Answering the Haters: Why Smart Timeshare Owners Never TUG
by Doug Milbrath, CEO
The question of whether timeshare might be a “scam” should be long settled. Timeshares have been sold continuously in the U.S. since the first timeshare resort broke ground in 1965. Today over 9.2M U.S. households own one and, among those households, 83% of owners report being satisfied. As a comparison, according to the 2017 J.D. Power U.S. Sales Satisfaction Index Study, the luxury car brands with the highest customer satisfaction were Mercedes and Lincoln; tied at 83% (830 on a scale of 1,000.) There is, of course, no serious debate about whether Mercedes is a scam. That being said, just like buying a new luxury car, buying a timeshare is not a good idea for everyone. Unfortunately for the timeshare industry, happy owners don’t tend to write about timeshares; leaving the online narrative to be dominated by a small number of disaffected owners and assorted haters. Many potential buyers of timeshare (who might otherwise become happy owners) get turned off by what they read online; making it more challenging for existing owners to sell. While it may be true that “haters gonna hate,” questioning and refuting some of their more erroneous claims is occasionally necessary.
Financial expert Dave Ramsey says don’t buy a new car unless your net worth is over $1M - and you pay cash. As for the rest of us, Mr. Ramsey advises buying used. Perhaps that’s good financial advice, but it didn’t deter Americans from buying over 17M new cars and trucks just last year. (It is hard to put a price on that new car smell.) Mr. Ramsey is also against buying timeshare. He feels that buying a timeshare is a bad “investment,” and he’s right: If you’re looking for a profitable financial investment, don’t buy a timeshare. If, however, you are looking for years of great vacations, then a timeshare is going to be a lot more useful than an index fund. The overwhelming majority of owners are happy because they recognize timeshare ownership as an investment in vacationing, and use it as such.
Confusing Experience with Expertise
Some of the most aggressive timeshare haters can be found on forum-style websites holding themselves out as experts on the ins and outs of timeshare ownership. What you'll actually find on these forum sites is misinformation, much of it contradictory and nonsensical. Forum regulars are often just disaffected timeshare owners; passing off anecdotal experience with one timeshare as expertise with all timeshares. The most virulent of these haters (unironically) call themselves "tuggers" and they especially hate the idea of selling your timeshare at a fair price.
Recently I ran across a forum post where the expert haters all agreed $3,000 for one week of timeshare at Orange Lake Resort was far too high a price; a specific claim that warrants some examination. As an actual expert that has worked in timeshare for over 20 years, I think $3,000 is absurdly low for a few specific reasons:
1. The whole is not greater than the sum of its parts. Even if you place zero value on the timeshare aspect of the ownership, $3,000 per week implies the entire condo is worth just $156,000 (52 weeks x $3,000). Based on actual real estate prices near Orange Lake, the entire condo would cost closer to $500,000 (and possibly much more for larger units.) Additionally, property taxes paid by Orange Lake owners reflect assessed values much higher than $3,000 per week.
2. Orange Lake is a popular resort that sells new timeshares every day. Depending on which week and which village a specific Orange Lake timeshare is located in, resort sale prices can be as high as $40,000 per week. If buyers are willingly paying the resort $40,000 for a "new" timeshare, why would the price of a used one be over 90% off?
3. The timeshare industry is simply not that profitable. If it was possible to sell a $3,000 property for $30,000, that would represent a profit margin unheard of in modern business. Net profit margins in real estate development average about 13%, while profit margins across all U.S. industries average just under 7%.
The timeshare haters on forum sites may be well-meaning, but they don't have enough information to qualify as experts. Unfortunately, the outsize amount of negative content on these sites is the #1 reason why potential timeshare buyers get cold feet. Don't participate in "tugging" your resale value down the drain.
Haters Never Win and Winners Never Hate
The thing about timeshare haters is this: no one is trying to force them to want or even like a timeshare. I happen to think timeshares are a great way to vacation, as do millions of happy owners. If you disagree, that's okay too - it's not for everyone. Unfortunately, the haters aren't content to agree to disagree; they want to convince you that timeshare's a bad deal, and they're happy to use manipulative tactics to do so. One wonders if what the haters might really need is a good vacation ;)