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Very humanly tempting is the thought of “a place to go every year” at some resort
surrounded by a lot of greenery. Timeshare salesmen promise the perfect vacation, no
hassle with travel plans, and the added bonus of family memories that will last a lifetime.
However, glossy brochures do tend to forget to mention the mountain of hidden costs within
these pages. These could very well turn your dream of being able to take a deserved
vacation into a financial nightmare.
This article intends to go beyond the surface and examine the real financial commitment of
timeshare ownership. We will investigate costs that usually go unnoticed but could still
impact your bottom line, empowering you with a source of truth as you make decisions
regarding this massive investment.
The Looming Shadow of Annual Maintenance Fees
One such major hidden cost is an annual maintenance fee that has to be paid by the owners
of timeshare properties. This charge is, in reality, some kind of a subscription fee by the
resort against the property, which includes property upkeep, utilities, amenities, and even
payroll for the staff. As stated in the official website of the American Resort Development
Association (ARDA), the annual average maintenance fee for timeshare in 2023 was $1,850.
Timeshare Annual Average Maintenance Fee in 2023: ARDA. Other “luxury” timeshares
could run to annual fees of over $5,000. If these fees become a financial burden, resources
like https://howtocancelmytimeshare.com/ can guide how to exit a timeshare contract legally.
Even more disturbing is that those fees tend to climb every year, most of the time between
2-3%. This, therefore, means that a charge that seems to be easily manageable today is
likely to snowball into a huge financial burden when cumulated over the period of your
ownership—more so, if you consider that the average duration of timeshare ownership is 13
years (ARDA 2023 Industry Report).
Beyond Maintenance: Closing Costs and Financing Charges
The upfront purchase price of a timeshare is just the tip of the iceberg. Closing costs, which
resemble those applied when purchasing real estate, can add several thousand dollars to
the final price tag. These are transfer taxes, recording fees, and title insurance. If further
financing is needed to purchase a share in the respective period, then be ready to pay
interest, which may additionally raise the cost.
Expenses: The Little Cost of Paradise
While the brochures may show beautiful beachfront properties, they fail to mention the travel
costs to get there. Added on the cost of flights, rental cars, meals, and activities, it is a lot of
money, especially for families or people who want to see something else in the destination
than what is offered at the resort. A personal finance guide can help you budget for these
additional expenses and determine if a timeshare fits into your overall financial plan. On the
other hand, a 2023 AAA study reported that American families spend, on average, $4,500
per vacation in expenses related to traveling, lodging, and others. Add this to increasingly
expensive travel due to inflation and constantly teetering and tottering currency exchange
rates on international timeshares, and the financial strain just becomes astronomical.
Trading Dreams: Covering the Costs of Exchange Programs
Often an added temptation for many timeshare owners is the exchange programs offered.
Often involving an exchange of a designated week at your home resort for a stay at another
location within the network. Though this arrangement is outwardly appealing, exchange
programs also tag their own charges. On top of booking charges, there is also membership
due to worry about, and maybe some additional maintenance fees for the exchange
property.
Timeshare Trap: Difficulty Reselling
Compared to conventional real estate, timeshares are notoriously hard to resell. The market
is saturated with owners desperate to offload their unwanted weeks, translating to a
significant depreciation in value. The fact is that, according to a report by the National
Timeshare Coalition in 2022, timeshares would usually be sold at 30-50% off the original
purchase price in the secondary market National Timeshare Coalition 2022 Report. In other
cases, you might have to pay heavy listing fees and commissions when trying to sell through
a resale broker.
Special Assessments: Unforeseen Burden
A timeshare may include special assessments, along with annual maintenance fees. Special
assessments are one-time charges the resort imposes for unexpected repairs, major
renovations, and amenity upgrades. Depending on the project’s scope, they can run from a
few hundred dollars to tens of thousands.
Case Study: How a Dream Vacation Can Turn Sour
So went the pitch to John and Sarah, aged 48, guaranteed family holidays for life. They paid
$20,000 for a timeshare in Orlando, drawn by the magical memories promised at Disney
World. But soon, the dream turned into a nightmare, making them wish they had invested in
a peaceful mountain getaway instead. A guide to Mountain Retreats could have shown them
the benefits of owning a secluded cabin or lodge, free from the hidden costs and
commitments of timeshares. The creeping increment was seen in annual maintenance fees,
reaching above $2,500 in five years. The costs of airfare, meals, and theme park tickets in
Orlando, for a family of four with two growing children, have kept skyrocketing their vacation
costs from the base of their jump-off. They tried to use the exchange program although it
always would come with extra fees attached. Frustrated and stuck, they attempted to sell the
timeshare on the secondary market. However, they could not find a buyer even after a hefty
listing fee was paid to a resell broker, due to a flooded market and the value depreciating
heavily. What was originally the timeshare, somehow emblematic of future fun, had grown
into a very serious financial burden for both Sarah and John, constantly reminding them of
the big hidden costs they didn’t have an accounting for.
Empowering Yourself: Making Informed Decisions about Timeshares
Before succumbing to the allure of a timeshare presentation, it’s crucial to do your due
diligence. Here are some essential steps to take:
● Resort and Management Company Research: Research of the resort about its
background of reputation, financial steadiness, and history of special assessments.
Research the background on the management company’s track record relative to
property maintenance and addressing owner concerns.
● Understand the fees: Some fees may not be included in the upfront purchase price.
Obtain a written explanation of all possible fees, including annual maintenance,
closing costs, finance charges, and exchange program fees. Possible special
assessments should also be included. Be sure this includes projected increases for
annual fees over your estimated ownership period.
● You may want to take a look at renting condominiums to find and reserve hotels with
travel websites and even vacation rental websites, such as Airbnb. This can give you
better flexibility and overall cost savings, especially when traveling.
● Resist High-Pressure Sales Tactics. Timeshare sales presentations have become
synonymous with high-pressure sales tactics. Do not feel under duress to make a
snap decision. Research, compare options, and take time to consider, discussing it
with a couple of trusted financial advisors.
● Take a Trial Stay: Some resorts offer a trial stay for 3-5 days to experience the
facility yourself. This will help you check if the place is compatible with what you have
in mind for a vacation.
Beyond the Brochure: Owning the Vacation Experience
Timeshare ownership could be a plausible avenue for some, especially those who strongly
favor one location for a fixed style of vacationing. The option, however, must be weighed
very painfully with a realistic understanding of the actual monetary commitment it carries.
Read between the lines of glossy brochures, and before long, it dawns that a timeshare is
anything but a simple purchase. Remember, true luxury is enjoying your holiday experience
and not being bound by any contract.
Henry Lau