To timeshare or not to timeshare ...

March 21, 2004|by ANDREA ROWLAND

Timeshares offer vacation lovers a chance to own resort getaways without the hassle of year-round maintenance, but there's plenty to consider before making the initial hefty investment.

In timesharing, also known as vacation ownership, owners typically buy the right to occupy a furnished unit for a specific period of time every year. Timeshare owners also may swap their weeks with owners in other resorts. The traditional interval-week timeshare purchase program offers owners use of their accommodations for either a specific week each year (fixed plan) or a week during a certain season (floating plan). In newer point-based programs, owners purchase points that can be redeemed for access to different types of accommodations, resort locations, amenities and other travel options, according to the American Resort Development Association at on the Web.

Timeshare units range in size from studios to more than three bedrooms, but two-bedroom, two-bath units are the most common. Most units include a kitchen with dining area, washer and dryer, stereo, TV, VCR and other amenities. In addition, many resorts boast planned children's activities, swimming pools, tennis, golf, spa and exercise facilities and other attractions, according to the ARDA.


The trade association states that the top five reasons that people buy timeshares include: Flexibility - including the type of unit, location of resort and time of year; the quality of the accommodations; the credibility of the timeshare company; the opportunity to exchange time with vacation owners in other locales; and the appeal of the resort.

"It's a product for people who love to vacation," said Howard Glassroth, vice president of communications for the Washington, D.C.-based ARDA, which represents the timeshare and resort development industries. "It truly is a vacation for all lifestyles."

The vacation ownership concept started in France in the 1960s and has enjoyed steady annual growth. The ARDA now counts more than 5,400 vacation ownership resorts in about 100 countries, with timeshare sales topping $9 billion. About 3 million U.S. households now own nearly 5 million weeks at almost 1,600 resorts, the organization states. Florida boasts more timeshare resorts than any other state. But while the Sunshine State, especially Orlando, continues to attract timeshare enthusiasts, vacation ownership resorts in sites such as Las Vegas, Nev., Colorado and Hilton Head, S.C., also are quite popular, Glassroth said.

Sharing costs

Timeshare owners "are locking in tomorrow's vacations at today's prices," Glassroth said.

Those prices vary based upon such variables as the size and age of the unit, location and time of year used, he said. In 2002, the average purchase cost for a one-week timeshare was $14,500, and the average annual maintenance fee - which owners must pay whether or not they use their unit - was about $385, Glassroth added.

That works out to about $1,100 annually for 20 years worth of one-week vacations, not taking into account increases in maintenance fees. Since these fees can rise at rates that equal or exceed inflation, it's important to ask if there's a fee cap for your plan when shopping for timeshares, according to the U.S. Federal Trade Commission.

The FTC also advises calculating total costs to make sure a timeshare purchase is worthwhile. The total cost of the timeshare includes mortgage payments and such expenses as travel costs, annual maintenance fees and taxes, closing costs, broker commissions and finance charges. Compare total timeshare costs with rental costs for similar accommodations and amenities for the same time and in the same location, the FTC recommends.

While Glassroth said timeshares can add up to savings over time - especially for, say, a family of four who otherwise could spend upwards of $3,000 weekly for food and comparable lodging at an upscale hotel - he emphasized the importance of buying a timeshare for use, not profit. Like most vehicles, most timeshares will decrease in value over time.

"It is not a financial investment," Glassroth said. "It's an investment to use."

Trading places

Timeshare owners can buy plans that allow them to exchange their time at their home resort with owners at another resort.

Glassroth estimated the average annual fee for this exchange option at about $200 - a cost developers often cover for the first year of ownership.

There may be limits on exchange opportunities, including the need to make trade requests far in advance. In addition, you might not be able to trade up to a better unit at a peak time - even with an additional cost. Expect a unit of about the same value as your own, the FTC states.

The ARDA suggests buying the most desirable unit in the most popular season if you're interested in exchanging time with owners at another location.

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