What many people do not realise is that timeshare has its roots in Europe following the aftermath of the Second World War! Individuals and families got together and bought a quarter share in a holiday property as a way of establishing an ‘investment’ following the gloom of the war years. They would then rotate the period they bought so that everyone would get an equal ‘timeshare’ of the property! This was then developed in the UK when companies began to sell a timeshare in the holiday property by the week, up to a period of 50 weeks. The remaining two weeks was then used to carry out maintenance on the property.
This form of selling holiday property was quickly monopolised by large corporations and hotel chains, which created the opportunity for many Consumers to get a slice of the good life abroad.
To understand the profits from Timeshare sales, can be summarised by a developer selling the same room 50 times to 50 different owners at an average price of £6,000.00p per week!
Timeshare is sold on the basis of:
- A Fixed Week Ownership – This provides the holidaymaker with ownership of one week (or more) by deed;
- Ownership by the ‘Floating’ Method – This means that a holidaymaker would own a share in a property within a given period and they would have to apply for their week (or weeks) along with the rest of the owners in that period. The more popular weeks are often excluded from these periods and are sold as ‘Fixed Weeks’;
- Rotating or ‘Flex’ weeks – This means that the weeks are rotated so that ‘owners’ have the chance to experience ‘peak’ season weeks;
- Fractional Ownership – owners bid for a set period, for example 4/5 weeks or for longer. Such purchases are usually presented in skiing resorts, island resorts and so on;
- Deeded Agreements – These allow for an owner to use the property for their lifetime and can allow them to pass on their ‘ownership’ or to rent, sell or exchange the property – we understand that this type of agreement can be used for either fixed or floating weeks;
- Right to Use Agreement – this is another form of agreement whereby the property always rests with the developer and they allow you to use the property for a set period. At the end of that period, the property returns to the full ownership of the developer – again this is used in fixed or floating arrangements but can also be used in a points based system such as a holiday club;
- Holiday Clubs – These present the ‘owner’ with the opportunity to purchase into a brand or selection of resorts and can be determined by the points that you hold.
Holidaymakers who purchase timeshare or holiday club properties are generally ‘recruited’ within resorts although some are attracted to this form of purchase through various marketing methods.
The ‘sales process’ is often long and arduous and is designed around a presentation to ‘sell’ you the merits of ownership, and the ‘good life’ attached to such an ownership.
Incentives are often given through the invitation to stay in a resort for free or at a substantially reduced cost. Some sales pitches provide free gifts or price reductions to make the deal more attractive. We have often been told by holidaymakers that they found it very difficult to leave such presentations; some have even admitted that they felt that the only way to leave was by signing an agreement!
Holidaymakers that do purchase timeshare will often use it for personal use, but (where their terms and conditions allow) they will rent out ‘their’ property, exchange the property within the same hotel or group, exchange with other external resorts or sell it directly or via a timeshare broker.
It is clear that problems can arise with re-selling as the actual purchase value (made up of marketing costs and so on), may not be recoverable; re-selling through a broker or agent will attract other marketing fees for this service, so Consumers need to be aware of these charges!
This brief guide highlights the principles of timeshare or holiday club ownership, however, we think that the principal questions that any holidaymaker should ask before committing themselves is:
- Am I being subjected to pressure sales?
- Are they complying with the law on how they are selling this to me?
- If I re-sell, will I get my money back from the timeshare or my points?
- What guarantee do I have to get my money back?
- Can I afford to make this investment?
- Could I book an annual holiday, of the same standard, for the same cost they are asking me to pay out?
The simple rule is – ‘All that glitters is not necessarily gold’ – before you commit to anything, always seek independent advice!