Timeshare Point products: Good & Bad

The most recent timeshare product addition has been the evolution of the point system. Many timeshare resorts have “upgraded” from the old traditional product of fixed or floating ownership to points.

Although points was touted as the newest feature, there are some major drawbacks that accompany its touted flexibility. Developers and points administrators like II and RCI have been “converting” many resorts under their affiliations. Simply, the old ownership (one week or seven days) was given a “point value” based on a recipe for a resort’s unit given value. The location, size of unit, demand of week, resort amenities all figure into how much point value the point administrator figured to assign to each point package it sells to consumers.

Today more than half the resorts sell a points type product. If you’re going to buy a timeshare and are trying to decide whether or not to purchase a points-based product, consider the following:

The Good

The positive thing about a points based resort product is this:

Flexibility. Points allow the owner to divide up the time used at a particular resort location. Rather than the old standard 7-day vacation, an owner can divide up the time and stay a night or two, then utilize the remaining points somewhere else. Hypothetically, an owner could spend 7 one-night stands (no pun intended) at seven different locations. Of course, point considerations fluctuate wildly based on demand, size of unit, location and so on. For example, a one night stay at a 3 bedroom unit a Disney on Christmas day may cost the same amount of points as 4 weeks at a 1-bedroom unit in Iowa. Hey, they got resorts in Iowa!

More Flexibility - Points also allowed owners to trade them for other non-accommodation items like meals, airline tickets, dry cleaning and anything else that happens to be on the point menu. That’s a nice feature.

The Bad

Cost - You are paying for the cost of the administration of the product. Expect to pay a hefty premium for a points package that would be equal to one vacation week (compared to a vacation week at a fixed week resort where you would have to take the 7-day vacation)

Maintenance Fees - Comparatively, maintenance fees at points-based resorts are MUCH higher than at traditional, non-point resorts.

Exchanging - This is complicated, so pay attention. When the developers of the points system started selling it, either someone knew what they were doing, or it was the biggest scam ever invented. Before points came along, all resorts sold a fix or float ownership product. When RCI and II created the “exchanging” or trading system for owners, it was an ingenious concept. The advent of the exchange allowed owners to trade virtually anywhere within a 3-year window of the week’s tradabilityworthiness. (I made that word up, but you timeshare people know what I mean) Keep in mind the trading systems these two companies operated always traded a WEEK for a WEEK. This concept is fairly easy to audit and easy to track.

When points came along it added the extra flexibility feature of exchanging for shorter durations of time, but the sad and scary thing it did was virtually eliminate trackability of a given week. Since the weeks were given a value, almost similar to currency, there was no way to track an owner’s ownership. Someone may own 25,000 points at Marriott, but it’s not tied to any one week. Want some proof? Try asking owners of point-based resorts how difficult it is to secure a reservation. Those resorts are renting the xxxx out of available inventory, because the ownership is tied to basically nothing. You find that many resorts are having huge increases in rentals because they can. They just tell the owners they don’t have any space, and then the reservationist says “Oh, but we have some time available for you in early December!” Not when you have shelled out 35 grand and pay $1250 annually on maintenance fees. Anybody shaking their head?

Inflation - The other BAD thing about points ownership is inflation. In the good old days, a week was a week, and you could count on that every year. Now, (unless it’s in the resort plan) the administrator begins to (Nurse) ratchet up the amount of points it takes to render services. Now, that 25,000 Marriott package is now only getting you 6 nights, not 7, like when you originally bought it. It makes the resort developers happy when owners have to purchase more points to maintain their vacationing habits. And gee whiz, more points means more maintenance fees! Wow, that’s a neat idea!

So that’s my spiel on points everybody. My resume includes 10 years in the residential real estate business (7 as a broker) in central Indiana, and 5 years as an employee of RCI (where I wrote and edited its business trade publication that went out to the resort developers, management and marketing companies). Feel free to ask any questions, but I thought it was my duty to inform the general public about this. eBay Ole!