Understanding Timeshare Points: A Shift From Financial to Use Value
When you see advertisements for timeshares, they often depict the product as real estate, complete with images of beautiful homes. But in reality, timeshares are not typical real estate transactions. More often than not, you’re buying timeshare “points” that can be used to stay at a resort’s properties for a certain period. This “points-based” or “right-to-use” model gives you more flexibility in your travel plans, but it also gives a lot of power to the resort developers. So, how much are timeshare resort points worth?
The Hybrid System: Points and Home Resorts
In the realm of timeshares, major developers have adopted a unique approach that merges two concepts: points and “home resorts.” This combination forms the backbone of a hybrid system.
On one hand, we have the points. The concept of points in a timeshare agreement functions as a form of currency within the system, providing owners the flexibility to access various resort locations. They serve as a ticket to diverse vacation experiences, depending on how and when they are used. For example, an owner might use their points to book a stay at a beachfront property during the summer or a mountain cabin during the ski season. This way, points can be seen as a passport to varied experiences, emphasizing the utility and enjoyment derived from their use.
On the other hand, we have the concept of a “home resort.” The home resort is typically the resort where the timeshare owner initially purchases their interest. Developers cleverly use this idea of a “home resort” to justify charging recurring maintenance fees and assessment fees for one specific resort location. These fees are necessary for the upkeep of the properties, ensuring that they remain desirable vacation destinations.
Interestingly, the obligation to pay these fees doesn’t depend on whether you actually use your home resort or not. Even if a timeshare owner uses their points to stay at other properties in the network, they’re still responsible for the costs associated with their home resort. This is a crucial point to note as it underscores that the fees aren’t tied to usage but rather to ownership or membership.
The hybrid system of points and home resorts places a clear emphasis on “use value” rather than financial value. It’s designed to prioritize the experiential value you receive from using the resorts – the memories you make, the experiences you enjoy, and the flexibility you have in your vacation plans.
Conversely, the financial value of the points themselves, particularly in terms of resale or exchange outside the timeshare system, is typically low. This is why understanding the nuances of this system is key to maximizing the value you get from your timeshare.
Value of Timeshare Points
The value of timeshare points, a crucial aspect of most modern timeshare systems, is dictated exclusively by the resort developers. This setup leads to a unique dynamic in which the value of points does not function like traditional currency or assets.
When determining the value of points, resort developers often consider economic principles such as supply and demand. For instance, points required for a week’s stay in a popular resort during peak season might be higher than for an off-peak period. The location and desirability of the resort, the size and type of accommodation, and the time of year are all factors that can influence the number of points required for a booking. This dynamic allocation of point value means the “cost” in points of a particular vacation experience can fluctuate based on these factors.
However, there is no industry-standard method to oversee or regulate this point valuation process. Unlike traditional real estate transactions or investments where there are governing bodies and regulations to ensure fairness and transparency, timeshare point systems operate without such external oversight. This can lead to situations where consumers are at the mercy of the developers’ valuation of points, which may not always align with the consumers’ perceived value of their points.
Moreover, timeshare points do not function like regular currency, which is subject to government regulation and influenced by market forces such as inflation and interest rates. Timeshare points are not exchangeable in the open market, they can’t be deposited in a bank, and they don’t earn interest. They do not have a universal value that can be translated into a dollar amount, nor can they be used for transactions outside the specific timeshare system.
In this sense, timeshare points are comparable to “Monopoly” money – they possess value within the specific context of the game, or in this case, within the confines of the timeshare system.
However, outside of this system, timeshare points are essentially worthless. Their value is tied to the ability to exchange them for stays at the resorts within the developer’s network, emphasizing once again the focus on “use value” rather than financial value.
Consumer Perception of Value
While timeshare points can offer the allure of varied vacation experiences, the reality for many consumers is often less rosy. Indeed, the perceived value of these points is frequently overshadowed by the numerous drawbacks associated with their use and ownership.
The primary appeal of timeshare points lies in the potential experiences and memories that can be created by staying at different resorts. However, this potential is often tempered by the reality of high maintenance fees and other costs associated with owning and using timeshare points. These fees are usually recurring and can increase over time, representing a significant financial commitment that many consumers may not fully anticipate when they initially acquire the timeshare.
Furthermore, these costs can make the timeshare points seem less valuable than they might initially appear. What might at first glance seem like a ticket to a dream vacation can, in fact, become a financial burden, as the costs of maintaining the timeshare and the limitations on using the points start to outweigh the benefits.
In addition, the value of timeshare points is controlled by the resort developers, meaning that it can fluctuate according to their valuation and policies. This lack of control and predictability can further erode the perceived value of the points for the consumer.
Lastly, timeshare points often have little to no value in the broader market. Unlike real estate or other tangible assets, timeshare points cannot be easily sold or traded outside of the specific timeshare system. This limitation means that if a consumer decides they no longer want or need their timeshare, they may find it difficult to recoup their investment, further diminishing the perceived value of timeshare points.
Making Informed Decisions
Before getting involved in the timeshare points system, it’s important to do your research. Understand what you’re getting into and what your rights and responsibilities are. Look carefully at what’s being offered and what’s written down in contracts and other paperwork. If you feel like you’ve been misled by a resort company, it might be a good idea to talk to a legal professional who knows about real estate and timeshare law. Remember, the value of timeshare points lies more in the experiences you can have with them, not in their financial worth.
This article is for information purposes only and is not intended as legal advice. You should always consult a legal professional to assist you with any specific issues you may have.
Led by timeshare attorneys J. Andrew Meyer and Michael D. Finn with over 75 years of legal experience. The Finn Law Group is a consumer protection firm that specializes in Timeshare law. If you feel you need a consultation with an attorney, please contact us at 727-214-0700 or email us at [email protected]