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Ask Chuck: Vacation clubs, timeshares, or none of the above?

Ask Chuck your money question

Dear Chuck,

We’re a large family who vacations 10 nights per year over spring break and summer. In your opinion, is a vacation club (like Marriott) a good purchase, or should we look at purchasing a timeshare resale?

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Looking for Vacation Savings

Dear Looking for Vacation Savings,

Ocean Blvd in Myrtle Beach, South Carolina.
Ocean Blvd in Myrtle Beach, South Carolina. | Unsplash/Jeremy Kierez

First, it is a joy to hear you are a large family that is intentional about spending time together on vacation. I can also appreciate your desire to find the best possible value for using the money that goes into your vacation budget.

I assume that you are currently selecting a desired location where your family would like to spend their vacation. Then you do your research and select the best value option for a hotel, Airbnb, VRBO, or campsite. Let’s discuss your interest in joining a vacation club or timeshare to save money. 

Know the real costs

There are several things to consider in your analysis. A good decision will be determined by your family’s needs. I’ve read that vacation clubs are a modern form of a timeshare. Typically points-based, members purchase points and then spend them at resorts within a company’s portfolio. Traditional timeshares are often a fixed week at the same resort. Then there are travel clubs, which offer a variety of services for free or paid memberships. This website offers a vast amount of information. We will look closely at each option.

The initial offers to join a club or timeshare always appear to be great bargains. The key is doing your research and understanding the long-term costs. It is difficult to recover the initial buy-in costs unless you happen to find an incredible resale deal. Just remember that timeshares rarely appreciate over time like a home. They are not considered an investment because they have limited potential to grow in value and come with high costs and fees. There is limited marketability, and they should not be purchased with the expectation of gaining income or capital appreciation. In addition, owners are at the mercy of property management.

Vacation clubs

Vacation clubs grant members access to their properties and resorts for an upfront fee. Many work on a points-based system for location, dates, and accommodation at resorts, villas, condos, or hotels. Exclusive privileges may include discounts, priority booking, member-only events and amenities, concierge assistance, and vacation planning. Some exchange programs allow the trading of points for stays at affiliated properties. Annual dues or maintenance fees cover operating costs, property maintenance, and ongoing services. Here are some key points on vacation clubs:

  • Expect an upfront membership fee or purchase price.
  • Plan for annual dues or maintenance fees.
  • You have flexibility of destination and timing.
  • They appeal to the adventurous who like exploring new places.
  • Resale can be challenging.
  • Memberships can vary in length; some have long-term commitments.

Timeshare resale

A timeshare resale can be purchased from an existing owner at a lower cost than purchasing from a resort or developer. It’s possible to find great deals, but you are limited to what is on the market. A property’s reputation, amenities, and quality are important.

Some resale companies offer exchange programs that allow you some flexibility. If the property has already been developed, you can begin using the timeshare immediately. However, the initial purchase price can be deceiving. You must factor in property taxes, maintenance fees, and exchange fees, which can all increase annually. Plus, if you decide to sell, restrictions and fees can be imposed, along with the risk of depreciation. Here are some key points on timeshare resales:

  • Resales can be purchased at a significantly reduced price.
  • Transfer fees and closing costs are incurred.
  • There are annual fees.
  • Be prepared for property taxes and other ownership expenses.
  • There is less flexibility — you must use a specific property or properties.
  • These appeal to traditionalists who desire familiarity.
  • There is usually, but not always, a market for resale.
  • Owners typically have a perpetual or long-term contract.
  • Maintenance fees may be required, even if you are no longer using the timeshare.

One drawback to purchasing a timeshare resale is the risk of dealing with fraudulent sellers. Deal only with a reputable broker or company before making any purchase. If the property sounds too good to be true, take special precautions! Here is an article on scams and how to avoid them.

CNBC reports that the timeshare industry is valued at more than $10 billion. One study found that 85% of buyers regret their purchase, and many go to the resale market to escape ownership. According to Brian Rogers, owner of Timeshare Users Group, a consumer advocacy and timeshare resale website, “Our general rule of thumb is most timeshares sell for between 0% and 10% of their original retail purchase price. And the majority of that focus is unfortunately on the 0%.” Watch this.

Three thousand complaints were filed with the Better Business Bureau on two of the largest timeshare companies under Wyndham Destinations: Travel + Leisure and Hilton Grand Vacations.

Marriott’s vacation club reports that ownership in Marriott’s vacation club starts at around $25,000. Maintenance fees include anticipated operating expenses, like repairs, insurance premiums, and real estate taxes. Points not used one year can be rolled over to the next, and borrowing points from the next year is allowed. There are family-oriented experiences through the Sheraton Vacation Club, which is just one of several clubs offered through Marriott.

Ask yourself if this is the kind of vacation that will benefit the entire family in the long run. Can you afford the costs year after year? This website answers questions specifically about the Marriott Vacation Club.

None of the above

I, too, like saving money on a vacation, but I also like having the flexibility to vacation where I want during a time that fits my schedule. For that reason, I have never been interested in these. Although clubs and timeshares work for some people, I cannot recommend them. Consider working a loyalty program with a VRBO or Airbnb owner with a property in your family's favorite destination. Ask if they will offer you discounts for your loyalty to their specific location each spring and summer.

I’d like to invite you to join a free Crown Bible study on the YouVersion app. We have several devotionals regarding money and stewardship that will help bring God’s Word into your daily life.

Chuck Bentley is CEO of Crown Financial Ministries, a global Christian ministry, founded by the late Larry Burkett. He is the host of a daily radio broadcast, My MoneyLife, featured on more than 1,000 Christian Music and Talk stations in the U.S., and author of his most recent book, Economic Evidence for God?. Be sure to follow Crown on Facebook.

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