When the Federal Trade Commission has a section on their website answering “What is a Timeshare,” you know there is confusion out there! That's why I like to say that a Timeshare isn't something you purchase on a whim, three margaritas deep, while on vacation.
It’s a legal contract and long-term financial decision that you should thoroughly understand and think through before buying. No matter what a salesman tells you, timeshare purchase deals will still be available after you get home, so take your time. In fact, purchasing a timeshare outside of a resort on the resale market from an existing owner can save you 75 to 99% off the resort-direct price. That's just another reason not to rush and fully understand what a timeshare, or vacation ownership, is before buying.
What Is a Timeshare Ownership?
Today, a timeshare isn't just one thing! The timeshare industry offers various products to match people's different lifestyles and vacation preferences. There are 9.9 million U.S households (and 22 million worldwide) that own one or more types of timeshares.
So, what is a Timeshare Ownership? There are four different types.
1. A Fixed Week
This type of timeshare ownership means you have the right to use a particular room type a specific week every year. That's why you'll see people talk about their timeshare ownership as Week 1 or Week 52. So if you want to vacation in Aruba the same holiday week every year at a specific resort, this type of timeshare purchase could be right for you.
2. A Floating Week
A floating week timeshare means that you aren't guaranteed the same week every year for vacation; you need to call the resort to reserve a room. Some floating ownerships are specific for high season ( AKA Red Weeks) or low season ( AKA White Weeks). There are also year-round floating week ownerships in locations where the demand and weather aren't as seasonal (e.g., Aruba).
While this ownership provides flexibility, popular travel times like Spring Break get booked very quickly. If calling at 8:01 am on the first day you can reserve those weeks isn't something you want to do or keep track of, this type of ownership might not be for you.
3. An Allotment of Points
According to the American Resort Development Association, an annual allotment of points is now the most common type of timeshare ownership. Based on your purchase package, owners receive a set number of points a year that act as currency they can use to make resort reservations within their timeshare chain. The more points you have, the larger the annual maintenance fee and the purchase price is. This type of timeshare provides a lot of travel flexibility as you don't have to stay at the same resort every year, but it does have a learning curve.
Owners use these points in a variety of ways based on their travel lifestyle or vacation bucket lists. For example, those looking to go on as many vacations as they can stretch their yearly points by staying during the week (vs. weekends, which require more points) choose a smaller sized unit or travel during non-peak travel times. For people who want a two-bedroom unit or a Park City resort during ski season, you can combine two years' worth of points to make one reservation.
4. Fractional Ownership
The rarest type of timeshare is fractional ownership (or a shared deeded ownership) which happens to be the type of timeshare we own. So instead of just a week or a set amount of points, we hold a larger piece of a specific unit at a particular resort. For example, we have ¼ ownership of a Vail Resorts condo in the Catskills. So we have one week a month, or 12 weeks a year, ownership of a specific unit.
The weeks rotate among the owners every year to keep things fair. So one in every four years, we get the coveted Christmas week, which either means a fantastic ski vacation or a big rental check!
What Is a Timeshare Resort?
With 1,582 timeshare resorts in the U.S. totaling 206,380 units, there is more than one answer to the question “What is a Timeshare Resort?” While some people may think a timeshare is a small 1970's resort past its prime, Disney's Saratoga Springs, Waikiki's Hilton Hawaiian Village, Marriott's Ko Olina, Four Seasons Residence Club in California, and other brand name resorts are timeshares.
Some examples of timeshares from hotel chains people know and love include:
- Wyndham Destinations – Owns 247 timeshare resorts under the brands Worldmark, Wyndham, Margaritaville, and Shell Vacation Club.
- Hilton Grand Vacations Club – Has 154 resorts, including the brand new Central at 5th by Hilton Club in Manhattan and Liberty Place Charleston by Hilton Club.
- Marriott Vacation Club – Owns 60+ upscale timeshare resorts with 13,000+ rooms throughout the U.S., Caribbean, Central America, Europe, Asia, and Australia.
- Holiday Inn Vacation Club – Includes 29 resorts with 7,900 condo units in 14 U.S. states, including its flagship 1,400-acre resort Orange Lake located right next to Disney's Animal Kingdom in Orlando. Orange Lake is the largest timeshare resort in the world, with 2,412 condos, four championship golf courses, seven swimming pools, a 12-acre outdoor entertainment complex, an 80-acre lake for water sports, and five dining options.
What Is a Timeshare Room Like?
One of the differences between a hotel and a timeshare is the room itself. I love timeshare traveling because these resorts combine a condo's space and conveniences with large chain resorts' amenities and cleanliness standards. A one or two-bedroom condo inside a resort is the best of both worlds.
So what is a timeshare room like? Some typical features of a timeshare room include:
- A Fully Stocked Kitchen – Whether you prefer to cook your meals, have picky eaters, or need to stretch your vacation dollars by eating in, timeshare resorts offer full (or partial) kitchens with the cooking supplies you need.
- Separate Living and Dining Room Spaces – Long gone are the days of eating breakfast on your bed or watching TV on your phone in the bathroom after the kids are asleep. With separate rooms and living spaces, there's room for everyone to spread out and relax.
- Multiple Bedrooms & Bathrooms – While there are studio timeshare rooms, 68% of timeshare units are two bedrooms or larger. Whether it's two couples traveling together or a family, the privacy of separate bedrooms is a real plus.
- Washer/Dryer in Unit or on Property – You can leave your big suitcase behind and pack light! If you're vacationing for more than one week or with small kids, being able to do laundry is another perk of timeshare traveling. For example, we recently stayed at a Marriott Timeshare in Fort Lauderdale, and our two-bedroom condo had a washer and dryer in the unit. During our week-long stay, we did laundry a couple of times which was a big convenience.
What a Timeshare Isn’t: 3 Things You Must Know
When trying to explain “What is a Timeshare?” to people who are unfamiliar, it can be helpful to mention what timeshares are not. Over the years, in my timeshare owners' Facebook groups, I've seen posts from unhappy timeshare owners. Many of these people bought a timeshare for a specific travel hack or certain travel destinations. Unfortunately, after their purchase, they learned that their plan is either not possible or very difficult. Their assumptions about timeshares often fall into one of three categories.
Here are 3 of the biggest myths about timeshares.
1. A Way to Travel to Every Destination in the World
If you are buying a timeshare to travel to Iceland, Alaska, or to have a place to stay in Dayton, Ohio, to visit your grandkids, you're going to be disappointed. That's because those places don't have timeshare resorts. If you have specific cities you want to travel to in the next ten years, take some time to make sure timesharing is a match for your bucket list.
One of the easiest ways to see timeshares worldwide is to look at the Resort Directories for the two largest timeshare exchange companies in the world. Combined, the RCI resort directory and the Interval International resort directory will give you a sense of what destinations timesharing can take you to.
So while you can’t go to every place in the world, there are still a lot of vacations you can go on via the 5,300 resorts in the timeshare exchange system. For example, timeshare owners can travel to 70% of U.S. National Parks by exchanging their timeshare with RCI as there are 277 affiliated RCI resorts near 44 American National Parks. That will keep many timeshare owners busy for years!
2. Guaranteed Exchange Availability at the Most In-Demand Resorts
Access to an exchange program is an exciting part of owning a timeshare. We take some of our weeks at our Catskills timeshare and deposit them with RCI to secure room reservations at other resorts. For example, in May, we reserved a room at a gorgeous Barbados resort by completing an RCI timeshare exchange. But if I had my heart set on using my ownership to stay only at The Crane Barbados and only during my birthday week, with only a month’s notice, I’d be frustrated with timesharing.
If you're buying a timeshare to travel hack and get cheap reservations at specific resorts like Aulani, a Disney Vacation Club, or The Galleon Resort in Key West, you should reconsider your approach. While those two resorts are in the exchange companies' resort directory, they rarely become available for exchange. That's because those owners are either using it themselves or renting their timeshare out. While it's not impossible to get those types of reservations, it could take years, require super last-minute travel, and not be during the specific week you are looking to travel.
3. A Real Estate Investment
If the idea of renting out a high-demand timeshare got your attention, it's crucial to understand that a timeshare is not a real estate investment like owning a whole vacation house or condo. In fact, a timeshare, in almost all cases, is a depreciating asset and will sell for 75 to 99% of the resort's direct purchase price. So that's another reason to purchase one on the resale market from an existing owner if you do decide to buy.
But even in that case, it’s dangerous to think of a timeshare as a financial investment or a vacation rental business. What happens when Airbnb regulations change in their cities or states? Or what happened to the people who own 20 timeshare units during the pandemic when travel shut down? Could they cover all the yearly maintenance fees and taxes for those properties without any rentals? What would happen if they also lost their job during that time?
For example, our timeshare resort in New York shut down and was not allowed to have any guests for part of the pandemic. That meant we couldn't use it, couldn't deposit any weeks with an exchange company, and we couldn't rent it out. But we were still responsible for the bills. That's why when answering the question “What Is a Timeshare?” to friends, I always mention the long-term financial commitment that’s involved.
So What Is a Timeshare? It’s a Prepayment for Vacations
No matter what kind of timeshare you own, you can consider it a prepayment for your future vacations. So take your time, think through your bucket list trips and make sure the vacations you are prepaying for with timeshare ownership are the ones you actually want to go on.
This post originally appeared on Your Money Geek.
Josh writes about ways to make money, pay off debt, and improve yourself. After paying off $300,000 in student loans with his wife in less than five years, Josh started Money Life Wax and has been featured on Forbes, Business Insider, Huffington Post, and many more! In addition to being a life-long entrepreneur, Josh and his wife enjoy spending time with their newborn son, their chocolate lab named Morgan, working out, being outside, traveling, and helping others with their finances! In case you were wondering, Josh uses Personal Capital to track his net worth and his first investment account ever was an Acorns account 😎