them over to the next year. You could also get bonus time at any of the PSE resorts. The system worked very well. There were a few restrictions protecting owners at their home resort. You could reserve your week 1 month earlier at your home resort and you could request unit location. We did reserve at a couple of the other resorts and we used bonus time extensively. Basically you had access to all the resorts with no cost to you other than your annual M/F.

Our resort was also dual affiliated with RCI/II and we were given free membership. The system worked very well for several years until Wyndham took over the management. I see now that SLBI is a Diamond resort but I don't know if that is the Sunterra Phase or the original SLBI.

Sunterra built a new section that was added on to the original resort but was not part of PSE and had separate management and HOA. Sunterra tried to take over the HOA about 15 years ago but were voted down 3-1 by the owners.

Our Maintenance fees were very stable rising just a grand total of $16.00 in 20 years.

[longtimer Senior Member Find all posts View Profile Close longtimer]

IMO TSing will continue to some degree. As operating costs continue to skyrocket, the smaller places will either fold or be absorbed into a bigger system. There's only so much money owners are willing to pay before they bail out. Larger companies can spread their costs over more owners.
At this point in time, it is usually cheaper to rent from an owner rather than purchase outright (plus you don't have the annual fee increases). Companies need to find ways to set owners apart from renters to bring value to ownership. Happy owners are a liitle more willing to put up with fee increases than unhappy ones. Here are some thoughts on what could be offered to owners at little cost to the companies:
*Check in one hour earlier/check out one hour later. (if not, than at least a separate check in line so there's no wait - I've waited an hour at some places to check-in).
*Meet and greet. Set aside one morning for an hour of coffee, OJ and breakfast pastries. No sales people present. The resort could use this time to show off its ammenities and side trips/programs that are offered.
*Discount tickets to area attractions - a plus for families with limited budgets.
I'm sure I could come up with many other simple things that could bring some value to ownership.

[T. R. Oglodyte Moderator Find all posts View Profile Close T. R. Oglodyte]

IMO TSing will continue to some degree. As operating costs continue to skyrocket, the smaller places will either fold or be absorbed into a bigger system. There's only so much money owners are willing to pay before they bail out. Larger companies can spread their costs over more owners.
At this point in time, it is usually cheaper to rent from an owner rather than purchase outright (plus you don't have the annual fee increases). Companies need to find ways to set owners apart from renters to bring value to ownership. Happy owners are a liitle more willing to put up with fee increases than unhappy ones. Here are some thoughts on what could be offered to owners at little cost to the companies:
*Check in one hour earlier/check out one hour later. (if not, than at least a separate check in line so there's no wait - I've waited an hour at some places to check-in).
*Meet and greet. Set aside one morning for an hour of coffee, OJ and breakfast pastries. No sales people present. The resort could use this time to show off its ammenities and side trips/programs that are offered.
*Discount tickets to area attractions - a plus for families with limited budgets.
I'm sure I could come up with many other simple things that could bring some value to ownership.

Personally, I think the single most important thing a resort can do to enhance value to owners is to control annual costs. Everything else pales in comparison.

When a resort rents out units, the money received goes directly to the homeowners association and reduces the amount of annual fees that need to be collected from owners.

Treating renters like second-class citizens will help ensure that they never come back, they bad mouth the resort to their friends and family, they post negative reviews of the resort at sites such as TripAdvisor, etc.

All of which will make the resort less desirable for rental and reduce the number of people who want to rent from the resort. The result will be higher vacancy rates and lower nightly rates for those units that do rent. Which, in turn, will mean that annual fees will need to be that much higher to replace the lost income.

Of course, demeaning the resorts reputation will also make it harder for owners to rent their units and force them to lower their rental rates.

*****

So while I understand what you're trying to do, I think that those specific suggestions might actually be counterproductive. To the extent that rentals are a significant factor in resort operation, it's in the best interest of owners to have the resort make as much money as possible from those rental activities. That means ensuring that renters feel wanted, welcomed, and valued.

[BocaBum99 Super Moderator Find all posts View Profile Close BocaBum99]

Developers are both a negative and a positive to the industry. This is true whether it is an independent resort, a resort group, a point system or a floating/fixed week system.

Pros
- builds new resorts
- expands general owner base
- subsidizes certain maintenance fees
- injects developer inventory into the system
- creates reservation systems and customer service
- can create brand awareness of resort group or resort
- equalizes quality of resorts over time with bulk purchasing power

Cons
- sells retail at a significant premium to the market thereby distorting it
- depreciates ownerships to maintain retail price points
- finds ways to extract extra revenue from current owners through fees.
- raises MF higher than hospitality inflation rate to cover subsidies.

As long as you know this ahead of time, you can find ways to profit from the inefficiencies in the systems and plan your buying and selling accordingly.

[tennisWalt Super Moderator Find all posts View Profile Close tennisWalt]

RCI Should Share The Income From Spacebanked Weeks

Personally, I think the single most important thing a resort can do to enhance value to owners is to control annual costs. Everything else pales in comparison.

When a resort rents out units, the money received goes directly to the homeowners association and reduces the amount of annual fees that need to be collected from owners.

Treating renters like second-class citizens will help ensure that they never come back, they bad mouth the resort to their friends and family, they post negative reviews of the resort at sites such as TripAdvisor, etc.

All of which will make the resort less desirable for rental and reduce the number of people who want to rent from the resort. The result will be higher vacancy rates and lower nightly rates for those units that do rent. Which, in turn, will mean that annual fees will need to be that much higher to replace the lost income.

Of course, demeaning the resorts reputation will also make it harder for owners to rent their units and force them to lower their rental rates.

*****

So while I understand what you're trying to do, I think that those specific suggestions might actually be counterproductive. To the extent that rentals are a significant factor in resort operation, it's in the best interest of owners to have the resort make as much money as possible from those rental activities. That means ensuring that renters feel wanted, welcomed, and valued.

The problem with RCI/II renting out the spacebank weeks is that the Resort gets the expense of housekeeping and they get no money from the rentals fees that RCI charges.

I own at 2 small Resorts that are sold out. Weeks that go to RCI are spacebanked weeks. Yet, anywhere from 1/3 to 1/2 of the available spacebanked weeks are rentals.

At least RCI could share some of the rental income with the Resorts.

Walt

Walt

[timeos2 Senior Member Find all posts View Profile Close timeos2]

RCI Rentals are a major problem

The problem with RCI/II renting out the spacebank weeks is that the Resort gets the expense of housekeeping and they get no money from the rentals fees that RCI charges.

I own at 2 small Resorts that are sold out. Weeks that go to RCI are spacebanked weeks. Yet, anywhere from 1/3 to 1/2 of the available spacebanked weeks are rentals.

At least RCI could share some of the rental income with the Resorts.

Walt

Walt

RCI rentals, while I understand the legitimate need due to the issues of unequal values in 7 day trades, have been twisted into a nightmare for owners and resorts. It is basically free inventory RCI makes pure profit on and now has the blessing of court approval. I would never give RCI Weeks another valuable week under the system as it as evolved.

[Carolinian Super Moderator Find all posts View Profile Close Carolinian]

Size is really not the critical factor. I know of some tiny resorts which are in great financial shape as they are well managed, and located in areas where they have little competition or at least only moderate competition. On the other hand, Sunterra, quite a large mini-system went belly-up and had to be bought out by DRI. Epic, another mini, also went bankrupt.

IMO TSing will continue to some degree. As operating costs continue to skyrocket, the smaller places will either fold or be absorbed into a bigger system. There's only so much money owners are willing to pay before they bail out. Larger companies can spread their costs over more owners.
At this point in time, it is usually cheaper to rent from an owner rather than purchase outright (plus you don't have the annual fee increases). Companies need to find ways to set owners apart from renters to bring value to ownership. Happy owners are a liitle more willing to put up with fee increases than unhappy ones. Here are some thoughts on what could be offered to owners at little cost to the companies:
*Check in one hour earlier/check out one hour later. (if not, than at least a separate check in line so there's no wait - I've waited an hour at some places to check-in).
*Meet and greet. Set aside one morning for an hour of coffee, OJ and breakfast pastries. No sales people present. The resort could use this time to show off its ammenities and side trips/programs that are offered.
*Discount tickets to area attractions - a plus for families with limited budgets.
I'm sure I could come up with many other simple things that could bring some value to ownership.

[T. R. Oglodyte Moderator Find all posts View Profile Close T. R. Oglodyte]

The problem with RCI/II renting out the spacebank weeks is that the Resort gets the expense of housekeeping and they get no money from the rentals fees that RCI charges.

I own at 2 small Resorts that are sold out. Weeks that go to RCI are spacebanked weeks. Yet, anywhere from 1/3 to 1/2 of the available spacebanked weeks are rentals.

At least RCI could share some of the rental income with the Resorts.

Walt

Walt

I don't understand this response Walt. I've reread my post and I think it's pretty clear that I was referring to rentals done by the resort.

****

As for incoming exchangers/renters, there's no reason why the resort can't tack on added fees if they so choose. Many resorts already do that.

That's a cash cow that is already available to the resort. Instead of moaning about alleged added costs associated with incoming renters, why doesn't your resort simply come up with a fee of some type to charge those folks?

[tennisWalt Super Moderator Find all posts View Profile Close tennisWalt]

I Understood Your Post

I don't understand this response Walt. I've reread my post and I think it's pretty clear that I was referring to rentals done by the resort.

****

As for incoming exchangers/renters, there's no reason why the resort can't tack on added fees if they so choose. Many resorts already do that.

That's a cash cow that is already available to the resort. Instead of moaning about alleged added costs associated with incoming renters, why doesn't your resort simply come up with a fee of some type to charge those folks?

The point I was making is that RCI's renting of spacebank weeks hurts the Resorts and the owners of both Weeks and Points by increasing housekeeping cost at the Resort without sharing the rental fees.

Walt