Timeshares have a bad rap. Horror stories abound of rundown resorts, runaway upkeep costs and owners so desperate to offload unwanted units they would post them on Ebay for less than $1.
But in the world of holiday gateways the T-word is making a comeback. Sales in North America were up over 12 per cent in 2015, according the latest available data. And the average age of buyers is going down, a sign of growing interest from younger generations, according to the Canadian Vacation Ownership Association (CVOA).
“Timeshare is resurging and it’s appealing to a younger generation of buyer, who is more affluent,” said Jon Zwickel, president and CEO of CVOA.
The typical timeshare owner in the U.S. and Canada is 51 years old with household income of around $89,000 a year. The new timeshare buyers are 42-years-old on average, with an average annual income of nearly $95,000.
The industry isn’t what it used to be, said Zwickel.
Young people want to do more than “go somewhere and sit by the pool.” And resorts have been adapting.
READ MORE: Getting out of a timeshare is about cutting your losses
A timeshare in Whistler, B.C., for example, now offer so much more than skiing in the winter and golfing in the summer. Guests might be able to choose from a slew of activities, from river rafting and zip-lining to getting a helicopter lift to the top of a mountain and skiing your way down (known as heli-skiing for in-crowd), according to Zwickel.
An option for the cottage have-nots
Anecdotal evidence suggests that young families who can’t afford to buy their own cottage are taking a closer look at timeshare options.
READ MORE: Baby boomers are pricing young families out of cottage country
“The dream of owning a vacation home is really strong among Canadians,” Alexander told Global News. But for budget-tight families sometimes the only option is a timeshare.
The average cost of a timeshare unit was around US$22,000 (C$28,000) in 2015, according to CVOA. (The figure is a weighted average which accounts for different unit types.) While the average maintenance fee was US$848 (C$1,000).
READ MORE: Alberta cottages priciest in Canada, at over $800K: Royal LePage
It’s easy to see how that price tag may seem attractive compared to cottage prices that easily shoot past a million dollars in the coveted vacations spots. And cottage upkeep can also be far more expensive than $1,000 a year, noted Zwickel.
Also, “timeshares can be a great option while you’re saving up for a cottage,” said Alexander.
Owning a timeshare unit in a location where you know you’re going to want to eventually buy a second home allows you to get to know the area and the local market intimately before you make your big purchase. You can plan relying on a timeshare for 10 years or so, while you set aside money for a down payment and wait for the perfect buying opportunity, he noted.
WATCH: If you’re looking for a lakeshore getaway, be prepared to pay
How it works
The traditional timeshare model, which emerged in the 1970s, is the so-called fixed-week, fixed-unit model. Owners buy the rights to use a certain property for a certain period of time every year.
Nowadays, though, many timeshares operate via a points system: You buy a certain number of points that generally corresponds to a type of unit and period of the year when you think you’re most likely to enjoy your holidays. You can then use those points for any property within your resort system whenever you want.
“It’s a much more flexible system, which is what young people like,” said Zwickel.
READ MORE: To buy or rent a cottage? These 5 questions will help you decide
Prospective buyers should still exercise caution
Before you take out your checkbook at a time share presentation, though, keep the following in mind:
- Timeshares are not a good investment. Zwickel has no trouble admitting this. If you’re buying recreational property as an investment, this is not for your. Timeshares are really “pre-paid vacations,” he told Global News.
- It can be really hard to sell a timeshare. See above. One of the main reasons why timeshares aren’t good investments is that they’re difficult to sell. “It’s possible to make a decent return on timeshares, but it takes time,” said Alexander. The demand for timeshares is much smaller than that for cottages, which is why it may become very difficult to find a buyer if your unit isn’t in a very popular location. In fact, offloading unwanted timeshares is so hard that there are entire companies devoted to it, such as Timeshare Exit Team, which helps owners break free of their timeshare contract when they can’t sell the property.
- There are lots of scams around timeshares. Timeshare companies are famous for their mesmerizing sales pitches. Guests staying at resorts might be promised a free dinner or spa massage in exchange for sitting through a presentation in which they’ll be shown slide after slide of breathtaking palm beach views, until they eventually draw their John Hancock on the dotted line. “They paint this picture – that the property is going to increase in value, which it won’t,” warned Timeshare Exit Team founder Brandon Reed. Canadians should avoid signing any contract or document at the presentation itself, warns the Canadian Consumer Handbook, a government-sponsored consumer guide. Instead, they should do their own research, including checking for complaints registered against the timeshare company. Other timeshare scams range “from hidden booking or maintenance fees to more extreme cases, such as companies suddenly going out of business once they secure your hefty deposit, leaving you without a timeshare,” according to the Canadian Anti-Fraud Centre. There are also plenty of fraudsters ready to prey on owners desperate to get rid of an unwanted unit, said Reed.
- Think carefully before buying into a lifetime timeshare membership. You can generally buy a time share property for a period ranging from 10 years to a lifetime. Buying a shorter membership can save you the hassle of selling your unit, should you ever wish to, noted Zwickel. A lifetime membership, on the other hand, often results in parents handing over their time share to their children, who may not want it and are then stuck with trying to offload it, said Reed. His company is regularly helping clients get rid of undesired timeshare inheritances, he told Global News.
- Not all timeshares are created equal. Some resorts fail to upgrade, despite charging maintenance fees, warned Reed. Another thing to be aware of is that, with the points system, you might not be able to get a spot in a popular resort unless you book well in advance – sometimes as much as a year and a half before your hypothetical trip, he added. Again, do you research before you buy.
Comments