Time-Share Travel Trends

Time-shares are hot, but are they a wise investment?

Last year, more than 229,000 vacation time-shares were sold, making them the fastest growing segment of the travel and tourism industry. But are they worth the money?

The Dolans say they make lousy investments. But if you buy a time-share as a flexible vacation option, they sometimes offer advantages.

Time-shares used to have a rather shady reputation - a hard sell resulting in a disappointing location - but that has changed. It used to mean spending the same week at the same place year after year. But not anymore. These days, there are all kinds of options to consider when buying a time-share.

The American Economics Group surveyed owners and found that 259,000 time-share weeks were sold in the U.S. in 1997. There are over 2,000,000 owners in the U.S. with prices ranging from $7,500-$50,000.

In the past, salespeople would often lure prospective buyers with gifts, "vacations" and arm-twisting tactics. These days, though, the time-share industry is calling itself "vacation ownership" in an effort to shed its shady past. There are new big names in the business like Disney, Hyatt, and Marriott.

It used to be that you would go to the same place at the same time each year. But now you can use "exchange networks" that allow you to swap your week at one resort for another resort anywhere in the world. You're charged an exchange fee in addition to your annual membership.

There are several exchange options in various time-share networks:

• Points-based programs allow you to trade in your allotted time for points that can be used to purchase airline tickets, car rentals, casino chips, etc.
• Floating time options are more popular than fixed time plans, but they require more planning. You have to book in advance. But it means you to buy a week within a three- to four-month season, and the exchange fees are built into the purchase price (as opposed to the other plans in which you pay a fee each time you do an exchange).
• For those who can afford it, there is fractional ownership, which allows you to buy a greater share of a unit, anywhere from 3 to 26 weeks, with a small group of owners.

Some time-shares are actually in hotels, so they offer room service and daily maid service. But, in most time-shares, there is no room service. Most offer daily maid service only at the end of your stay. You do get linen and cutlery. In addition, most time-shares provide washers and dryers for your use.

But the Dolans say time-shares are not a good investment. Vacation ownership ranges from $7500 to $25,000. According to the American Resort Development Association (ARDA), the sales and marketing costs are 40 percent of the price of the unit. In other words, developers spend $4,000 to sell typical a $10,000 time share. It costs an average $185 just to attract couples to time-share presentations with incentives, prizes, and discounts - and most don't buy.

According to the Dolans, if you look at a time-share as a vacation option instead of an investment, it looks a bit better.

You may feel that just the flexibility of a time-share is enough to sell you on the idea. But be aware that the ARDA says that most buyers since 1990 feel they did not save money on their vacations because maintenance fees keep rising.

Also, you have to consider how available exchanges are for places you'd really want to go. Some places are more difficult to get into than others.

If you really want to buy one, say the Dolans, buy it from an individual owner instead of the developer. Timesharing Today magazine says that about 10 percent of time-share owners want to sell at any one time. (They've had lifestyle changes, they don't use them enough, want more flexibility, or they just can't afford them anymore.) Ten percent comes to about 200,000 owners - a pretty good selection. By buying from an owner, you may save 25 percent off the original sales price.

One good tip: Lots of time-share owners who are in the market to sell their properties put them up for rental. Rentals average about $400-$800 per week. Renting is a great option to consider first.

You'll find links to timeshare resort reviews and classified ads for sales and rentals on the Web:

• www.timeshare-users-group.com: offers resort reviews and classified ads to its members for $15 per year.
  
• www.timesharing-today.com: a bi-monthly newsletter that provides tips on buying and selling industry news and resort report cards.)

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